EU meat companies plan major Russian investment

The huge Russian market is tempting meat processors to invest significantly in the country

Global meat players including Germany’s Tönnies and Denmark’s Idavang are planning to invest heavily in major Russian projects. 

Government officials claim the scale of Russia’s 144 million population could be overcoming reluctance from overseas companies to develop operations in Russia because of its economic recession and sanctions.

A spokesperson for German meat processor Tönnies told GlobalMeatNews about plans to invest up to RUB5.4 billion (US$95m), building the first stage of a slaughterhouse complex in the Belgorod region (Oblast) in southern Russia.

According to the company’s press service, the new slaughterhouse will have the capacity to process up to 728,000 head of pigs a year, making it one of the largest abattoirs in Russia.

Set up to supply Russia

The spokesman for Tönnies Fleisch Russia said: “Construction work will start in the coming months. The enterprise will include a slaughter line with a capacity of 350 head per hour, as well as a line for cutting and packing products.” He said further upcoming investment was planned so that, by 2020, the plant’s capacity would reach 1.04m head per year, and the company has longer term plans to increase this to 2.08m head. The company has already purchased a plot of 30 hectares, in the Alekseevsky district of Belgorod.

According to the company, up to 70% of the plant’s future production will be sold in Russia, with the rest exported, probably to European Union states.

This announcement follows the release of Tönnies Fleisch plans last September (2016) to build 20 pig-breeding complexes throughout Russia and a meat-packing plant in the Voronezh region, costing RUB35bn (US$618m).

Russian economic growth driving capital investment
 
It also follows the announcement of plans by Denmark’s Idavang, another leading EU meat producer, to increase its Russian operations. The company already operates two pig farms in Russia – located in the St Petersburg and Pskov (near Estonia) regions.

The company’s Russian press service told GlobalMeatNews that it wanted to increase the annual output capacity of its Russian pig farms by 98,000 units by the end of this year, up from the current level of 300,000 pigs. This would involve building a new complex in the St Petersburg region.

According to analysts at Russia’s Ministry of Agriculture, foreign investors in Russia are attracted by the scale of the country’s market and its prospects for further growth, now Russia’s economy is growing again (the World Bank is predicting 1.5% GDP growth for 2017). Ministry statistics suggest that Russia’s pork production has been booming in the medium term; in the past 10 years, industrial pigmeat production has increased sevenfold, with general per capita pigmeat consumption doubling over these years.

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