Moscow-based Cherkizovo Group said it was seeking for new broiler export markets in Africa, the Middle East and South East Asia, in a drive which would help reboot Russia’s emergence as a poultry shipper, after setbacks to bird flu.
Cherkizovo – revealing it had returned to top-rank among Russian meat producers last year, increasing sales by 9% year-on-year to 903,000 tonnes – said it had now added Angola to its export markets, after kicking off shipments to Egypt and Tanzania in August.
Sergei Mikhailov termed progress in “building our export portfolio” amongst the group’s “landmark” achievements last year.
And the group said it was investigating further expanding its export buyers, “pursuing ways to enter new markets in the Middle East, South East Asia and Africa”.
The move comes amid a significant shift in Russia’s fortunes in poultry, from being one of the world’s top importers a decade ago, with purchases of 1.2m tonnes a year, to coming within range of a long-held government target of self sufficiency.
The US Department of Agriculture has forecast Russia exporting 150,000 tonnes of poultry meat this year, up from 7,000 tonnes at the start of the year, while imports have fallen to 220,000 tonnes.
Russia’s exports have only been spurred by the embargo on agricultural commodity imports from some Western countries, in retaliation for trade barriers imposed by the likes of the European Union and US over Russia’s involvement in Ukraine unrest.
The US had historically been the largest exporter of chicken to the US, a position now filled by Belarus, with Brazil also supplying significant volumes.
‘New strategic goal’
Indeed, with domestic demand for broiler meat “unlikely to increase in 2017, industry has identified the new strategic goal – to open new markets,” USDA staff in Moscow said in a report last week.
“Major leading producers continue to expand production as they target new markets,” with other former Soviet Union countries in exporters’ sights, besides Asian and Middle Eastern buyers.
“For the first time in Russia’s modern history, the Russian government has begun to support outbound export missions to the potential markets,” the briefing said.
However, potential for shipments has been undermined for now by the strength of the rouble, which has undermined the competitiveness of the country’s shipments, besides curbs imposed on Russian poultry exports by the likes of Kazakhstan and Hong Kong over bird flu.
The USDA bureau had initially forecast Russia’s broiler meat exports hitting 185,000 tonnes this year.
Cherkizovo’s comments came as the group reported a 68% drop to 1.92bn roubles in earnings for last year, despite a rise of 7.0% to 82.4bn in revenues.
The rise reflected higher volume sales rather than price increases, with pork values dropping by 10% year on year, while costs were swollen by rouble depreciation early last year.
“A significant share of expenses is pegged to foreign currency,” the company said, flagging in particular “costs for feed components, hatching eggs and veterinary supplies” in its poultry division.
The group forecast a “soft” performance in the first three months of 2017, reflecting a historical trend, with margins in the January-to-March period often “the lowest in the year, as a result of the typical post-holiday drop in consumer spending and seasonally low meat consumption at the beginning of the year”.
‘Consumer spending to rise’
However, it was more sanguine on domestic market conditions further ahead, saying that “following signs that the macroeconomic situation in Russia is starting to recover, GDP is expected to return to moderate growth during 2017.
“Consumer spending is forecast to rise as inflation is forecast to be at a record low level.”
Cherkizovo shares stood 1.5% higher at 861 roubles in afternoon deals in Moscow.
(Source – http://www.agrimoney.com/news/cherkizovo-looks-abroad-driving-russian-switch-to-poultry-exports–10493.html)