ADB and APU Dairy Partner to Strengthen Mongolia's Dairy Industry and Support Nomadic Herders

The European Bank for Reconstruction and Development (EBRD) is co-financing the project as a parallel lender.

The Asian Development Bank (ADB) has joined forces with APU Dairy LLC in a $20 million (in Mongolian togrog equivalent) financing agreement aimed at transforming Mongolia’s dairy industry. This initiative seeks to integrate nomadic herders into a more resilient dairy value chain, expand domestic milk processing capabilities, and implement sustainable herd management practices. The project is expected to enhance food security and create economic opportunities for local communities.

In addition to the loan, ADB will provide up to $750,000 in technical assistance to equip 300 herders with vital skills in sustainable herd and pasture management, financial literacy, gender equality, disability awareness, and climate resilience. The European Bank for Reconstruction and Development (EBRD) is co-financing the project as a parallel lender.

“This partnership with APU Dairy is a significant step toward a more resilient and inclusive dairy value chain in Mongolia. It will enhance the country’s food security by supporting local milk production and helping herders adapt to climate and economic challenges. The project’s benefits will be shared by all value chain stakeholders, improving the livelihoods of 1,000 herders and giving women better access to job opportunities and greater inclusion in the dairy supply chain,” said Suzanne Gaboury, ADB Director General for Private Sector Operations.

Addressing Mongolia’s Dairy Industry Challenges

Mongolia produces approximately 800 million liters of raw milk annually, yet only 10% is processed into finished products due to limited connections between herders and processing facilities. Dairy production peaks during summer and declines significantly in winter, leading to reliance on imported milk powder during colder months.

To address these challenges, the project will establish 25 new raw milk collection centers within a 450-kilometer radius of Ulaanbaatar. These centers will provide herders with a stable market and enable them to use milk production as collateral for credit. By 2028, the new centers will supply raw milk for APU Dairy’s expanded processing facility, which will operate at increased capacity and create 320 new jobs.

Empowering Herders and Enhancing Inclusivity

The complementary technical assistance aims to foster inclusivity and empower herders, particularly women, by improving their access to job opportunities within the dairy value chain.

APU Dairy CEO Bayarmagnai Galsumiya expressed confidence in the project:“This partnership with ADB is not just about financing but also reflects our shared goals and aspirations to increase community participation, build capacity, and promote inclusiveness. The technical assistance is an important step toward developing the sector. This initiative will become a pillar of future development for Mongolia’s agriculture and food production, improving the livelihoods, knowledge, and skills of rural herders.”

Expanding APU Dairy’s Reach

Founded in 2006, APU Dairy is Mongolia’s second-largest dairy producer. It operates across 4,700 sales points in Ulaanbaatar and 4,000 in rural provinces, producing and marketing its own branded products. APU Dairy is part of APU JSC, the largest beverage producer in Mongolia, and is owned by the Shunkhlai Group, a leading conglomerate in the country.

The project underscores ADB’s commitment to promoting sustainable economic growth, improving rural livelihoods, and supporting Mongolia’s efforts to achieve food security while addressing climate and social challenges.