SUU

Print

BIO has committed USD 2 million to Suu, the leading dairy processor based in Ulaanbaatar, Mongolia. The investment program aims at increasing and modernising Suu’s processing capacity and extending its raw milk supply chain. As a result, 2500 existing and 1500 new herders involved in the milk supply chain will obtain a higher and more sustainable income, quality standards will be raised and the country’s self-sustainability for domestic milk product supply will be improved.

Suu was founded in 1958 as a state owned company and has been privatised since; it is the leading Mongolian dairy processor, with a current processing capacity of 150t/day, producing 51 different products including milk, yoghurt, butter, curd and ice cream. Presently, milk supply is sourced via 19 milk collection points, where more than 2000 herders delivered their production in 2009-2010.

50% of Mongolia’s population depends on agriculture (being herding in particular) and 36.1% live below the poverty line. As households selling milk have an average income three times higher than households who do not, the herders’ welfare depends on their ability to sell milk. Suu is the only dairy processor which sources its milk maximally from the local farmers through an extensive network. By improving the quality of its operations, Suu (and its herders-suppliers behind it) is to play an important role in the self-sustainability of the Mongolian dairy industry.

BIO’s commitment will allow the company to execute its investment programme which involves:

- Increasing and upgrading its existing processing/packaging capacity

- Extending the raw milk supply chain, including the establishment of 22 milk collection points, 13 cooling units, 2 milking parlours and working capital to fund additional milk purchases

- Improving the quality standards, including health and safety.

By granting a long-term loan, BIO fills a gap on the local financing market, which often solely provides short term debt. Without this type of involvement, the project would need to rely on inadequate short-term financing or be scaled back, resulting in poorer quality milk products for a longer period of time and without reaching the catchment area for sourcing milk as planned.

With regard to the improvement of quality standards, BIO will assist Suu with technical assistance subsidies for items such as management information systems, quality control, training and waste management.

This first investment in Mongolia shows once again the importance of access to finance for private companies in developing countries. By supporting the expansion and consolidation of their activities with long-term financing and by supplying them with grants for technical assistance BIO is contributing to the stimulation of innovation and the development of new skills. The agro-industry, that is to say the growing of subsistence crops, export crops, livestock farming and the processing industry, is a priority for BIO because it generates a direct impact on the local economy and the living conditions of the population.

  • Investment amount (€):

    USD 2 million

  • Contract signature :

    2011

  • Nature of intervention :

    Debt

  • Development impacts :

    • 1 — import substitution
    • 2 — job creation and pay conditions above standard
    • 3 — employement of female employees
    • 4 — environmental impact is limited

Photos :