Speculation rife over Russian poultry deal

By Vladislav Vorotnikov

- Last updated on GMT

Speculation rife over poultry deal

Related tags: Poultry

The Russian Government is considering the merging one of the biggest turkey producers Eurodon and major broiler meat producer Belaya Ptitsa.

A letter filed to the Russian Agricultural Ministry stated there is a “real and obvious opportunity”​ to create an export cluster with the capacity of up to 200,000 tonnes (t) of poultry meat per year between Eurodon and Belaya Ptitsa..

Vasily Golubev, governor of the Rostov Oblast, the region where both companies are located, said that as of today, the production at both companies is stopped.

Meanwhile, according to Golubev, there is a company that is ready to revive production. This is a company with some experience in the area of poultry production and it is the biggest poultry exporter in Russia.

The project is supported by the Russian Agricultural Minister Dmitry Patrushev, who has already scheduled the meeting in the Ministry to discuss the proposal. The authorities plan to provide a state aid so that the production at both companies could be restored until the end of the year.

Both Eurodon and Belaya Ptitsa stopped operation due to the financial diffuculties on some extent assotiated with the avian influenza (AI) outbreaks that affected both companies during the past several years.

Although Russian authorities so far have not revealed what company is interested in creating the export cluster, several local news outlets reported that it was GAP Resource, the second biggest poultry producer in the country.

In February 2019, the company said that it was interested in renting some capacities of Belaya Ptitsa, while a month earlier there were some reports that GAP Resource may acquire Eurodon.

GAP Resource is one of the leaders of the Russian poultry market and has all means to develop poultry exports, Konstantin Korneev, director of the consulting agency Rinkon Management told local news media Agroinvestor. On the other hand, the very definition “export cluster” is not fully clear, since export always is only one sales direction, Korneev added.

It is most likely that the project is about of creating a new production that would match international requirements in terms of biological safety and quality, and so would be able to establish export supplies as the result, Korneev said.

GAP Resource may be interested in exporting poutry via the Black Sea ports to the Middle East and North Africa, a source in the Russian meat industry who wished to stay anonymous told GlobalMeatNews. In this case, the logistics costs would be feasible and GAP Resource could have some synergy with its own assets located in the Russian south.

Nevertheless, the investment cost of the project could be too big, and scare away investors, especially because the domestic poultry market in Russia is close to saturation and it is rather dangerous to begin new big projects now, since the price conjuncture is far from perfect, the source added. 

Related topics: Financial, Russia, Poultry

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