Mongolian dairy producer Suu Milk secures financing from EBRD, XacBank to support expansion programs

MONGOLIA – Suu Milk, one of Mongolia’s oldest dairies, has secured funding from the European Bank for Reconstruction and Development (EBRD) and the local lender XacBank to support its expansion plans.  

Founded in 1958, Suu Milk prides itself in being the oldest dairy company in Mongolia. It reportedly sources milk supplies from 19 collection points in the country and has more than 420 employees. 

In a joint transaction, XacBank will be providing a local currency loan equivalent to US$4.8 million to Suu Milk, while 65 percent of the risk on the loan will be assumed by the EBRD under a risk-sharing facility signed between the two financial institutions. 

The funds will be used to finance the expansion of production capacity and the renewal of Suu Milk’s transport fleet. 

With the funding, Suu Milk is expected to acquire new delivery trucks serving more than 2,500 nomadic herders across Mongolia.  

New ice cream, dairy production, and packaging equipment will also be bought to widen the company’s range of products, extend their shelf life and raise food safety standards. 

EBRD in a statement noted that these improvements will lead to significant reductions in the consumption of energy and water.  

Suu Milk is also committed to adapting its operational policies and practices to provide new employment opportunities for women. 

Apart from receiving much-needed funding, Suu Milk is also expected to benefit from technical assistance funded by the European Union helped Suu Milk. 

The assistance will go towards improving the dairy producer’s accounting and financial reporting practices and enhance the firm’s marketing. 

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Investment in Suu Milk is a continuation of EBRD’s work in Mongolia which the European lender says is aimed at helping build a diverse economy by developing the private sector and supporting infrastructure improvements.  

The Bank notes that it has invested more than €1.84 billion (US$2.21 billion) in 116 projects in the country since it started operations there in 2006. 

In continuing its support for food businesses globally, EBRD announced in August that it had lent Turkmen agribusiness company Parahat a loan of US$2.5 million. 

EBRD said the loan will help the country’s leading juice and dairy products producer Parahat replenish necessary working capital, improve efficiency, widen its product range and increase exports to neighbouring markets. 

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