The poultry industry is facing extreme challenges around the world as a result of the global spread of COVID-19. Even processors in Russia are forced to overcome the hurdles that this pandemic has put throughout the food chain. To enable optimal service towards their customers, Meyn Poultry Processors has done thorough research on the influence of COVID-19 on the Russian poultry industry and the numbers of growth and decrease throughout the entire market during the past years. “We can only stand side by side with our customers if we are prepared for any shifts we foresee in the market. The only way to foresee the future is by learning your history inside out” – Oleg Leonov, general manager Meyn Russia.
Oleg and his team kindly shared their inside knowledge of the poultry processing industry with MSP Magazine.
Huge growth in EV weight and Russian independency
According to the results of 2019, the production volume of poultry meat in Russia has reached a capacity of 4.940.600 tons of poultry meat in the EV weight. This means the volumes grew by 36.3% over the past 5 years.
Russia’s self-sufficiency in poultry meat (the ratio of production to consumption) in 2019 amounted to 98.1%. In comparison, 10 years ago self-sufficiency in poultry meat was 59.8%, in 2005 self-sufficiency in poultry meat was even less: 40.9%.
Growth in poultry consumption
Besides the growth in self-sufficiency as well as EV rate, the consumption of poultry meat in Russia has increased massively. At the end of 2019, per capita consumption of poultry meat in the Russian Federation amounted to 34.1 kg. In comparison, 10 years ago this was only 22.5 kg, and 15 years ago less than half: 16.1 kg.
So overall we can conclude that the Russian poultry meat market has shown a positive trend of growth in recent years:
In 2019, in the structure of the poultry meat market, domestic production exceeded the volume of imports by 24.5 times.
The best poultry meat production indicators are coming from the Belgorod region of Russia with the production volume of 586.9 thousand tons of poultry meat.
The largest Russian poultry meat-producing companies of the industry are:
- PJSC “Cherkizovo Group”
- JSC “Prioskole”
- GAP “Resource”
- BEZRK “Belgorod”
- Miratorg – “Bryanskiy broiler” LLC
- “Chelny-Broiler” LLC
- JSC Agrokomplex farm named after N. I. Tkachev
- Poultry Farm “Severnaya” (CPF – Charoen Pokphand Foods)
- Group of Companies “Healthy Farm”
- Ravis – Poultry Farm “Sosnovskaya”
- “Oktyabrskaya” agricultural company %MCEPASTEBIN%
The TOP-10 poultry manufacturing companies provided 56.9% of all poultry meat produced.
Export vs Import
As a result of Russian growing independence and conditions of saturation of the domestic market, Russian producers show a general interest in developing the export of poultry meat. In 2015 – 2019, the poultry meat exports from Russia have grown 3 times: from 68.0 in 2015 up to 205.7 thousand tons of poultry meat in 2019. With China being in first place among the countries-buyers of Russian poultry meat with an astonishing 61.6 thousand tons (90,88 % of the total export volume).
In 2015 – 2019, the export of deep-frozen poultry meat increased 3.2 times: from 59.3 thousand tons up to 190.3 thousand tons of poultry meat in 2019. At the same time, the export of fresh cooled poultry meat has also increased by 1.8 times: from 8.7 thousand tons to 15.4 thousand tons.
In 2020 – 2024, poultry meat exports from Russia will be growing by an average of 10.3% per year and will reach 335.5 thousand tons of poultry meat by the year 2024.
It is interesting to note that the development of the export direction of the poultry trade in Russia in many respects coincides in dynamics with what was observed in Brazil in the 1980s. Thus, the export of poultry meat from Brazil in 1976 amounted to only 20.0 thousand tons. Already in 1980, it reached 169 thousand tons, in 1981 – 294 thousand tons. Currently, Brazil became the world’s largest exporter of poultry meat.
With the increase in export and independence during the past years, the decrease in imports naturally followed. Imported poultry volumes decreased by 59.9% over the past 5 years. The downward dynamics of imports are primarily associated with a weakening of sales prices in the US dollar, which led to an increase in the competitiveness of the Russian products both in the domestic and world markets.
What can the poultry industry expect in the future?
According to the forecast the Russian poultry meat production in 2019 may amount to 5.1 million tons of poultry meat a year.
The necessity to increase poultry production volumes in order to meet the growing demand combined with the inability to actively supply surplus to the markets is expected to put pressure on prices and reduce the margin of producers. Weak players are increasingly unable to withstand and leave the market, while large processors are consolidating new assets (M&A).
How are the processors handling the shifts in the market?
Investment flows go to the technical modification of the facilities built 10 to 15 years ago. To increase capacities for further processing and to produce a wide range of packed products and products for hospitality.
Further consolidation of the poultry industry also inevitably leads to the need to improve infrastructure – feed mill plants, rendering facilities, wastewater facilities, warehouses, and logistics centers.
How is Meyn preparing its customers for future developments?
Following the trend of the market development, the Meyn Moscow team increased the target to the added-value projects in cut up and deboning, as the most profit-generating for the customers. Focusing on providing the customers with 100% professional care – the total scope of technical services to the customers in 24/7 work mode.
The local spare parts stock in Moscow has been moved to a new location in the city of Moscow, giving more space for the parts and componentry, as the volume of the parts almost doubled in 3 years.
All these actions were implemented step-by-step over a period of 3 years. Enabling MEYN – Moscow to reach a rapidly increased amount of new orders and sign a new greenfield 9.000 bph MEYN line project with “Ruskom” LLC, Tyumen region (Western Siberia). Giving the real proof of a market leader, who is fully dedicated to poultry processing.