ADB, APU Dairy Sign $20 Million Loan to Strengthen Mongolia’s Dairy Sector, Improve Food Security

ULAANBAATAR, MONGOLIA (29 November 2024) – The Asian Development Bank (ADB) and APU Dairy LLC have signed a $20 million (equivalent in Mongolian togrog) loan to support nomadic herders by integrating them into the dairy value chain, enhancing dairy processing capacity, and promoting sustainable herd management practices. The project will boost Mongolia’s dairy supply and strengthen its food security through domestic milk sourcing and domestic processing of dairy products.

ADB’s financing also includes up to $750,000 in technical assistance to build the capacity of 300 herders on sustainable herd and pasture management, financial literacy, gender equality, disability awareness, and climate resilience. The European Bank for Reconstruction and Development joins ADB as a cofinancer and parallel lender.

"This partnership with APU Dairy is a significant step toward a more resilient and inclusive dairy value chain in Mongolia. It will enhance the country’s food security by supporting local milk production and helping herders adapt to climate and economic challenges. The project’s benefits will be shared by all value chain stakeholders, improving the livelihoods of 1,000 herders and giving women better access to job opportunities and greater inclusion in the dairy supply chain,” said ADB Director General for Private Sector Operations Suzanne Gaboury.

Mongolia currently produces 800 million liters of raw milk annually, but only 10% is processed into finished products. On the other hand, dairy production facilities only run at half capacity due to the absence of linkages with herders. Milk production peaks during the summer and plummets in winter, making Mongolia reliant on imported milk powder in colder months.

The funding will help APU Dairy establish 25 new raw milk collection centers within a 450-kilometer radius of the capital Ulaanbaatar. These centers will provide herders with a stable market for their milk. By 2028, these centers will meet the growing demand for raw milk from APU Dairy's expanded processing facility. This expansion will also generate 320 new jobs.  These collection centers will not only boost productivity and income for herders but also allow herders to use their milk production as collateral for credit.

“This partnership with ADB is not just about financing but also reflects our shared goals and aspirations to increase community participation, build capacity and promote inclusiveness. The complementary technical assistance that empowers 300 herders is truly an important step towards developing the sector," said Apu Dairy's Chief Executive Officer Bayarmagnai Galsumiya. "I am confident that this loan and technical assistance will become a pillar of the future development of Mongolia’s agriculture and food production, and will make a significant contribution to improving the livelihoods, knowledge, and skills of rural herders” 

Established in 2006, APU Dairy is the second largest dairy producer in Mongolia. It develops, produces, markets, and sells its own branded products through 4,700 sales points in Ulaanbaatar and 4,000 in rural provinces. APU Dairy is fully owned by APU JSC —the largest beverage producer in the country and part of Shunkhlai Group, one of the largest conglomerates in Mongolia.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 69 members—49 from the region.