Russian veg oil market set for change
that they are struggling against poor soy bean supplies, out-dated
production equipment and excessive market competion. Although
manufacturers still envisage market growth, change, it seems, is
inevitable.
The survery, carried out by Moscow-based Market Advice, questioned key executives on how they perceived the current state of the sector. In total, 50 enterprises producing sunflower and/or soya oil were involved, including key names such as Anninsky, Irkutsk MZHK, Labinsky, Millerovsky, Petromaslo, Rusagro, Efko and Yug Rusi.
Findings revealed that the production output and product composition of the enterprises questioned varies. Some 80 per cent of enterprises produce crude sunflower oil, while refined sunflower oil is produced by 64 per cent of the companies. Crude soya oil is produced by 16 per cent of enterprises, suggesting that this is an area of specialisation, while only 10 per cent produce refined soya oil.
The information gathered on the type of equipment and facilities used byt the companies in question also makes for some interesting reading. Most of those using equipment which is no more than three years old have acquired their production lines from foreign producers - suggesting that there is little in the way of new equipment currently available from domestic suppliers.
However, domestic equipment prevails when it comes to facilities fitted out more than three years ago, although much of the equipment is up to 25 years old. The survey found that the newer the equipment, the more likely it was to be supplied by a foreign manufacturer. In the case of equipment aged between seven and ten years old, the survey revealed that only 2 per cent was supplied by foreign manufacturers.
Market Advice said it had also received significant feedback about the difficulties and problems in the manufacturing of vegetable oil. Some 70 per cent of participants considered manufacturing to be the most problematic area, with high competition among manufacturers being the primary barrier.
The survey revealed that 60 per cent of respondents specified the shortage of raw materials as being most important, with quality and pricing being particular issues. This was said to be especially true for soya beans, as supply is unreliable. For the manufacture of soya oil, the short harvest period means that most enterprises only produce the oil for several months in the year.
As regards the year ahead, a staggering 88 per cent of participants believe that the market for sunflower oil will be subject to dynamic development in 2004, on the back of its continued popularity. Some 12 per cent of respondents also believe that the manufacture of soya oils will see further growth being sustained in the year ahead, with the supply situation improving as the year progresses. On top of that, 10 per cent of companies specified said that the market for eco-friendly rape oils would also develop in 2004.
The interview for this article was bought about through the kind co-operation of Moscow-based market analysis company Market Advice.
