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EBRD, KMB and Groupe Danone to help Russian dairy farms
Loan will be used to increase quality yoghurt production for the Russian market
The European Bank for Reconstruction and Development (EBRD) has joined forces with Russia's Small Business Credit Bank (KMB) and the Russian dairy arm of the Danone Group, OOO Danone Industria, to set up an innovative financing programme for Russian dairy farms. The initial loan will be €7.8 million (US$ 7.0 million).
The lack of sufficient fresh quality milk in Russia is generally impeding the growing production and consumption of quality yoghurts in Russia. This financing will assist Russian dairy farms in improving their productivity and will help Danone secure a stable supply of high-quality milk in Russia.
Under the programme, the EBRD will provide a credit line to KMB, which will be on-lent to dairy farms to purchase or lease dairy equipment. Danone Industria, which is majority-owned by the Danone group, will purchase the milk to produce yoghurts and provide technical support to the farms.
"Through this loan, the EBRD is not only helping develop the Russian operations of Danone, but is also encouraging cooperation between local banks, food processors and agricultural small businesses. This will act as a model for other companies throughout the Bank's countries of operations," said Hans Christian Jacobsen, Director for Agribusiness at the EBRD.
James Dwyer, Chief Executive Officer (CEO) of Danone Industria, said: "To sustain the fast growth of our business in Russia we need a steady supply of high-quality milk. The programme will make this possible, and help Russian dairy farms improve production standards, increase productivity, and reduce seasonality. Danone is committed to building a strong relationship with local suppliers, to whom we will provide support throughout the programme."
Reiner Muller-Hanke, CEO of KMB, added: "This programme gives us an excellent opportunity to extend our small and micro-lending to the Russian agribusiness sector. There is a clear demand for this type of financing, and, in cooperation with the EBRD and strong sponsors such as Danone Industria, we are well-positioned to offer financing on competitive terms."
The EBRD has signed 142 investments in the agribusiness sector totalling more than €2.4 billion, including a €23.4 million (US$ 21.0 million) equity investment in Danone Industria. The EBRD has a 35 per cent share in KMB. KMB has granted over 12,500 loans to small Russian businesses for a total of US$ 169 million l to date and has a loan portfolio in excess of US$ 75 million.
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