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9 months ago 374

Poultry breeding: from import substitution to products export

Russia is the world’s fourth-largest producer of poultry meat. In Russia the poultry meat production increment rate is six-fold higher than the world average. In 2015 the poultry meat production showed the highest increment of 8.1%.

What changes has the poultry breeding demonstrated in Russia during the last 15 years? From 1999, when poultry meat production comprised 680,000 tonnes, it has grown to 4.15 million tonnes slaughter weight in 2015. To make a long story short, if we assume that all this poultry consisted of hens of one size (1,500 g on average), let alone turkeys, ducks, geese and guinea fowl, in 1999 our country produced 450 million carcasses, whereas this number grew to 1.7 billion carcasses in 2009 and will be as high as 3 billion in 2016!

In Russia lately the consumption rate of basic kinds of meat has considerably exceeded the worldwide trend. During 14 last years consumption in the world increased by 38%, whereas in Russia it grew by 73%. Note that in 2005 about 59 kg of meat was consumed per capita in Russia (including by-products), and in 2014 this value achieved 75 kg. This is higher than the average world consumption (50 kg per capita), however it is less than an annual per capita consumption in developed countries (80-120 kg per capita). It should be noted that import products achieve about 10% of consumption in Russia.

In 2014 the highest growth of per capita poultry meat consumption - equal to 52.1, 43.6 and 31.8 kg - was recorded, respectively, in the USA, Argentina and Mexico. On average about 16.5 kg is consumed worldwide per capita.

Import behavior of the basic meat products including by-products is negative. In 2014 import of all kinds of meat to Russia dropped by 30% (to 1.68 mln tonnes), and in 2015 the decrease became even more evident and achieved 34% (to 1.11 mln tonnes). Last year the poultry meat import reduced from 262,000 to 220,000 tonnes. In 2016 it will supposedly drop to the level of 150,000 tonnes.

International experts still estimate the potential of the poultry meat production in Russia as high. The necessity of entering the foreign markets is viewed as specifically critical for Russian producers.

According to Rabobank forecast, the demand for animal products will keep on growing exceeding 45% within a period of 2010-2030. Note that in 2030 the demand for poultry, pork and beef will, respectively, grow by 60%, 42% and 25% to compare with 2010.

The world meat and poultry market demonstrates stable growth since 1995 to 2014.

Besides, within the same period an annual increment rate of pork, beef and poultry export achieved, respectively, 2.5%, 5% and 5.9%, whereas the world meat sales grew by nearly 25 mln tonnes. According to Rabobank data, the USA occupies 25%, Brazil 23%, EU 13%, India and Canada 6% each, and Russia and Nicaragua 0.2% each of the world poultry export market.

In view of further increase of the worldwide meat demand and population growth, this trend will last. The world meat sales will grow from $100 billion in 2014 to $200 billion by 2030. Hence, Russian producers have to enter foreign markets and to use any chance to have a piece of this sweet pie.

It is noteworthy that in the 2010-2020 period about 70% of growth of the demand for eggs and basic kinds of meat will be delivered by Asian countries, such as China. According to Rabobank, the growth of poultry meat production will occur worldwide, whereas pork production will increase in the USA, Russia and Mexico. Total world pork and poultry meat production will grow by 0.4% and 1.1%, and beef production will drop by 1.1%.

Poultry meat net exporters are Brazil, the USA, Thailand and EU. Net importers are the Middle East countries, China, Russia, CIS countries, Mexico, South Africa and Canada. Just Middle East and Northern Africa import 2.4 mln tonnes of poultry meat annually.

Unpromising news for producers: there are good reasons to believe that a chicken will still have the same number of legs, wings and fillets in the nearest decades, even if alternative breading methods are applied! For sure, their weight percentage in a chicken carcass can be modified. All these parts should be profitably sold to anybody! A new stage of industry development begins.

Consumer behavior may be predicted, however it is very difficult to say for sure what the customer will need tomorrow; hence the problems will never end, and it is the task of business to settle them in a competitive battle. The producers are to investigate new trends and consumer behavior in detail, to review international, national and regional statistics, and to respond to any market changes promptly. Otherwise, they are doomed to continuous assortment disbalance (chilled or frozen, carcass or dressed, target weight, dressing, and packing, etc.).

