Ultimately, this project will be the largest of its kind in terms of beef production capacity in the post-Soviet Union era.
Miratorg’s latest project will cover the full cycle of beef production, from breeding 110,000 head of Aberdeen Angus cattle to a high-tech plant for slaughter and processing. It will be officially launched in September 2014. Total investment in the project now amounts to RUB27bn (US$757m).
"Government subsidy funds will be targeted at production development: training employees in the best international practices in working with beef cattle; expanding and strengthening private veterinary services; and attracting advanced technology to improve the project’s efficiency. Money will be redistributed in the region by creating new jobs and improving living standards, especially in rural areas," said Dmitry Moiseenko, general director of Miratorg Bryansk.
As part of this latest project Miratorg has built 33 farms to keep 250,000 animals. The company has already launched large feedlots to simultaneously fatten up to 47,500 head of cattle. With such a large capacity, Miratorg is aiming to cover 20% of Russia’s beef market demand, while a percentage of production will be exported.
"In terms of exports, beef has much more potential than pork or poultry, because the global area under pasture is decreasing," said Viktor Linnik, head of Miratorg. "We believe the barriers we face for high-quality beef exports from this project will be minimal.
"Also, in terms of capital expenditure, investment in beef is lower than poultry and pork. The investment is constrained only by the fact that the minimum period to obtain marketable products is 2.5 to three years, as well as a lack of infrastructure – modern farms, feedlots and meat processing complexes. It creates a high ‘input threshold’ for investors," he added.
Also in 2015, the company plans to build a plant for further processing of beef, also in Bryansk Oblast. As part of this, it will open a shop specialising in processing cattle hides to make car interiors for BMW, Audi and Mercedes. The cost of this production site will be €30m and production capacity will amount to 400,000 skins a year. According to the company, this will further improve the profitability of the overall project.
Industry observers believe that, by 2016, Russian consumers will already be feeling some saturation in the beef market, due to the Miratorg project and, thanks to increased supplies, the price of beef will start to decline. In Russia, the high price of beef seriously hampers levels of demand.