(Adds Damate comment, background)
MOSCOW Nov 1 French food group Danone
will co-finance the construction of new dairy farms in Russia,
partnering local firm Damate, with the aim of securing long-term
milk supplies in the fast-growing market, the companies said on
The world's largest yoghurt maker said it would provide
financial support to the construction of several dairy farms in
the central Tyumen region and the Bashkortostan Republic.
All milk produced by the farms will be sold to Danone's
factories, according to a joint statement. Danone has more than
20 plants in Russia and is the leading producer of milk and
They did not detail the size of the planned investment.
Damate earlier announced plans to invest a total of 14.4
billion roubles ($448.7 million) until 2017 into the
construction of dairy farms in those regions.
Naum Babaev, Damate's founder and board chairman, told
Reuters the Russian firm would bear the bulk of the construction
costs and the size of investments had yet to be finalised.
"Danone will part-finance the construction... but its share
won't be large," Babaev said. "What interests Danone as our
partner is quality milk, stable volumes and price of supplies."
Damate plans to sign a supply agreement with Danone for at
least eight years, he said, adding the parties were currently
finalising the pricing.
Danone has invested a total of more than $1.6 billion in
Russia, including the acquisition of dairy firm Unimilk in 2010.
Emerging markets account for about half of Danone's total sales.
($1 = 32.0911 Russian roubles)
(Reporting by Maria Kiselyova, editing by Jason Bush and Elaine