Fonterra says reports out of Buenos Aires that it is about to start producing milk in Argentina are not correct, but it will open offices there this year.
Fonterra director Greg Gent -- who this week met Argentine Industry Minister Debora Giorgi in Auckland -- was reported by the Buenos Aires Herald as saying the company intended to become a "local producer" in the South American country.
"During the meeting, Mr Gent expressed interest in strengthening ties with Argentina and stated that the company would soon be opening its first offices in the country," the newspaper reported.
"Mr Gent stated the company's intentions involve becoming a local producer".
Spanish language websites also reported Fonterra "expressed its intention to consolidate and produce locally", but a Fonterra spokesman said today the full meaning of the conversation appeared to have been lost in translation.
"We don't have any present intention of becoming a producer in Argentina, i.e. owning farms," he said.
"I think Greg Gent must have been talking about Fonterra's strategy on a global basis...there will occasionally be need to develop a quality local milk supply, as we are doing in China.
"We may do that in other geographies - but there are no plans to do that in Argentina, at the moment.
"We hope to have our offices open there later this year. That's another step for us in development of our business in Argentina".
Fonterra has a joint venture with SanCor - the biggest Argentine dairy cooperative - for the production of value-added dairy products, and signed an agreement in 2004 to export milkpowders and cheese.
Until now Fonterra has been managing its affairs in Argentina through Dairy Partners America (DPA), a joint venture with Nestle, which operates 13 manufacturing sites across Brazil, Argentina, Venezuela, Colombia and Ecuador. Fonterra separately controls its own big South American dairy company, Soprole, in Chile.
Mr Gent was reported to have said that Argentina "is a key associate because New Zealand production is insufficient, and in order to accomplish our goal of worldwide production, it is necessary to join forces with other farming producers. This is what makes Argentina a key partner".
Argentina was said to be the most competitive of Latin American countries in terms of milk production costs, at US29c per litre, compared with US35c in Brazil.
Mrs Giorgi also met Trade and Enterprise investment director, Graham Matthews, and agreed that the largest potential business deals for both countries lay in agriculture, with business deals also likely in software, biotechnology, film-making, biofuels.
She also looked at hospital supplies, financial services and tourism, and signed several trade accords.