By 2018, Russia will nearly double its production of feed premixes, bringing its overall volume to almost 500,000 tons per year, as several large, recently commissioned plants reach full operation capacity. This projected figure exceeds today’s domestic demand, but major market participants set their hopes on export supplies and the intention of a large number of farms to improve feed conversion ratios with the use of more feed additives and premixes.
According to the Russian State Statistical Service (Rosstat), Russia produced 126,700 tons of feed premixes during the first six months of 2016, an increase of 1.9 percent over the previous year. Rosstat also indicates stable growth of premix production over several recent years, because in 2015 the country manufactured 254,000 tons of premixes, a 13 percent increase in a year-to-year comparison.
Growth of production performance on large part provided comfortable market conjuncture, as devaluation of the Russian ruble cut poultry and pig farmers’ ability to continue purchasing premixes in Europe and significantly raised the demand for domestic products.
This situation pushed up market prices for Russian premixes. As a result, their value rose to RUB17.1 billion (US$264 million) — 24 percent higher compared with the same period in 2015.
According to the report of the Russian consulting agency Tsenovik, in 2014 the overall Russian demand for premixes was 271,000 tons with nearly 18 percent (48,000 tons) attributed to imports. Of this figure, 150,000 tons of premixes were consumed by poultry farms, 75,000 tons by pig farms, and 46,000 tons by cattle-breeding companies.
Russian Agricultural Minister Alexandr Tkachev meets with Coudais Mkorma’s investors at the launch of the company’s new premix production line in Vladimir Oblast. He believes the Russian premixes market will reach 400,000 tons by 2020. | Government of Vladimir Oblast
Speaking at the opening of new production line of feed plant Coudais Mkorma, Russian Agricultural Minister Alexandr Tkachev suggested Russia’s demand for premixes had already reached 300,000 tons per year, adding that he expects this figure to rise 33 percent to 400,000 tons by 2020.
“This is a unique market, which should be occupied not by importers, but with our [domestic] premix manufacturers in order to provide farms with quality products of Russian origin,” Tkachev said. “The Ministry of Agriculture is ready to provide full-scale support to such investment projects.”
According to estimations of the Ministry of Agriculture, between 2016 and 2020, the actual growth in Russia’s meat and milk industry should be approximately 20 percent, so the average ratio of premixes will naturally increase.
Russia still lags behind in terms of premixes use, reported Russian agricultural analyst Eugene Gerden. According to official information, Russian farms contain 110 million heads of poultry, 22 million heads of pigs and 19 million heads of cattle, so simple estimations show Russian agricultural animals receive 40 to 60 percent less premixes than animals throughout Europe.
“Given the obvious intention of most agricultural holdings to become more efficient in the situation of enhancing competitive fight at the country’s livestock market, the forecasts on the rise of demand for feed premixes seems quite justified, since almost all companies today evaluate ways to improve feeding technologies,” Gerden said.
MegaMix recently launched one of the largest premix plants in Europe. | MegaMix
In mid-2016, two large projects with the overall capacity of 200,000 tons of premixes per year were commissioned; the first plant, MegaMix in Lipetsk Oblast, launched in May.
MegaMix CEO Sergei Vlasov explained the plant is one of the largest for the production of premixes in Europe. Its location was strategically placed within a 300 km radius from the company’s new facility, in an area that accounts for 40 percent of Russian meat, milk and egg producers.
“In addition, the decision to choose this production [location] has been largely influenced with the support we received from regional authorities. We have been offered very good infrastructure of Special Economical Zone,” Vlasov said.
He emphasized that, within the project, MegaMix has established Russia’s largest analytical laboratory in Volgograd, where the company owns another premix plant. This laboratory conducts constant monitoring of production at all stages of the production process.
MegaMix is working with hundreds of companies across Russia accounting for 6 million metric tons of compound feed production, Vlasov said.
Meanwhile, Coudais Mkorma, a joint Russian-Netherlands venture belonging to De Heus, has launched its second plant in Vladimir Oblast with the overall capacity of 63,000 tons, said the company’s CEO Maksim Sazonov.
In addition, other projects are under discussion, including those with foreign investors. In particular, representatives of DSM Nutritional Products expressed interest in the construction of a premix facility in Russia within the terms of a so-called Special Investment Contract.
This form of public-private cooperation involves significant tax breaks and some other benefits, but also provides obligation to bring huge investment into construction of the facility.
The registration of premixes, proposed by Technical Regulation of Eurasia Economy Union “On Feed and Feed Additives,” could become compulsory in 2017 and poses a challenge to the development of the Russian premix industry.
Russian veterinary watchdog Rosselhoznadzor and Veterinary Department of the Agricultural Ministry insist on introduction of compulsory registration, while market participants say this will significantly hurt business.
The registration process is very bureaucratic and requires payment of large fees, a lot of paperwork, and time-consuming terms. There are several companies in the country offering to become intermediates to work with work government bodies on this issue, requesting up to US$15,000 for registration of one feed additive within the period of three to six months.
“The absurdity of the state registration of premixes is obvious. These requirements are not possible to fulfill,” said Vladimir Manaenkov, executive director of Russian Union of Feed Producers. “I’ve been in discussion of this issue with European colleagues from FEFANA and when I tried to explain the situation to them, they could not understand what it was about. When they understood, they said that this is crazy.”
The registration issue is ongoing.