Wellington, Aug 30 NZPA - Fonterra farmers who wrote off more than $200 million in their ill-fated Chinese joint venture, Sanlu, are set to spend more than $400,000 to help support Chinese university students.

Working with the China Soong Ching Ling Foundation, the company has founded a Fonterra scholarship for 400 students over four years, reported to be worth a total of 2 million yuan ($NZ412,000).

The company will provide scholarships to 400 animal husbandry and food science students at five universities -- China Agricultural University, Northeast Agricultural University, Jiangnan University, South China University of Technology and Northwest Agricultural and Forestry University -- until December 2012.

Annually, 100 students will each receive 4000 yuan, according to the China Daily, which reported Fonterra "has identified the concept of corporate social responsibility as one of the most important long-term development strategies to enable it to integrate into Chinese society".

The scholarship will help impoverished students finish their studies at university and aid development of the food industry as well as the agricultural economy of China, said Li Xikui, vice-executive secretary of the China Soong Ching Ling Foundation.

"Fonterra expects to encourage more students to study animal husbandry and food science, which can boost China's agricultural and food industries," said Philip Turner, managing director of Fonterra (China).

"Young university students have the potential to be leaders in China's dairy and food industries," he said.

China had the fastest growing demand for food in the world and the industry supplying it is also rapidly expanding. Fonterra wanted to play a role in helping it to develop in a sustainable manner, said Mr Turner.

"China's food industry and rural economy are in a process of structural re-adjusting," he told the newspaper.

Fonterra chose China Soong Ching Ling Foundation as a partner because it focused on Chinese rural development, said Mr Turner.

Fonterra farmers had a 43 percent minority stake in Sanlu when that company and more than 20 other China-based dairy companies sold deliberately contaminated milkpowder which killed a small number of babies and made hundreds of thousands of other children sick. Fonterra said it called for a public recall of the contaminated powder as soon as it was told of the problem.

Shortly afterwards, Fonterra and the Soong Ching Ling Foundation announced a new charity project - the Fonterra Rural Maternity and Infant Healthcare Community Programme.

Fonterra said then it was donating $US5m ($NZ8.4m) over five years to provide medical care and advice to pregnant women and mothers of infants in rural communities.