RDIF, Thailand's C.P. Group sign memorandum on $1-bln Ryazan dairy complex

Interfax, 18.05.2016

Thailand's Charoen Pokphand Group (C.P. Group), the Russian Direct Investment Fund (RDIF) and the government of Ryazan Region signed a memorandum of understanding (MoU) on Wednesday on the construction of a $1-billion integrated dairy complex in the Russian region.

The MoU was signed in the presence of the prime ministers of Russia and Thailand, Dmitry Medvedev and Prayut Chan-o-cha, an Interfax correspondent reports from the signing ceremony.

The RDIF and C.P. Group are part of a consortium that also includes Banner Infant Dairy Products from China (Banner Dairy) as well as leading Middle Eastern investors and banks.

This will be Russia's largest integrated dairy complex, the RDIF said in a press release. "This significant agreement demonstrates the commitment from all parties to this important project involving an estimated investment of $1 billion," it said.

The new complex will have the competitive advantage of incorporating the full production cycle for dairy products - from the cultivation of feed crops for livestock, right through to the production of finished products, packaging and logistics.

The total production capacity of the complex will be 400,000 tonnes of finished products per annum, with the broad product range including pasteurized and UHT milk, cheese, and sour-milk products. The project will be managed by C.P. Group in collaboration with Banner Dairy.

"The complex will utilise Banner Dairy's unique model of new generation in the dairy industry, which is characterized by the comprehensive integration of the latest technology and best practices in modern dairy production from around the world together with Banner's own innovation and experiences. Such technology reduces the processing time of raw milk from the cow to the bottle to just two hours. This model also allows the complex to produce the safest and best quality dairy products, as well as to retain all the beneficial properties of natural milk, including its immunologically active factor, which cannot be preserved using other modern milk-processing technologies," the RDIF said.

This is not the first major project that CP Group has announced in Russia. Last year the conglomerate announced that it would invest about $700 million in poultry processing in Leningrad Region.

The partnership between CP Group and the RDIF was announced at the 2015 St. Petersburg International Economic Forum. They agreed to jointly look for and invest in projects in agriculture, food production and distribution and other areas.

A CP Group subsidiary, Charoen Pokphand Foods, acquired a 24% interest in Russia Baltic Pork Invest ASA, which produces grain and hogs in Kaliningrad region's Pravdinsk district, in January 2014 for 16 million euro.

Also on May 18, the Russian and Thai agriculture ministries signed an MoU and the Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) signed a memorandum with Thailand's Department of Fisheries on safety monitoring for imports and exports of fish and aquaculture products.