The Asian Development Bank (ADB) and Inner Mongolia Saikexing Breeding and Biotechnology signed the loan last week.
Saikexing, China’s fourth biggest dairy farming company,says it will use the funding to invest in treatment and processing facilities to stop discharge of untreated animal waste, and to increase the use of that waste for making fertilizers.
Captured methane will also be used for creating energy.
The loan will also be used for sterilized milking and feed-processing equipment to boost the quality and safety of milk.
Expansion to meet increased demand
The company says the funding will also enable another four farms, with a total of 20,000 cows, to be created in China. Saikexing currently owns 27 farms with a total of 100,000 cows.
The expansion is expected to create around 600 new jobs in rural areas, bringing the company’s workforce to around 2,600 by 2020. Saikexing says that the number of smallholder farmers supplying forage food to Saikexing is also expected to grow from about 15,000 in 2015 to at least 17,500 by 2020.
According to the Chinese Ministry of Agriculture, demand for processed milk in China is expected to increase, with the gap between domestic production and consumption rising from 9.7m tons in 2014 to 15.4m in 2024.
A first for ADB
ADB, based in Manila, Philippines, says this is its first direct assistance to a livestock company and its first private sector agribusiness investment with a focus on environmental protection and food safety.
The bank says that the terms of the financing ensure positive impact is spread widely across farms in seven provinces and autonomous regions.
Martin Lemoine, agribusiness investment unit head in ADB’s private sector operations department, said that food security and safety are major concerns in China, and that Saikexing’s project will promote modern, sustainable dairy farming practices, while minimizing pollution.
He added that another benefit would be that it would help set dairy farming benchmarks that could then be replicated elsewhere in the country.