Fewer Russian poultry farms, labor scarcity and sanction on inputs placing important stress on business
18 March 2024
6 minute learn
The Russian poultry sector is experiencing powerful occasions as sanctions and the ever-growing isolation of Russia within the worldwide area has put critical stress on the business.
Previous to February 24, 2022, poultry was one of many quickest rising segments of the Russian agricultural sector with annual development charges of 10% to 11%, nevertheless the start of the Russian-Ukrainian struggle put an finish to any present hope for additional development of the business, at the very least for now.
The present disaster is confirmed by official statistics of the Russian Ministry of Agriculture, in response to which, the variety of poultry farms in Russia has declined from 5,650 as of February 2022 to solely 4,900 in 2024 (a 13.2% drop), and this downward development is predicted to proceed.
One of many main causes for this farm decline is critical interruptions with the provides of feed, uncooked supplies and numerous business applied sciences to the Russian poultry sector, a lot of which have been historically provided from overseas.
In response to an official spokesman of the Russian Ministry of Agriculture Dmitry Patrushev, previous to 2022, a lot of the high-quality feed, embryos, vaccines and tools for elevating poultry have been provided to Russia from overseas, primarily from the EU states, nevertheless the imposition of sanctions led to the suspension of most of such provides. Regardless of the present implementation of state coverage geared toward substituting imports, Russia doesn’t have the wanted competencies and expertise to determine the manufacturing of most of such merchandise at the very least within the short-term. The identical scenario is noticed in case of business’s tools and equipment, in addition to spare components – most of which have been provided to Russian poultry farms from the West prior to now.
This has already sparked some considerations from producers, nevertheless most of them consider that the present scenario stays underneath management, whereas numerous choices to take care of the present issues are thought-about.
Natalya Stolyarova, head of the “Turkey” division of Damate Group of Firms, one among Russia’s poultry producers, feedback: “The group is fixing the problems of supplying spare components for its manufacturing utilizing at the moment out there strategies. There are at the moment no dangers for the corporate’s work.”
Labor shortages
The scenario can be difficult by the deepest scarcity of personnel within the sector, which exceeds post-Warfare II figures of 1945-1946, as a big a part of the business’s employees have been mobilized to the Russian military.
At the moment essentially the most advanced scenario is noticed in some main Russian poultry-producing areas amongst that are the Tatarstan, Bashkortostan, Dagestan and Krasnodar, which have suffered essentially the most.
Roman Smirnov, normal director of the Roskar poultry farm, one other main Russian poultry producer, has confirmed this.
Smirnov feedback: “As a result of weakening of the ruble, there was a scarcity of overseas employees. To resolve this difficulty, the corporate indexes salaries, attracts staff from different localities and gives them with housing and insurance coverage.”
The present disaster has already led to a critical scarcity of poultry and poultry merchandise in some main Russian retail chains, with the peaks being noticed in the beginning of the present 12 months. Whereas in current weeks the scenario has usually stabilized, analysts count on new waves of poultry product scarcity within the Russian market within the coming weeks.
Within the meantime, representatives of some main Russian poultry producers consider that the present fears are exaggerated, whereas the manufacturing at the moment stays on virtually the identical stage as prior to now.
That has been confirmed by an official spokesman of Tkachev Agrocomplex, one among Russia’s largest poultry producers, in response to which “the corporate has been producing poultry meat on the stage of 105,000–106,000 tons for greater than 5 years and plans to keep up this manufacturing quantity sooner or later.”
Costs for poultry meat & eggs
On a separate notice, in response to knowledge of some Russian state statistics providers, similar to Rosstat, costs for poultry in Russia are quickly rising and can proceed to develop within the coming months.
Generally, costs for poultry meat and eggs in Russia have been rising at double-digit charges in current months. As of November-December 2023, in response to Rosstat, chilled and frozen hen elevated in value by 29.26%, hen eggs – by 40.29%. The federal government explains this by rising demand and sure “errors” made by its officers.
The Russian Ministry of Agriculture has just lately mentioned that they’re finding out the potential for zeroing out import duties on eggs from “pleasant” international locations for your entire 2024 and are engaged on switching producers and retail chains to long-term contracts and rising manufacturing. On the finish of final 12 months, the Russian agricultural regulator Rosselkhoznadzor lifted restrictions on the provides of eggs and poultry merchandise from Azerbaijan and Turkey, and it’s deliberate that the identical restrictions will probably be lifted in regard of different potential importers to Russia.
Scarcity of breeding inventory
Lastly, there are critical issues with breeding poultry inventory in Russia, which have at all times been imported to the nation from overseas. Russia has been traditionally experiencing a scarcity of such breeding inventory, nevertheless as a result of present disaster within the business and the rise of costs, its imports to Russia have develop into extraordinarily costly.
In response to knowledge of Rosstat, poultry inventory at Russian farms since June 2023 has been steadily declining together with month-to-month meat and egg output.
As of November 2023, the general poultry inventory in Russia estimated at 462.7 million models, which is 3.2% decrease on a year-on-year foundation.
As for month-to-month meat output, in November 2023, it was about 540,000 tonnes (-3% decrease, in comparison with November 2022), whereas within the case of eggs it’s at 3.15 million models (-1%).
Consultants of the Russian Poultry Union and unbiased analysts within the poultry enterprise consider that critical interruptions with the imports of hatching eggs from March to December 2022 and the general drop of their imports by 60% over two years (to about 300 million models in 2023) grew to become the primary motive for the present disaster within the Russian poultry sector.
“For comparability, in 2020, Russia imported 700 million hatching eggs, whereas in 2021 – 600 million,” in response to Sergei Lakhtyukhov, normal director of the Russian Nationwide Union of Poultry Farmers.
Poultry vaccine choices could improve
Different specialists additionally clarify the present disaster by restrictions on the turnover of overseas vaccines to Russia, which led to a critical drop in output of some Russian poultry producers and their productiveness. Lastly, final 12 months the scenario with the unfold of avian influenza in Russia considerably worsened, and there have been a number of outbreaks of Newcastle illness.
As for vaccines, from September 1, 2023, the provides of veterinary medication to the Russian Federation are permitted solely from these overseas enterprises which were examined for compliance with the necessities of fine manufacturing follow (GMP). In response to Russian Kommersant
enterprise paper, some vaccines from the American MSD Animal Well being and Elanco haven’t but handed such certification. Within the meantime, representatives of the Russian Affiliation of Veterinary Pharmaceutical Producers (which incorporates such corporations as MSD, Boehringer Ingelheim, Zoetis, and so on.) mentioned there’s a risk that this difficulty may very well be resolved, whereas the provides of 14 sorts of vaccines are anticipated to be carried out to Russia quickly.
Russian authorities making an attempt to stabilize poultry business
The Russian authorities, from its aspect, additionally prepares a package deal of measures geared toward stabilizing the scenario within the business. Amongst them are offering tender loans for home poultry farmers, signing of long-term state contracts for procurements of poultry for numerous state wants and state reserves, in addition to the supply of subsidies for modernization of Russian poultry farms.
To stop unfair will increase in costs for eggs and poultry meat, the Ministry of Agriculture additionally proposes limiting the commerce margin on these merchandise to twenty%.
Within the meantime, on account of present volatility available in the market and the ever-tightening competitors, some main Russian poultry factories have already introduced their plans to increase in some promising niches of the market.