In the years immediately ahead, the existing increment rate in Russia will result in the overproduction of fillets; this will not permit selling them at a higher price to ensure sales of other parts (legs) at prices that will be 15-20% below the current ones.

Hence, export sales are the key target and condition of the production further growth. Otherwise, an overproduction crisis of individual parts of chicken carcasses is inevitable.

Our first attempt to start this discussion took place back in 2009 at a meeting with Vladimir Putin in the Belgorod Region. It received the encouragement from the Premier of that time. Export issues were actually discussed at any meeting of the highest level. The country leaders issued eight ordinances during five years. In 2015 within the frames of Rosselkhoznadzor activities related to promotion of animal products export, audits were fulfilled by the authorities of the following countries: Azerbaijan, Vietnam, China, the UAE, and Iran.

In 2015 the export of all kinds of meat increased by 10% from 2014. However, the amounts under consideration are extremely low: about 85,000 tonnes.

To enter international markets our standards have to be brought to maximum compliance with the international requirements. To integrate into world community the Russian Government endeavors best efforts to harmonize veterinarian and sanitary regulations with the requirements of international agreements.

Economists are eager to advise the governments of the developing countries: have a look at EU and the USA, and follow their practice: do not introduce trade barriers, do not limit capital movements, and open the boarders. Russia followed these recommendations: acceded to the WTO and removed trade barriers. However, it has yet to receive benefits. Russia was late. If Russia had entered the WTO twenty years ago, the country could have skimmed the cream off globalization; but today it has just losses and zero profits. According to Satyajit Das, a well-known international economist, countries close their markets little by little, and trade barriers grow from year to year. In the nearest future the globalism will become a reminiscence.

Globalization saw its height in the late XX and early XXI centuries. Activization of international trade and free capital movement contributed to unprecedented growth and prosperity. However, according to a precise observation of the UK statesman Lord Palmerston, nations have no permanent friends and allies, they only have permanent interests. After the financial crisis these interests changed drastically. Nowadays the most important target is self-sufficiency and minimization of external markets dependence.

The long-range markets of the Russian poultry meat export are: China, Middle East, Saudi Arabia and Northern Africa. Final meat products can be supplied to EU countries. Hence, the poultry plants of Prioskolye, Bryansky Broiler, Krasnobor Company, and Perepelkin & Zhoyev are entitled to export poultry meat to the European market.

Can Russia produce twice as much meat? Yes, it can! Huge land and water resources, climate, competitive labor costs, investment resources, gained experience of challenging projects implementation, as well as customs and tariff regulations of the market, and governmental support are the key contributory factors to this process.

Can Russia increase meat production by 100% or at least by 50%? No, it cannot achieve this without export, and the reasons are as follows: limited import-substitution capabilities (no more than 500,000 tonnes), limited consumption growth potential (no more than 1 mln tonnes provided the economy grows), risks of overproduction and assortment disbalance, market pricing below costs.

To be arranged separately

The first priority tasks of export potential development (in terms of regulatory and legislative governing):

  • National and regional programs of prevention and elimination of especially dangerous animal diseases and anthropozoonoses shall be developed.
  • Federal financing of the governmental federal and regional monitoring of epizootic situation and safe animal products shall be provided for.
  • Regulations for regional zoning and compartmentalization shall be provided for.
  • Rosselkhoznadzor shall be authorized to audit producers and to keep a single register.
  • Procedures of creation of a federal register of facilities reporting to the State Veterinarian Service shall be developed.
  • Veterinarian regulations shall be harmonized: sanitary norms and rules.
 
 
Author: Sergey Yushin,
Head of Executive Committee, National Meat Association

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Свежие новости «с полей», актуальная аналитика и публикации ведущих экспертов дают уникальную возможность взглянуть на отрасль, как на единое целое. Журналы Издательского Дома СФЕРА предоставляют важнейшую бизнес-информацию руководителям всех значимых пищевых производств России и по праву считаются одними из наиболее авторитетных печатных изданий в пищевой промышленности.

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