APU dairy secures US$40M funding to boost Mongolia’s dairy sector

ASIA – Mongolia’s APU Dairy has secured a US$40 million loan from two leading development finance institutions to support its expansion efforts, according to recent reports.

The European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB) are co-financing the initiative, each contributing a substantial amount toward the project.

Additionally, Canada’s High Impact Partnership on Climate Action (HIPCA) is set to provide up to US$2 million in technical assistance, as noted by the EBRD.

APU Dairy, wholly owned by APU JSC—Mongolia’s oldest and largest beverage producer—plans to utilize the funding to expand its processing plant and acquire advanced processing and packaging lines.

The company aims to triple its processing capacity, positioning itself to meet growing domestic demand and reduce reliance on imported dairy products.

As reported by the EBRD, part of the financing will also be allocated to upgrading milk sourcing arrangements and meeting the company’s working capital needs.

The investment aims to bolster the resilience of Mongolia’s dairy sector by supporting over 1,700 local farmers who supply raw milk to APU Dairy.

According to the ADB, Mongolia produces approximately 800 million litres of raw milk annually, but only 10% is processed due to inadequate linkages with herders.

The new project seeks to address this gap by introducing modern technologies and market skills to small-scale yak herders, particularly in the Arkhangai region.

To strengthen supply chain infrastructure, APU Dairy plans to establish 25 raw milk collection centres within a 450-kilometre radius of Ulaanbaatar.

These centres are expected to create a stable market for herders’ milk, contributing to the company’s expanded operations. The ADB noted that this initiative will generate 320 new jobs by 2028, further stimulating Mongolia’s rural economy.

Bayarmagnai Galsumiya, CEO of APU Dairy, expressed optimism about the project’s impact. “I am confident that this loan and technical assistance will become a pillar of the future development of Mongolia’s agriculture and food production.”

“It will make a significant contribution to improving the livelihoods, knowledge, and skills of rural herders,” he stated.

The expansion follows a broader trend of development finance supporting Mongolia’s dairy industry. In 2019, Suu Milk, another major Mongolian dairy producer, secured a five-year $12 million loan from the EBRD to enhance its production capabilities.

This funding was used to acquire equipment for curd production and improve milk collection and distribution logistics.

With the latest financing, APU Dairy’s ambitious investment programme aims to create a sustainable and resilient dairy sector while integrating nomadic herders into a more structured value chain.

The initiative highlights a significant step toward boosting domestic production and reducing Mongolia’s dependence on imported dairy products, especially during seasonal shortages.