Russian meat industry sees slowdown in growth
The growth of meat production in Russia will slow dramatically in 2013, said the report, which revealed that production of all types of meat in Russia rose 6.1% year-on-year in 2012 to 11.6 million tonnes.
The 2012 increase was mainly driven by strong growth in poultry production, where output rose by 12% last year. Russian experts have attributed the slowdown in this year’s forecast to the country’s accession to the World Trade Organization (WTO), which forced producers to spend money on upgrading their production facilities.
“The need to harmonise Russian phytosanitary requirements with international standards has already begun and, in the near future, it will mean that companies in the meat sector will have to spend money on product safety and quality control, which could also significantly improve their competitiveness,” said Albert Davleyev, head of the Russian department for the USA Poultry & Egg Export Council (USAPEEC).
Meanwhile, a source in Russia’s Ministry of Agriculture said: “Russia’s poultry industry will not grow by more than 4% this year. The market is saturated and companies essentially have no other place to grow.They need to develop export opportunities, but this is not easy, so companies don’t have ambitious plans to boost production levels.”
Bankruptcies
Experts also pointed out that a forecast decrease in the profitability of the meat sector will be followed by a significant increase in bankruptcies in the industry.
“2013 will be a very difficult year for many meat companies. We expect a significant increase in bankruptcies in the poultry and pig industries, which will be followed by mergers and acquisitions and a slowdown in growth rates in both sectors. There has been a long and painful decline in profitability and a reduction in market prices for meat products to levels that are significantly below the prices fixed in the business plans of companies,” said Davleyev.
“The growth in credit will exacerbate a difficult market situation, which has occurred due to increased feed costs. Only the strongest companies will survive – those who really learn to count every penny and invest it in constant expansion and efficiency improvements. As a result, clear leaders in each industry will be created. The survivors of this year will certainly strengthen their leadership position in the future.”
