French dairy major Danone has partnered with Russian firm Babaev’s Damate, in a move to expand its presence in the country.
The company will invest in the construction of several milk farms in Bashkortostan and Tyumen regions of Russia, which require a cumulative amount of around RUB14.4bn ($450m).
The proposed farms are expected to have a combined production capacity of 193,000 metric tons of raw milk annually, which will be completely sold to Danone.
Commenting on the collaboration, Damate founder and chairman Naum Babaev was quoted by Reuters as saying that the Russian firm would bear the bulk of the construction costs and the size of investments had yet to be finalized.
"Danone will part-finance the construction... but its share won't be large.
"What interests Danone as our partner is quality milk, stable volumes and price of supplies," added Babaev.
