TH Group kicks off giant dairy complex in Russia

TH Group kicks off giant dairy complex in Russia

Once completed, the project, the first phase of which is valued at $500 million, will become the largest and most modern fresh milk plant in Russia, and also Vietnam’s first project of the type in the country. With a capacity of 1,500 tonnes of milk per day, the plant is expected to begin production in 2019 and will entirely source material from TH Group’s existing dairy farms in Moscow and Kaluga.

“TH Group’s milk project does not only contribute to bolstering investment and trade exchanges between Russia and Vietnam, it also attests to Vietnam’s efforts to support Russia in the rebuilding of its agricultural production, which was once foremost in the world,” said Party General Secretary Nguyen Phu Trong at the ground-breaking ceremony for the project, which he attended as part of his official visit to Russia.

The Party leader said that the project heralds the start of a new investment trend of Vietnamese companies in Russia. So far, most of Vietnam’s outbound investment projects in Russia are in the oil and gas sector and mostly run by state-owned businesses. TH Group’s project differs greatly from them, as it is run by a private company and involves high-tech agriculture.

“I believe more and more Vietnamese companies will look at Russia as an up-and-coming investment target and set up businesses in the country,” said Party General Secretary Trong.

As per the plan, TH Group will complete disbursing the whole $2.7 billion investment in Russia within the next decade.

Shortly after receiving the investment certificate for the project in May 2016, TH began the construction of a dairy farm in Moscow and another in the Kaluga region in October 2016, located just under 100 kilometres south-west of Moscow. Late last year, the first 1,100 dairy cows were imported from the US to TH’s Moscow farm.

The Russian milk market is facing mounting hardships following the ban on food imports, including milk, from the EU and the US. Statistics showed that from 2013 to 2017, the milk material produced by Russia came to about 20 million tonnes, making up 76 per cent of the total demand, while the remaining 24 per cent – equalling about seven million tonnes per year – must be made up by imports.

Thai Huong, founder of TH Group, saw the opportunity and decided to invest in Russia. The plan received active support of Russian President Vladimir Putin’s administration.

The Foreign Investment Agency’s latest figures show that Vietnamese companies have registered 13 investment projects in Russia valued at nearly $3 billion.