APU Dairy's Role in Strengthening Mongolia's Dairy Sector: EBRD and ADB Support
APU Dairy, Mongolia’s second-largest dairy producer, is driving transformative growth in the country’s agribusiness sector with a $40 million loan from the European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB). This initiative highlights the critical role of sustainable finance in enhancing food security, reducing import dependency, and fostering climate-resilient agricultural practices.
APU Dairy operates in the agricultural sector, which is vital to Mongolia’s economy, employing one-third of the workforce and contributing 13% of the GDP. APU Dairy faced key challenges including seasonal production fluctuations, reliance on imported dairy (60% of consumption), and underdeveloped rural infrastructure, limiting farmers’ access to markets and sustainable practices.
To address these challenges, APU Dairy and its partners have introduced a multi-faceted strategy:
Infrastructure Expansion: Building 25 milk collection centers within 450 km of Ulaanbaatar to streamline supply chains and reduce spoilage.
Farmer Empowerment: Training 1,700 farmers and 300 herders in climate-smart practices and providing collateralized milk contracts for income stability.
Sustainability Integration: Constructing a wastewater treatment plant to recycle water for industrial reuse and convert sludge into fertilizer, promoting circular economy principles.
Global Collaboration: Leveraging technical assistance from Canada, Japan, and the Food and Agriculture Organization (FAO) to advance gender-inclusive policies and sustainable production.
Outcomes and Impact
Economic Resilience: The project aims to boost domestic dairy production by 30%, reducing import reliance and stabilizing prices for 8,700 sales points nationwide.
Environmental Benefits: The wastewater plant repurposes 90% of processing waste, cutting pollution and providing organic fertilizer for local agriculture.
Social Upliftment: Over 2,000 rural households gained improved market access and financial security, with a 25% target increase in herder incomes by 2025.
Sectoral Growth: Enhanced processing capacity and cold storage infrastructure mitigate seasonal disruptions, strengthening Mongolia’s dairy value chain.
Lessons Learned
Holistic Partnerships: Collaboration between international financiers (EBRD/ADB), governments, and local actors accelerates scalable impact.
Circular Economy Synergies: Integrating waste management into production processes enhances sustainability and creates ancillary revenue streams.
Community-Centric Models: Training and fair pricing mechanisms build trust and long-term engagement with rural producers.
APU Dairy’s initiative, backed by EBRD and ADB, exemplifies how targeted sustainable finance can revitalize agribusiness, strengthen food security, and empower rural communities, positioning Mongolia as a model for climate-resilient dairy sectors in emerging economies.
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