The details of the investment plan were discussed at a recent meeting between the Russian deputy agriculture minister Andrei Volkov with the chairman of Charoen Pokpand, Sivashri Nutthakrita. It is expected that all of the projects will receive state support, while the Thai company will also look to establish the export of meat products to the Russian market from its foreign farms.
Andrei Volkov said: "The Thai company said it plans to develop a number of projects for the production of poultry meat and shrimp in Russia. They are also interested in the development of a pig breeding project in the Kaliningrad region. The two parties also discussed issues related to the launching of imports [to Russia] from countries where the manufacturing facilities of Charoen Pokpand Group are located."
According to experts, Charoen Pokpand believes there are growing prospects in the livestock market in Russia, especially with a rise in prices for meat products in the country, which would significantly increase the profitability of locally based production capacities. Since the beginning of 2014 the rise in prices for poultry meat has exceeded 50%, while for pork it has increased by up to 60%.
"The two sides exchanged views on prospects for the development of the agricultural sector in Russia," Volkov added. "The Thai side has expressed the desire to invest more than US$2 billion in various projects related to agriculture in the territory of the Russian Federation."
Charoen Pokpand previously announced a temporary freezing of investment in new foreign projects while it waited to clarify the economic policy of the new government of the kingdom of Thailand.
A source at the Russian Ministry of Agriculture said that a project of this scale was likely to receive government subsidies, and at the meeting not only direct investments, but also state support were discussed, as well as the possibility of launching joint ventures with local businesses.
"Currently it is premature to talk about the capacities of the project," said the source. "However, given the company’s experience in implementing similar projects it can safely be said that in the Kaliningrad Oblast a full-cycle production with feed mills and its own processing plant, will be opened. The total capacity would not be less than 40,000 - 50,000 tonnes of pork per year, which will ensure the best profit margins for the company."
Charoen Pokpand Group already owns several enterprises for the production of animal feed and pork in Moscow, Kaliningrad and Kaluga Oblast. According to the company’s own estimations the volume of investments in the Russian economy has so far amounted to approximately US$300 million.