Vietnamese dairy company expands operations in Russia
Vietnamese dairy company TH Group has kicked off the construction of a dairy farm and dairy processing plant in the Russian Far East worth US$204 million.
The company plans to build a farm with 12,000 cows, including 6,000 dairy cows, a milk processing factory with a capacity of 250 tonnes per day, and roughly 13,000 ha of agricultural land. This project is expected to revive the agricultural potential that has not been a focus for a long time in the Russian Far East, said TH Group chairman Ngo Minh Hai at the ground-breaking ceremony.
When the factory is put into operation at the end of 2027, the farm cluster will provide all input materials, officially forming a closed, high-tech production chain ‘from grassland to glass of milk’ and contributing to the regional GDP growth, the chairman continued.
First Asian investor
TH Group is the first Asian company to invest in establishing dairy industry capacities in several Russian regions.
In 2022, the company estimated it was due to invest US$2.7 billion in the Russian dairy industry, launching farms and dairy processing capacities in the Moscow and Kaluga regions, as well as at the first stage of the expansion in the country and Primorsk Krai on the Far East and the Bashkiria Republic at the second stage.
In the Kaluga region, the company started building 2 farms for 6,000 dairy cows each and dairy processing capacities in 2021. The complex, with a total capacity of 1,000 tonnes of dairy products per year, is scheduled to reach full production performance in 2026.
Bumpy road
TH Group originally unveiled ambitious plans to build a network of dairy farms across Russia in 2016. However, the company ran into problems as the construction of some farms was delayed. Russian newspaper Kommersant reported that the company “has not taken into account the peculiarities of the Russian construction market”.
Construction costs of dairy farms reportedly jumped by 50-100% compared with original estimations. At that time, the publication reported that, among other options, TH Group was looking at “importing labour force from Vietnam” to build its farms.
A new beginning
In an interview with the Russian news outlet Dairy News, Thai Huong, founder of TH Group, said that the Russian dairy market offered major development potential in light of Western sanctions.
Thai Huong said that agriculture was traditionally well developed in Russia, but the country lacked high-tech operations. For instance, she said that the average yield in the country was as low as 17 litres of milk per cow against 40 litres at the TH Group’s farms.
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