With a total investment of RUB24 billion (US$400m), it will handle all stages in the production and processing of poultry meat. The facility will also receive state support, as it should play an important role in improving the country’s self-sufficiency in meat production.
"We are talking about the creation of a closed-cycle, large-scale poultry production plant, located in a rural area. The commissioning of the project is scheduled for 2017. It will involve the construction of some special facilities that will grow, slaughter and process chickens, as well as the production of broilers, eggs and animal feed," reported the press service of regional governor Andrew Bocharov.
The plant will be designed to handle a capacity of 100,000 tonnes (t) of poultry meat, 60 million eggs and 250,000t of feed production. Russian authorities estimated that the new complex should cover regional demand in poultry production– a crucial task for the government, as the meat market in southern Russia expanded last year with the annexing of the Crimea peninsula.
It is also expected that the new plant will handle turkey meat as well. The company, LLC Agro-industrial Company Volga, has disclosed plans to invest an additional RUB2.5bn (US$40m) in the construction of several facilities to produce turkey meat, with a capacity of 10,000t. It is due to be commissioned by mid-2015.
Bad time for new projects
Despite investments such as these, experts have cast doubts about the prospects for any large meat production project in Russia, as the country’s meat industry is entering a tough period, with a decreasing level of state support and great uncertainty surrounding prices and demand.
These factors have already forced investors to cancel a number of other projects of a similar scale. Most recently, Agro-Belogorie, one of the largest pig producers in the country, cancelled a project to construct eight pig farms in Belgorod Oblast.
"The fall in the [exchange rate of the] Russian ruble and the increase in the key rate of the Central Bank of Russia casts doubt over the feasibility of Agro Belogorie’s major agricultural holding investment projects, planned for 2015," said the company’s CEO Vladimir Zotov.
According to Zotov, the reason why the agricultural holding decided to "take a break" in its plans for the construction of the pig farms followed the drop in the exchange rate of the ruble, as foreign equipment became "unreasonably expensive".
According to industry observers, almost all new poultry and pig farms use some foreign equipment, so the problem of a rise in spend on construction may become common for the Russian industry and could hamper its development in the years ahead.