(Yicai Global) June 8 -- Bright Dairy & Food will spend CNY2.5 billion (USD374.7 million) to build new pastures to expand its herd of dairy cattle and increase milk output, the Chinese milk products giant said.

A unit will develop four pastures over 2.6 square kilometers in Dingyuan county, Chuzhou city in eastern Anhui province, enough for 47,500 dairy cows to graze, Shanghai-based Bright Dairy said yesterday.

The project should produce around 260,800 tons of fresh milk a year by 2028 and generate profit of CNY127 million (USD19 million) a year on average over the next 11 years on an annual revenue of CNY1.2 billion (USD180 million), it said.

As part of its ‘fresh strategy’ push, the project will help fill a gap in Bright Dairy’s milk sourcing and make it more self-sufficient, it said. It will optimize its supply chain and enhance market competitiveness. CNY1.3 billion will come from the subsidiary’s own funds and the rest from bank loans.

Bright Dairy, which runs 28 dairy pastures at the moment, has been accelerating the expansion of its grazing land since last year and currently has pastures under development in Anhui, northwestern Ningxia Hui Autonomous Region and northeastern Heilongjiang province which will increase its cattle herds by 31,000 head, it said in its annual report.

The firm recently raised CNY1.9 billion (USD285 million) in a private placement scheme, 73 percent of which will go towards pasture construction, it said at the time.

Bright Dairy’s share price [SHA:600597] was trading up 0.26 percent at CNY11.68 (USD1.75) as of 2 p.m. China time today.

Editor: Kim Taylor