August 1/Los Angeles/The Associated Press -- Feihe International Inc., formerly known as American Dairy, announced plans to sell its two dairy farms in China to a Chinese investment company.

The investment firm, Haerbin City Ruixinda Investment Company Ltd., will pay about $18 million in cash for the two farms. It will also supply Feihe with milk for the next year and a half, which Feihe estimates will be worth about $114 million. Haerbin City will also be banned from selling milk to other companies before supplying Feihe's milk.

Leng You Bin, Feihe's CEO, said the sale would allow his company to cut debt and eliminate the expenses of operating dairy farms. It also would allow Feihe to focus on selling infant formula, he said. Feihe sells infant formula and powdered milk in China.

Feihe International has an office in the Los Angeles area but does business in China through its subsidiary, Feihe Dairy, headquartered in Beijing. The company changed its name in October to reflect its "exclusive focus" on the Chinese market.

From the August 2, 2011,Prepared Foods' Daily News.