The Russian poultry sector has been hit by a wave of bankruptcies, affecting even the largest producers in the country.
In September, 100,000 head of chicken starved to death on several large poultry farms in the Kirov region of the country – Kirovo-Chepetsk, Orlovksay, Falenskay and Urzhumskay – after debt-ridden farmers were left unable to afford feed or electricity.
Last week two other large poultry farms in the Arkhangelsk region, Kotlas Poultry and Nyandoma-Broiler, also found themselves on the verge of bankruptcy, due to large debts. Seven smaller farms farms in this region have filed for bankruptcy, with similar problems observed among small and medium poultry producers throughout the country.
However, the biggest shock to the industry was the possible bankruptcy of Optifood, one of the largest poultry producers in Russia, which produced about 90,000 tonnes (t) of poultry in 2011, and recently doubled its production capacity with the commissioning of a new complex to produce 100,000 of broiler meat annually. Currently the work at all its production facilities has stopped, due to the company’s large debts on loans and salary.
According to the press service of the Arbitration Court of the Rostov region, a monitoring procedure – the first phase of the bankruptcy process – has been introduced at Optifood. The company has the total debt of about RUB9.5bn (US$317m).
Russian experts believe that what is currently happening in the Russian poultry market is just the beginning.
“It seems the industry is experiencing some kind of crisis. At the core of this process is the fact that the price of feed for poultry has nearly doubled across the country since August. If some poultry producers already had problems or financial obstacles, these problems worsened after the jump in prices, and this finally resulted in this wave of bankruptcy,” Russian agricultural analyst Eugene Gehrden told Globalmeatnews.com.
“Obviously, this trend will continue for some time and allow the largest complex to increase its share in the market. At Optifood, the problem is mostly related to errors in risk management, although these problems have been aggravated by the rise in feed prices.”