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Russian meat industry bites into meatier profits

We’ve shone a spotlight on Russia’s meat industry before, which has been flying in the face of import sanctions and stepping up production hugely. And, most importantly, producers have turned greater output levels into higher profits.


Russian meat industry profits soar


According to data from the Russian Ministry of Agriculture, the profitability of the nation’s meat sector rose 2.2 times between 2013 to 2016.

In a report released on August 11th 2017, the Ministry said it had stepped up state support for the industry after sanctions were imposed. As a result, production gained a solid boost. Domestic meat production is close to meeting the demands of Russia’s population.

The focus now will be on exporting goods to markets such as the CIS countries or China, which have a big appetite for meat products of all sorts.

A spokesman for Agricultural Minister Alexander Tkachev, said: “In 2016, the ratio between profits and costs for domestic meat producers was 16.4%, which is 2.2 times more than in 2013, when the figure was only 7.3%.

“The level of profitability in the first quarter of 2017 exceeded last year’s figures and reached 16.9%. There is a possibility that these figures will further grow by the end of the current year.”

The spokesman added the end of meat imports from the EU and US in 2014 had been beneficial for Russian meat processors, as it boosted Russian purchases by volume from domestic companies.

That said, Russia is still a major importer of meat. A report from Flanders Investment & Trade, a Belgian trade bureau, Russian imports of pork, poultry, and beef totalled 849,600 tons.


Pork, poultry push profit projections


The pig meat segment has enjoyed the biggest rise in profits. Profitability was 19% in 2016. During the same year, poultry marked a 13-14% rise in profitability, with the domestic market commanding lower prices. 
Beef and turkey producers have also seen profits grow.

The Ministry of Agriculture is confident the meat industry will continue to enjoy its growth throughout the rest of 2017. In fact, they have claimed profits are meeting targets set by the government in the Russian state agricultural development programme. For reference, Russia is aiming at self-sufficiency in food production by 2020.

Ministry forecasts suggest the ratio between production costs and profit within the Russian farming and livestock producers should be 15% by 2018 and 16% in 2019.


More money means more cash to spend on production machinery


As Russia’s meat producers experience higher profits, it’s likely they will invest this cash back into their factories, farms and other relevant facilities.

Many meat sector members are already investing heavily in new sights. Rusagro, one of the Russia’s leading producers, is planning on expanding its Far East farms and production facilities to hold an annual capacity of 400,00 tons a year.

Miratorg, another huge supplier of meat products, has its eyes on overseas sales. By the end of 2017, the company hopes to bump up its export sales to $100 million.

For manufacturers of meat processing and packaging equipment and machinery, plus producers of animal rearing technologies, Russia’s meat industry is looking rather tempting right now.
 
More money points towards expansion, like the two major projects mentioned above, which means increased spending on relevant production technology.


Meet Russian meat technology buyers at Dairy & Meat Industry expo


Take advantage of the growing need for world class technologies at the Dairy & Meat Industry show in Moscow.

This exhibition is dedicated solely to the meat and dairy industries – and is your chance to connect with the sector’s key buyers while they are actively searching for new partners, products and solutions. 

We also have a brand new show dedicated to animal rearing: FarmingExpo – an event dedicated to solely focussed to poultry and livestock rearing technologies in Krasnodar, one of Russia’s key farming regions.
 
Interested in being at these shows? Contact our team today to learn more about each event and to book your stand.

 

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