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As Fonterra rebuilds its presence in China chief executive Andrew Ferrier says the dairy giant wants to control all aspects of its supply chain.
In 2008 Fonterra owned 43 per of Chinese dairy company Sanlu - one of 22 firms caught up in a melamine contamination scandal in which at least six infants died.
Sanlu went bankrupt and Fonterra wrote off its $201 million investment.
"Anything that's going to be sold we need to be assured that our management stamp is all the way through, and that's a result of what we learned from two years ago," Ferrier said.
"What it did is it underscore the importance of getting right on-farm, securing safe milk right on-farm."
The co-operative would be in control of the farms producing the milk and the processing of products, he said.
The strategy had always been to build a safe supply chain, although in the past the company did not control all aspects of it, Ferrier said.
"We had an interest in it but we didn't run it and we're saying now we've got to run it. That's the lesson we learned."