Vietnam’s TH Group seeks Russia sites for $1.7 bln dairy investment
The majority of the investment is expected to flow into the Far East regions of Russia
Vietnam dairy company TH Group is investigating regions of Far East Russia for farm and processing plant locations as part of its announced plans to invest some $2.7 billion in the country.
The majority of that amount, or about $1.7 billion, is expected to flow into the Far East regions of Russia, with a delegation from the company this month visiting sites in the Khabarovsk territory. Local officials said the Vietnamese company is considering the construction of a large dairy complex for 2,400 cattle.
Earlier, the Vietnamese delegates visited the Amur territory, where they announced plans to build three dairy farms for 6,000 cattle and a soybean processing facility. Other projects being considered include production of butter and cultivation, processing of ginseng.
“Over time, we plan not only to meet local demand, but also to export products,” TH Group President Thai Huong told the media in April when first announcing the Russia plans. “The Far East is in close proximity to the markets of China and Japan, where there is a large deficit of ecologically friendly, organic products, and this opens up great opportunities,”
The overall strategy of TH Rus Primorsky LLC, a subsidiary of TH True Milk, is to create a full-cycle dairy cattle breeding complex in the Primorsky Krai territory, according to earlier media reports.
The company has plans to build three livestock complexes with a total head of 15,000 cattle and a milk processing plant with a capacity of up to 60,000 metric tons of dairy products per year. The company also intends to invest in the cultivation of fruit and medicinal plants.
Last year, the company began construction of dairy complexes in the European parts of Russia, in the Kaluga and the Moscow regions. Investments in those projects are expected to reach about $800 million. In addition, it was reported that the company plans to build a livestock complex in Bashkiria. Approximate investment is $220 million.
Russia’s current self-sufficiency for milk is only 75% so there is domestic demand to be, while Russia’s Far East has plenty of land for growing crops for fodder and is in proximity to Asia for exports.
What’s more, the self sufficiency rate for milk in Far East regions is low, just 10% in Khabarovsk and 22% in Primorsky Krai where Vladivostok is located. Between 2010 and 2015, milk production in the Far East declined by 54,000 tons.
“Cattle in the Russian Far East are traditionally scarce so such businesses could be very successful,” said Maxim Krivelevich at the School of Economics and Management of the Far Eastern Federal University.
“Milk is a large volume of liquid, it does not make sense to export it. Therefore, most likely, milk, cream, sour cream will go to the Russian market, and milk-based, valued-added processed products will go for export. Cheese and ice cream perfectly fit into the latter category,” he said.
TH Group runs dairy farms, processing facilities and distribution. It’s key brand – TH True Milk – accounts for more than 50% of their domestic dairy market. The company produces about 50 products and sells it in 39 countries.
In terms of acreage, TH True Milk complexes are the largest in Asia and can produce up to 500 million liters of milk per year.