Vietnamese dairy company TH Group is making waves in the Russian Far East with its US$204 million investment in a dairy farm and processing plant. This move marks the company’s foray into the Russian market, aiming to establish a high-tech production chain ‘from grassland to glass of milk.’ Let’s delve into the details of this groundbreaking project and explore its implications for the dairy industry in the region.
### TH Group’s Ambitious Venture
#### Construction Plans:
– Building a farm with 12,000 cows, including 6,000 dairy cows
– Establishing a milk processing factory with a capacity of 250 tonnes per day
– Acquiring roughly 13,000 ha of agricultural land
This ambitious project is set to revive agricultural potential in the Russian Far East by focusing on a sector that has not received significant attention in recent times. The TH Group chairman, Ngo Minh Hai, highlighted the importance of this venture in contributing to regional GDP growth.
#### A Closer Look at TH Group:
TH Group has become the first Asian investor to take the plunge into establishing dairy industry capacities in various Russian regions. With plans to invest a whopping US$2.7 billion in the Russian dairy industry, the company is set to revolutionize the sector.
In the Moscow and Kaluga regions, TH Group has already laid the groundwork for building farms and dairy processing capacities. The Kaluga region project aims to achieve a full production capacity of 1,000 tonnes of dairy products per year by 2026.
### Challenges Faced and Lessons Learned
#### The Bumpy Road:
Despite its grand aspirations, TH Group encountered challenges along the way. The company’s initial plans to construct a network of dairy farms across Russia hit roadblocks, resulting in construction delays. The Russian construction market posed unforeseen obstacles, leading to cost escalations and adjustments in strategy.
Reports indicated that construction costs for dairy farms surged between 50-100% beyond initial estimates, prompting TH Group to explore various solutions, including importing labor from Vietnam. These hurdles underscored the importance of adaptability and understanding local market dynamics.
#### A New Beginning:
In a candid interview with Russian news outlet Dairy News, Thai Huong, the founder of TH Group, shed light on the vast potential of the Russian dairy market amid Western sanctions. Huong emphasized Russia’s rich agricultural heritage but noted the lack of high-tech operations in the sector.
Drawing a comparison with TH Group’s operations, Huong highlighted the significant disparity in milk yields per cow between Russia and the company’s farms. This gap underscores the untapped opportunities for technological advancement and efficiency improvements within the Russian dairy industry.
### Conclusion
TH Group’s venture into the Russian Far East signals a significant milestone in the company’s expansion strategy and showcases its commitment to driving innovation in the dairy sector. By leveraging its expertise and resources, TH Group aims to elevate the region’s agricultural landscape and catalyze economic growth.
As the project unfolds over the coming years, the impact of TH Group’s investments on the Russian dairy industry will become more apparent. The lessons learned from the challenges encountered along the way will undoubtedly shape the company’s future growth trajectory and set a precedent for other international players eyeing opportunities in the region.
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