New Zealand's Fonterra Cooperative Group Ltd, has agreed to develop a dairy farm in Yutian, Hebei province to expand milk production in China, Bloomberg reported on Wednesday.

The farm will hold 3,000 cows imported from New Zealand, the world's largest dairy exporter said in a statement. Fonterra will invest NZ$42 million ($31 million) in the project, it said.

Fonterra already has diary farm in Tangshan, Hebei province, which has doubled to over 6,000 cows since it opened in 2007 and produces about 25 million liters of milk for local consumption, the company said.

The Yutian farm will cover 42 hectares. Construction of the new farm will take about 12 months and milking is expected to begin in November 2011, Fonterra said.

Fonterra accounts for about 40 percent of the global trade in butter, milk powder and cheese, selling $12 billion of product in 140 countries, Bloomberg said.