Russia sees foreign investments in new projects shrinking

In 2017, for the first time ever, China became the biggest investor in the Russian economy, EY revealed. In previous years, the biggest investors had been either the US or Germany. China boosted its investment into Russia by 3.5 times in 2017, compared to the previous year, EY estimated, However, it did not provide specific data to back up this research.

Similar information had been released earlier by the Russian Central Bank. Over the first three quarters of 2017, foreign investment in Russian agriculture amounted to $235 million (m), a drop of $95m or 30% on the same comparable period in the previous year, it said.

Foreign investment in Russian agriculture has dropped nearly threefold since its peak of around $900m in 2013, Central Bank estimated. The strongest slump was recorded in 2014 – the year when the first international sanctions against Russia were implemented. In that year, foreign investment dropped by more than 30% or $300m, the Central Bank revealed.

International food companies are still interested in starting new projects in Russia, but the attractiveness of investing is hampered somewhat by geopolitical risks, Daria Snitko, an analyst with Russia’s Gazprombank, told local media Agroinvestor​. Several major foreign companies are continuing to strengthen their positions in Russia, including Louis Dreyfus, Cargill, CP Foods and NCH Capital, she added.

As for Russia’s meat industry, the largest foreign investors are Tönnies and CP Foods, according to official information released by Russia’s Ministry of Agriculture. Both companies are involved in expansion projects, with Tönnies earlier outlining plans to build several pig farms in Voronezh Oblast and a major meat processing plant in Belgorod Oblast. Meanwhile, CP Foods wants to build a major pig farm in Moscow Oblast and, according to some media reports, has sought to acquire meat processing facilities in the European area of Russia.

Foreign investment in Russia’s meat industry has reduced substantially, although this trend is primarily associated with the saturation seen on the domestic meat market, Sergey Yushin, chairman of Russia’s National Meat Association told GlobalMeatNews​.

“In the early 2000s, Western investors launched a number of foreign projects in the Russian meat industry. Several US investors pumped money into the Russian poultry industry, while numerous European companies – from Denmark, Norway, Germany and elsewhere – were investing in pig farming,” said Yushin.

From 2010 onwards, Russian saw an influx of Asian investors into its pig industry, including from Thailand, Vietnam and China, added Yushin.  

“Similar investment activity has not been seen in recent years, but this was not due to any problem associated with the attractiveness of investing in Russia’s meat industry,” Yushin claimed.

Meanwhile, the National Meat Association believes the flow of investment into Russia from overseas could start growing again in future, given the Russian meat industry’s strong export potential, Yushin stressed.