China’s Banner Infant Dairy Products will participate in managing the production of a newly established integrated dairy complex in Russia, in the Ryazan region, which is to be the country’s largest, according to an agreement signed in Moscow on Wednesday [18 May 2016]. The $1 billion complex will produce dairy products for the Russian market, utilizing technology from Banner and Thailand’s conglomerate, Charoen Pokphand Group (C.P. Group), with both firms acting as project manager. The complex will manage the full production cycle for dairy products – from the cultivation of feed crops for livestock, right through to the production of finished products, packaging and logistics…Full Article: ECNS.cn May 2016

Key Points

  • The Russian Direct Investment Fund will invest in the Ryazan dairy project. Once completed, the dairy complex will have an annual production capacity of 400,000 MTs of dairy products, including UHT milk, cheese, and sour cream.
  • In 2013, Banner Infant Dairy Products (Banner Dairy), a vertically integrated dairy company, was established.

ChinaAg Comments

  • In March 2016, China’s Minister of Agriculture encouraged Chinese companies should invest in the agriculture sector of Russia’s Far East.
  • In December 2015, China and Russia signed quarantine inspection agreements on Russian exports of wheat, corn, rice, and soybeans.
  • In October 2015, China’s Food Conglomerate, COFCO Group, announced plans to construct two warehouses (100,000 MT capacity each) in Russia’s Far East. COFCO was interested in constructing the warehouses in Russia’s Mikhailovsky priority development territory located in southern Primorsky Krai.
  • In June 2015, China announced it would start the construction of a joint Chinese-Russian livestock agricultural complex in Heilongjiang province. The agricultural complex will developed by China’s Zhongding Dairy Farming and Russia’s Severny Bur, with approximately 100,000 ha of Russian and Chinese land to be used to grow animal feed. Russia’s Primorsky Krai borders China’s Heilongjiang province.
  • In June 2015, a Zhejiang-based company was granted permission to lease 115,000 hectares of uncultivated land in Russia’s Transbaikal region (i.e. Zabaykalsky Krai). The Chinese company plans to use the land to grow vegetables, wheat, and other agricultural commodities, as well as raise livestock.
  • In June 2012, the Russia-China Investment Fund (RCIF) was established by the Russian Direct Investment Fund (RDIF) and China Investment Corporation (CIC). The private equity fund initially received US$2 billion from the RDIF and CIC (equal share). The RCIF was tapped to invest 70% of its funds in Russia and CIS countries (i.e. Central Asia), while the remaining 30% would be invested in China.
  • In 2004, the Sino-Russian agricultural joint venture “Armada” was established. The agricultural JV covered an area of 40,000 hectares in Russia’s Primorsky Krai region.
  • Historically, Russia’s agricultural trade with China has been dominated by Russia’s exportation of timber/wood products and seafood. All other agricultural products from Russia are minimal. Russia’s agricultural imports from China are modest and typically consist of value-added products such as processed vegetables, fruits, nuts and seafood. Russia also imports a fair amount of fresh vegetables from China. Russian agricultural exports to China deal primarily with timber/wood products and seafood. In 2011, Russia exported 11.9 million cubic meters of unprocessed timber, valued at US$2.1 billion. The second largest wood export was processed sawn wood at 4.6 million cubic meters, valued at US$1.3 billion. Analyzing seafood, Russia exported US$1.5 billion worth of frozen fish to China in 2011. Unlike the Russia’s agricultural export trade with China, which is dominated by a few commodities, the import trade is much more diverse and modest in value. No single Chinese commodity surpassed a half a billion in trade as of 2011.

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