Wellington, Sept 2 NZPA - A Singapore-based food multinational building a global dairy empire has taken a stake in NZ Farming Systems Uruguay Ltd, which hopes to make money from dairying in South America.

NZ Farming Systems chairman Keith Smith today welcomed news that Olam International has bought a 14.35 percent stake in his company, from existing shareholders.

Mr Smith also chairs PGG Wrightson, another big investor in NZFSU. That company last week wrote down the book value of its 11 percent stake by $39.214m, as its investment dropped from $50.95m last year to $12.89m.

He said then it was hoped that by 2012 NZFSU would have more infrastructure such as irrigation and electricity lines built and that higher stock levels, increasing milk production and better returns, would boost on-farm returns.

Mr Smith said today that the addition of Olam International as a substantial shareholder was "very positive".

"With its growing dairy business, and its global sales and marketing footprint, Olam brings real strengths to our shareholder register," said Mr Smith.

Olam International last year paid $101m for a 24.99 percent stake in Open Country Cheese, New Zealand's second-biggest dairy processor. Open country operates dairy factories at Waharoa in Waikato and Awarua in Southland, processing more than 450 million litres of milk into cheeses, powders and butter oil, with a third plant at Wanganui taking the company's milk processing capacity to over 800 million litres.

Open Country is mainly owned by Dairy Trust Ltd, controlled by the Talley family and its Affco meat company.

Olam's chief executive Sunny Verghese has said the company is developing a global position in the dairy business. Listed in Singapore, it sources, processes, packs and merchandises commodities ranging from cocoa, rice and cotton to dairy products.

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