MANILA, PHILIPPINES – Local dairy and fruit farmers in Kazakhstan are expected to secure long-term supply contracts from the country’s leading beverage company as it expands production facilities and improves its delivery system through financial assistance from the Asian Development Bank (ADB).
The $40.2 million loan to RG Brands group – one of the leading producers of milk, juice, and tea in Kazakhstan – will fund its capital expenditures from 2013 to 2015 to expand its milk and juice production facilities as well as purchase coolers and delivery trucks.
“To transcend its middle-income country challenge, Kazakhstan needs to diversify its economy and increase its productivity and competitiveness. The private sector will ultimately lead this transformation,” said Martin Lemoine, ADB Senior Investment Specialist.
Agro-industry has been identified by the Government of Kazakhstan as a target sector that can help reduce economic dependence on the oil and gas sector, which have been the country's main exports and engine of growth.
The investments will help RG Brands increase the local content of its major products, improve production and distribution efficiency, expand direct access to customers in rural areas, and increase exports to neighboring Central Asia countries.
RG Brands will enter into long-term procurement contracts with local dairy farmers in the northern Kostanay region. It will also provide critical equipment to small retailers in rural areas, enabling them to participate in the high-quality beverage value chain.
RG Brands also plans to upgrade its juice production facilities in Aksengir and build a juice production line in Kostanay. About 25% of the concentrates and purees used in RG Brands are sourced from local farmers supplying peaches, tomatoes, and apples.
RG Brands is expected to raise the production of its ultra-high temperature (UHT) milk from 25 million liters in 2011 to at least 50 million liters in 2017, while juice production is expected to double to at least 120 million liters in 2017, from 60 million liters in 2011.
This is ADB’s first private sector agribusiness project in Central and West Asia.