The XIV industry business conference “Meat and Feed Industry. Development Prospects in 2022”, which is a key event for the farmers in the first half of the year, has been held on May 24th in the “Hilton Moscow Leningradskaya” hotel in Moscow. The organizer of the conference is the “Agroinvestor” project. The meeting brought together the manufacturers of animal feed and livestock products, representatives of the companies producing components and equipment for those sectors, as well as scientists, industry and financial experts. The participants of the conference analyzed the production volumes in the livestock, crop production and animal feed industry, evaluated the condition of the investment market, discussed how they can rebuild the agriculture in the new conditions of economic restrictions, in which Russia found itself after February 24th.
During the “Market Forecasts”opening session, the Deputy Minister of Agriculture of Russia, Andrey Razin, said that the last year’s positive momentum of the Russian export volumes remained almost in all branches of meat, milk and egg production in the first quarter of 2022.
“Looking at the dry figures of statistics, everything seems fine. However, in real life, we, of course, face certain challenges. First of all, we understand that the logistical difficulties which today impact almost all industries are an important factor for us too. There are certain challenges that our companies manage to deal with today, but we must look for opportunities to diversify the traditional supply channels of equipment, spare parts and everything connected with the premixes and vitamin and feed supplements,” Andrey Razin said.
The Deputy Minister emphasized that due to the additional industry support measures by the Russian government, the agriculture managed to cope with the problems from the beginning of the year and with the lack of liquidity during the rapid growth of the Bank of Russia’s key rate. The sowing campaign is being conducted normally, while the government undertakes to fulfil its financial commitments to the banks and agricultural producers, including the subsidies. Among the most noticeable problems, Andrey Razin highlighted the change in the traditional consumer behaviour, because the consumers now rarely choose expensive products which are high margin for the agricultural companies.
Although the milk production shows an average 3.5% growth (more than 20% in the last 7 years), in the current situation, Artiom Belov, Chief Executive Officer of the National Union of Milk Producers noted the major key risks for this industry. The speaker put the government support availability problem on a par with the decline in real incomes and disruption of the supply chains of equipment, spare parts, consumables and ingredients for the food industry. The industry development needs an increase in export, but there is yet another risk: with the US dollar’s exchange rate at 60-62 rubles and the current price of raw milk, the Russian export is non-competitive. Artiom Belov is also concerned about the state’s desire to control prices, which he believes may lead to the market imbalance.
Yuriy Kovaliov, Chief Executive Officer of the National Union of Swine Breeders, is concerned about the additional supply of 300,000 t of meat which is expected this year due to the production growth and export decrease almost by 50% compared to the last year because of the logistical problems with Asia. It is also assumed that the prime cost will increase by 15-20%, and if the wholesale prices remain at the last year’s level, the situation may become dramatic. The additional supply of meat in the market also poses risks for the poultry production. There is a potential for the expansion of exports, but Sergey Lahtuhov, Chief Executive Officer of the National Union of Poultry Producers, is concerned about the minimal profitability and marginality of the companies in this sector.
“420,000 beef cows out of one million belong to just one player – “Miratorg” <…>. There are about 120 companies in the country, but none of them could even achieve more than 2,000 or 3,000 heads. The investors should be told that this is the gold mine of the excessive domestic market saturation,” said Roman Kostyuk, Chief Executive Officer of the National Union of Beef Producers about the problems in the meat cattle breeding during the investment session.
Kostyuk pointed out that the total number of cattle in Russia decreases by 180,000 – 270,000 each year. The production decrease is compensated with the cattle and beef import. 80% in this segment is the dairy cattle. The expert believes that Russia lacks the infrastructure of an effective livestock sale and price balance by regions. Roman Kostyuk sees prospects of the industry in building a reference model based on cooperation that will allow small businesses compete with the large ones.
Due to the declining real incomes, Albina Iskakova, Commercial Director of “Belaya Dolina” company, forecasts a negative trend in sausage consumption, especially in the segment of expensive smoked and dry sausages, from which the meat processing companies earn their margins. The price growth in meat processing is expected to reach 16.5–18%.
“The overall picture in the animal husbandry is spoiled by the dependence of the animal feed on the imported supplements,” said Vladimir Manaenkov, Chief Executive Officer of the Feed Union. The poultry feed showed the biggest price growth last year – by 26%. Russia is the largest exporter of beet pulp in the world and second in exporting sunflower meal and press cake to other countries. Vladimir Manaenkov is convinced that Russia can successfully export animal feed, while the Russian grain will compensate its high price, therefore no reduction of the share of grain in animal feed will be needed.
Analyzing the agribusiness trends, Konstantin Korneev, Chief Executive Officer of “Rinkon Management” company, said that the small new businesses in the agricultural sector lose up to 30% of their crops due to the lack of a competent approach to the organization of agricultural processes. The market is developing only because of the big players. Abdurazak Razakov, Head of Branch Expertise Department of the Far East and Arctic Development Corporation, discussed the investment potential of Far East animal husbandry and the investor support mechanisms in those regions.
During the afternoon session “Technologies and Innovations in the Meat and Feed Industries”, the conference participants shared their visions about the current situation, proposed effective solutions to the challenges and shared their experience. Maxim Golosov, Deputy CEO of “Megamix” company presented digital solutions that ensure high quality animal feed. The company “PAVLIN Technologies” develops smart devices for controlling poultry weight gain. In addition to feed additives, the Belarusian National Biotechnological Corporation produces four essential amino acids that can be used by Russian animal farmers. The alternative to antibiotics used by the “EFKO” company includes organic acids, probiotics, prebiotics, phytoncides, inhibitors, and also has a significant effect on fattening chickens and piglets. “Cintivo” company presented its qualitative method for calculation of the poultry vaccination calendar and its successful economic performance. Anastasia Plohih, Head of the peasant farms, presented the results of the experimental attempt to grow lupin because its beans are used as an alternative to soy beans. “Biocomplex” company presented an effective manure processing system which saves mineral fertilizers and increases yields.
The participants in the evening session, the executives of the companies “Russian Agrarian Group”, “Volzhanin” and “Carpathia”, discussed the preliminary results of the sowing campaign. The speakers also said that they were trying to mobilize their efforts due to the forced adjustments in the investment plans and maintain the business effectiveness.