The price of poultry in the Russian market has recently hit its lowest level ever, which has hit the profitability of the country's poultry producers, according to market participants.

Problems have been exacerbated by the Russian government's recent intervention in Ukraine, which has resulted in the country's currency falling by about 12%, as well as a rise in feed costs. Russian producers are importing some compound feed ingredients from abroad and paying in dollars, while selling poultry on the domestic market for roubles.

"Because of the low purchase price for domestic poultry, producers have been suffering losses for about three months now," claimed Mikhail Yakushev, chief executive officer of Belgrankorm Group, the fifth-largest poultry producer in Russia, speaking at a meeting of industry participants in Belgorod.

He noted that, in the first quarter of last year, the price for poultry amounted to about RUB71 (US$2) per kilogramme (kg) but that it had now dropped to RUB69 (US$1.97) per kg. He also revealed that poultry producers had not received the state support promised to them, probably due to the tough economic situation in the country.

The Russian poultry industry's profit margin is currently around 3.5%, said Vladimir Fisinin, head of the Russian Union of Poultry Producers (RUPP). This is one of the lowest levels of the past 15 years. According to RUPP's recent research, poultry producers' problems have coincided with a rise in the price of grain and feed, which has jumped over the past year.

Fisinin added that the first reason for the low profitability is the high price of feed and grain, which came about due to a severe drought of 2011 to 2012. Also, the industry has a lot of debt that amounts to about RUB5 billion (US$150 million) in total. This has led to a sharp deterioration in the financial condition of poultry farms in general.

Meanwhile, RUPP noted that, over the past few years, Russia's poultry industry has been developing rapidly and achieving good results, so that it now needs some "breathing space".

Fisinin also said Russia's poultry industry is a dynamic, knowledge-based agro-industrial sector, which provides 37% of animal protein in the diets of Russian citizens, via the consumption of poultry and eggs, adding that the volume of poultry production in the country had risen around six-fold.