APU Dairy, a dairy producer in Mongolia, has secured a Tg136.55bn ($40m) loan from two development finance institutions for expansion.
The European Bank for Reconstruction and Development (EBRD) has offered a $20m loan to APU, one of Mongloia’s largest domestic producers of dairy products.
This funding also includes up to $2m from Canada’s High Impact Partnership on Climate Action (HIPCA).
APU Dairy will use funding for the expansion of its processing plant, to acquire new processing and packaging lines, and upgrade its milk sourcing arrangements.
Specifically, the company aims to “triple” the capacity of its plant.
Additionally, the financing will also be used to meet the company’s working capital needs.
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By GlobalData
APU Dairy’s investment programme is also supported by a comparable loan amount co-financed by the Asian Development Bank (ADB).
APU Dairy is wholly owned by APU JSC, the “oldest and largest beverage producer in Mongolia”, the EBRD noted.
The company said it aims to enhance the climate change resilience of more than 1,700 local farmers supplying raw milk.
The project will support small-scale yak herders in the Arkhangai region by introducing “new technologies” and “market skills” to “improve productivity and sustainability”.
APU Dairy hopes to “support nomadic herders by integrating them into the dairy value chain”.
According to the ABD, Mongolia produces 800 million litres of raw milk annually, but only 10% is processed due to limited herder linkages.
Dairy plants operate at half capacity, while seasonal fluctuations force reliance on imported milk powder in winter.
APU Dairy plans to establish 25 raw milk collection centres within a 450km radius of the capital Ulaanbaatar, creating a “stable market” for herders’ milk.
By 2028, these centres will support the growing demand for raw milk from the company’s expanded processing facility, generating 320 new jobs, the ABD noted.
Apu Dairy CEO Bayarmagnai Galsumiya said: “I am confident that this loan and technical assistance will become a pillar of the future development of Mongolia’s agriculture and food production, and will make a significant contribution to improving the livelihoods, knowledge, and skills of rural herders.”
In 2019, Mongolia’s Suu Milk received EBRD financing for expansion, securing a five-year $12m loan to enhance its production facilities.
The funding was used to acquire equipment for curd production, milk collection, and delivery trucks.
