With this move, Auchan would become the first retailer in Russia to build its own meat-processing plant. The project, worth RUB2.5bn (US$40m), would have a capacity of 40,000 tonnes (t) and would help the company guarantee the quality of meat products on its shelves, claimed the firm.
According to Auchan’s director of external communications in Russia, Maria Kurnosov, the company is already attracting farmers to sign contracts for long-term cooperation in Tambov Oblast, where the plant will be located. Alexey Filin, head of the agriculture ministry’s department of livestock development in Tembov Oblast, also revealed the plant would produce 23,000t of beef, 15,000t of pork and 2,000t of mutton.
Construction is scheduled to begin in September, and the facility is expected to be commissioned in the fourth quarter of 2016. Acting first vice-governor of Tambov Oblast Aleksandr Dubovik also confirmed that the start of the project was scheduled for early September, adding that a preliminary agreement on the project had been signed in July.
“Auchan has involved [French] company Cia Genes Diffusion, which will help farmers with breeding and genetics technology. Together, they have already conducted veterinary audits of several farms in Tambov Oblast,” said Filin. Under special agreement with the farmers, Auchan would finance the last 100 days of fattening the animals, when cattle should be fed with a concentrated grain mixture to improve the meat’s quality.
Contracts with local firms would cover a period of five years, and would involve companies from Tambov Oblast, and potentially Lipetsk and Voronezh Oblasts.
Possible tightening of legislation
Auchan’s decision follows a major scandal, where Russian veterinary body Rosselkhoznadzor identified dangerous microorganisms, including listeria and E.coli, in 37 out of 45 samples taken from the company’s stores. Veterinary services also claimed that Auchan sold pork products to customers that contained the DNA of horse, beef and poultry, and had been manipulating the shelf-life of products via labelling.
The case may have important consequences for the market, as the Russian Government is considering a Bill to prohibit retailers from manufacturing meat products. According to Victor Zvagelsky, deputy head of the State Duma Committee on Economic Policy and Development, retailers should give third parties the right to manufacture meat products under their brands.
“Everyone has to mind their own business. Retailers have to sell, rather than produce meat. If they want to have the products under their own label, than they should attract other producers to do that,” he stated. “On their own they will not produce anything good, especially if it concerns perishable products.”
According to Zvagelsky, Russia’s Parliament is already considering tightening legislation on meat fraud and violations of the veterinary norms, which allow fines for such practices and a temporary stoppage of retail operations if the violation is found a second time. In the opinion of the Russian authorities, these measures should stop the flow of low-quality and counterfeit products on the market.