Speaking during a meeting with regional governor Andrey Tarasenko, Basov pledged to add the poultry division to its pig production complexes, which RusAgro has already been constructing in Primorsk Krai, with a total investment value of some RUB29bn (US$500m).
RusAgro originally revealed its plans to invest in poultry farms in June 2017, when Basov said the company was considering the construction of a complex with a planned production capacity of between 80,000 tonnes (t) and 100,000t of poultry meat per year. The total investment value was expected to be around RUB20bn (US$350m), Basov added.
Speaking earlier, Basov said the company initially wanted to produce poultry in the Far East to meet demand in the local domestic market. He added that although Russian poultry was not allowed to be exported to many markets as yet, it was important to “break through” the barriers, as the country has borders with a number of major countries, including China, Japan and South Korea.
Meanwhile, Russian media, citing insiders in RusAgro, reported that, instead of building poultry farms from scratch, the company was considering acquiring Far Eastern Poultry, with a plan to grow capacity to around 30,000t of poultry per year, following further expansion. RusAgro has neither confirmed nor denied those reports.
Closing the gap.
RusAgro did confirm that it planned to start poultry production in Russia’s Far East, although it refused to provide any further details in response to a request from GlobalMeatNews.
“The Russian Far Eastern Federal District, with a population of over six million people, needs approximately 180,000 metric tonnes of poultry meat [per year]. However, the total capacity of the five local poultry farms doesn’t even exceed 80,000 metric tonnes. So, for the past 25 years, the region has been Russia’s biggest importer of poultry meat, and imports substitution in this market segment have been a priority for local administrators,” Albert Davleyev, president of Russian consulting company Agrifood Strategies told GlobalMeatNews.
“Although there is no deficit of poultry meat, as the supply comes from central Russia, logistics costs, including transportation, handling and storage, make the product rather expensive for local consumers and limit its consumption. Besides, most of this poultry meat, both domestic and imported, is sold frozen. There is a big opportunity for successful marketing and sales of fresh chilled poultry cuts, although this may require additional investment in infrastructure, marketing and the cold supply chain due to the very long delivery distances,” Davleyev added.
In late 2016, RusAgro signed a memorandum of understanding (MOU) with Japanese company Mitsui, under the terms of which the partners were considering joint promotion of Russian poultry and pork in the Japanese market, according to Basov.
“From a geographic perspective, poultry products exported from Russia’s Far East could be very competitive in Japan, China, South Korea, Taiwan and the rest of south-east Asia. However, the major challenge for Russian poultry exporters will be ensuring the high quality of their products, as well as compliance with the target markets’ food safety requirements and product specifications. Another important factor to consider is the risk of export restrictions due to avian influenza, which is becoming endemic in the whole Far Eastern region and could affect future poultry production facilities,” Davleyev added.