Russian meat giants increase production in 2017

Cherkizovo’s sales in its poultry division rose 4% to 522,500 tonnes (t) compared to 2016, while production of pork increased by 15% to 211,750t, the company said in a statement.

In the processed meat sector, the company sold 236,638t of products, up 9% compared to 2016, Cherkizovo added.

Miratorg increased pork production by 1.5% to 415,000t, poultry by 11% to 114,000t and beef by 32% to 82,000t in 2017 compared to 2016, the company revealed on its website.

Consolidation continues​

Production growth by leading Russian meat companies had been anticipated and formed part of a general consolidation trend in the industry, Sergey Yushin, chairman of the National Meat Association of Russia told GlobalMeatNews​.

Given this trend, the country’s top meat producers were likely see their share in the industry grow in the next few years, Yushin explained. Although the 2017 statistical data was still to be analysed, it was certain that the major producers had increased their share last year, he added.

Russia is only at the start of a consolidation trend, as the share of top meat companies in the industry is still far below the level of those in Western countries, said Yushin.

However, meat production in the non-industrial segment, including that in backyard farms, was likely to keep falling in the years ahead, he added.

Other top Russian meat companies have not yet revealed their performances in 2017, although RusAgro has already reported that its meat revenue has risen.

Falling prices​

Meanwhile, performance growth in the meat industry has led to increased competition and pressure on prices. According to Cherkizovo, the retail price of its poultry fell by 3%, while pork prices were down 10% in the fourth quarter of 2017 compared to the previous quarter.

Yushin claimed a further fall in prices was unlikely in 2018, as these had already reached relatively low levels. Meanwhile, for the pork category, prices would be supported by the absence of imports from Brazil and, in both the poultry and pig sectors, domestic prices should also receive support from rising exports, he said.

Efficiency improvements​

Both Cherkizovo and Miratorg reported efficiency improvements in 2017, with efforts taken to cut production costs. In its annual report Cherkizovo said that improved genetics and animal welfare had contributed to a rise in pork production.

However Cherkizovo has not yet provided further details in response to a request from GlobalMeatNews​.

Miratorg press-secretary Dmitry Sergeev told GlobalMeatNews the company had increased the number of piglets per sow by 4.5% and had improved feed conversion rates by 2%. The average daily weight gain on fattening pigs was 750 grams, he said.

According to Yushin, efficiency improvements would mitigate the negative effect of falling prices for Russia’s leading meat companies and would fuel the consolidation trend in the industry, as less efficient companies in the non-industrial sector were already operating outside the bounds of profitability.