Russian agri-firm invests in export plans for China
According to the company’s chief executive Maksim Basov the company has seen some benefits from the Russian restrictions on food imports and has no significant debt burden, allowing it to consider large expansion plans. At the first stage of the project’s implementation, the company intends to open several pork farms in the Primorsk Krai region with total capacity of 70,000 tonnes of pork, at a cost of RUB13bn (US$350m).
"The far east is the best foothold for entering the Chinese market. We can go to north-east China from the Primorsky Krai, while north-west China can be covered from the Urals and the Volga area. Construction is scheduled to start at the beginning of next year. In the future, we can increase production to up to 1 million tonnes, if it [the project] opens the Chinese market for us. But these are medium and long-term plans," said Basov.
According to him, the new pig farm at Primorsk Krai will open in 2018. It will be a full-cycle complex with facilities for growing feed crops, as well as a feed mill and slaughterhouse. Also, the company wants to invest in increasing production at its assets in the central part of the country – in particular in Tambov Oblast. However, it did not disclose the nature of the investment.
Meanwhile, the second "high priority" market, according to the company’s management, is Iran.
"We are creating shipping facilities on the Volga River, and it is possible that, in future, we will create similar facilities in the north of Iran, in order to become a low-cost product supplier. Iran is our neighbour across the Caspian Sea and barges only take three days to get there [from Russia to Iran]," according to Basov.
Earlier, president of the Russian Meat Union Musheg Mamikonyan called on Russian producers to actively develop export opportunities. In his opinion the most promising destinations for the country’s meat are the Middle East, Africa, the Persian Gulf and China, while the most promising type of meat for export is poultry.
RusAgro intends to claim state support to help fund its new projects. Basov said: "The current geopolitical situation indirectly affects our business in a positive way – thanks to a weak ruble and the government’s willingness to support new projects on import substitution."
Experts say that RusAgro’s projects have a good chance of attracting state support as, after the implementation of food restrictions at the beginning of August, Russian Prime Minister Dmitry Medvedev announced plans for the country’s government to allocate ten of billions of rubles in additional support to Russian meat producers.
It is assumed that support priority will be given to the larger meat producers, which can implement the highest-capacity projects.
