Danone to partner with Russian firm in new dairy infrastructure projects

By Rizza Sta. Ana

Nov 01, 2013 10:23 AM EDT

A joint statement by French food group Danone and Russian firm Damate said it had formed a special joint venture to construct dairy farms in Russia. The special venture, the companies said, would enable Danone to secure milk supplies for a long-term period. However, the statement failed to disclose the size of the investment to be made by Danone.

The new dairy farms would be situated in the Bashkortostan Republic and central Tyumen region. The milk that would be produced from the new dairy farms would be sold directly to Danone's over 20 plants.

Damate founder and board chairman Naum Babaev said to Reuters his firm would be shouldering much of the construction costs. Babaev also added that the companies had yet to decide the final size of their investments. Damate had said earlier that it planned to investment RUB14.4 billion or USD448.7 million into new dairy farms in the same Russian regions until 2017.

"Danone will part-finance the construction... but its share won't be large. What interests Danone as our partner is quality milk, stable volumes and price of supplies," Babaev said.

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