Olam and RUSMOLCO to develop large scale dairy farms in Russia

A whopping US$400 million will be invested in the project in the next four to five years.

Olam International Limited announced its partnership with the Russian Dairy Company, LCC (“RUSMOLCO”) a growing player in the Russian dairy industry, for the large scale development of dairy and grains farming in the Penza region of Russia.

The first step under this partnership is the investment of up to US$75 million by Olam in exchange for 75% of the equity of RUSMOLCO. This translates into RUSMOLCO enterprise value of up to US$130 million. In the first phase of expansion spread over the next 4 - 5 years, RUSMOLCO will invest to expand the area under grains cultivation from the current 52,000 hectares to 106,000 hectares. In addition, four new modern dairy farms will be constructed, taking the total milking cow population from the current 3,600 heads to 20,000 heads.

The total investment required for Phase 1 will aggregate up to US$400 million to be spent over the next four to five years in a phased manner.

RUSMOLCO plans to establish a training and development centre aimed at inculcating the best practices in international farming and milk production. Initially, the centre will focus on training of RUSMOLCO’s own staff, which later may be expanded into a national centre to promote adoption of best practice and latest technologies across Russia.

Future Growth Plans
RUSMOLCO provides a strong platform for investment and expansion in the agriculture sector in Russia with attractive growth prospects. In Phase 2, Olam and RUSMOLCO envisage further investments which could include the enhancement of the area under cultivation to 130,000 hectares, increasing the milking cow population to 50,000 heads of cattle, investing in sugar cultivation, milling and refining as well as other adjacent initiatives that are aligned with Olam’s strategic plan.

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Tags: Olam, RUSMOLCO, large scale dairy farms, Russia, Russian Dairy Company