Ural factor: the poultry industry is forced to reduce meat production

In the Urals, where the country's largest poultry farms are located, a drop in poultry meat production is recorded: according to Sverdlovskstat, in the Sverdlovsk region, 53.5 thousand tons of poultry meat were produced in eight months of 2021, which is 14% less than the same period last year, in Kurgan — 26.9 thousand tons, which is 5% less. In the Chelyabinsk region, 178 thousand tons of poultry meat was produced in January-August, which is 12.3% lower than the same period last year.

In the Southern Urals, Ravis - Sosnovskaya Poultry Farm (-7.2 thousand tons) and Healthy Farm (-9.6 thousand tons) show a serious lag behind last year's pace. At the end of 2021, it will not be possible to bring production into plus for poultry meat in the region, plans to end the year at a level of 90% compared to last year.

“Among the reasons for the reduction in volumes is avian influenza, the foci of which were recorded on the territory of the Chelyabinsk region. For other regions and countries (Kazakhstan), this becomes a reason to introduce temporary restrictions on the supply of poultry products, which lead to a reduction in sales of local poultry farms,” said the Ministry of Agriculture of the Chelyabinsk Region.

Representatives of the Ural poultry industry consider bird flu not the main reason for the drop in volumes, noting the increase in feed costs: due to drought, grain yields have decreased this year. “The drought has seriously affected grain yields, it will not be possible to provide the poultry farm in the same volumes at the expense of its own feed base this year, while we are fixing an increase in prices for feed, bioadditives, meal,” says Andrey Kosilov, general director of Ravis - Sosnovskaya Poultry Farm. Representatives of the Sverdlovskaya poultry farm told local media that feed suppliers in the Urals refuse to supply grain under old contracts, as they observe positive price dynamics and regularly update the terms of transactions.

 “In the Ural poultry industry, the increase in production costs during the year since October 2020 has reached 30%, while the all-Russian figure is 25%. It is due to the scenario of the industry development over the past decades. The main problem of poultry farms in the Sverdlovsk region is that they are still on the balance sheet of the regional government, access for private investors is very limited,” commented Albert Davleev, President of Agrifood Strategies.

According to him, a quarter of a century ago, the Reftinskaya poultry farm was the industry leader with a potential production volume of about 50 thousand tons of poultry meat per year in slaughter weight, but today the enterprise, being an asset of the region, is mired in debt. The total debt on loans and borrowings exceeded 1 billion rubles, the auction for the sale of a loss-making asset was once again declared invalid due to the absence of applicants. This is the logical end of the initially wrong economic development model, the expert believes.

In Russia, enterprises with state participation in the poultry industry were bought out by private investors 10 years ago or repurposed for another type of business, but in the Sverdlovsk region the economic model has not changed since Soviet times. At the same time, it cannot be said that there was no interest from private investors: multiple proposals to invest in previously unprofitable assets of the region were blocked, and pressure from local authorities on the environmental agenda finally saved the region from those who wanted to invest. “The uncompromising nature of the authorities in relation to private business in the poultry industry for so many years is surprising,” says Albert Davleev.

In his opinion, the situation in the Sverdlovsk region is developing by inertia and in accordance with the approach that was established 25 years ago. Until the policy of local authorities towards private investors changes, poultry farms in the Sverdlovsk region will continue to operate at a loss.

In the Chelyabinsk, Kurgan regions and the Perm region, difficulties with the sale of products are explained by the fact that enterprises enter the area of ​​distribution of low pathogenic avian influenza, which is a sluggish disease that reduces the productivity and safety of broilers, leads to an increase in the cost of veterinary care, difficulties with disposal, guarantees a high percentage culling. The newly detected outbreaks of highly pathogenic avian influenza in the Chelyabinsk region require even greater costs for the implementation of anti-epizootic measures.

 “We made proposals to the regional government to strengthen state support in poultry farming by paying subsidies to increase the cost of feed and to modernize production. Poultry farms need to upgrade their equipment. Poultry farms are doing this as part of their investment programs, but in recent years it has become more difficult to do this due to rising costs, ”said officials from the Ministry of Agriculture of the Chelyabinsk Region.

Earlier, poultry meat producers in the Urals sent notices to retailers about a rise in product prices by at least 10% by the end of 2021. Now the issue of approving a fixed price for poultry meat is under discussion. It can be established by signing agreements at the federal level between producers and retailers, by analogy with the prices for sunflower oil and sugar.