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July 14, 2016
 
Future landscape of Russia's feed industry to be shaped by import replacement and anti-GMO initiatives
     
By Vladislav VOROTNIKOV
 
An eFeedLink Exclusive
 
    
In the first five months of 2016, Russia produced 10.7 million tonnes of compound feed, an increase of 7.4% year-on-year, according to official statistics. In the same period, Russian veterinary body Rosselhoznadzor restricted import of compound feed and additives from the European Union (EU), and most recently in June, from Belarus.
 
The restrictions came after the detection of the presence of genetically modified organisms (GMO) in imports, and in the opinion of market players, they indicate the new attitude of Russian veterinary bodies. With new equipment for the testing of imports destined for animal feeding, veterinary bodies target to launch a new anti-GMO campaign.
 
Russia's compound feed market has a rather low dependence on imports. Prior to the EU trade sanctions and the collapse of the ruble, in 2013 Russia imported 284,000 tonnes of feed, or only 1.5% of overall demand. And in the first five months of 2016, imports had not exceeded 10,000 tonnes per month, and today only farms close to the country's borders are applying to import.
 
The situation for feed additives for long time has been different. Russian farms consume 260,000 tonnes of additives annually, and this figure prior to the trade sanctions had been growing at nearly 15% per year, and farmers had been actively exploring new feeding schemes and technologies.
 
While Russia has been actively increasing its production of additives since the start of 2013, there are still no real alternatives to imported goods from the EU for many types of additives.
 
Production remains strong while…
 
Over the first five months of the year, Russia produced 84,203 tonnes of feed additives, an increase of 32% year-on-year, Russian statistical agencies reported.
 
Domestic production is growing thanks to the efforts of both local and foreign producers, who target to avoid risks associated with importing from the EU.
 
Of special mention is French-based Lesaffre which opened a production facility for 20,000 tonnes per year of feed additives (dry yeast) at their plant in Voronezh Oblast. More than one billion rubles had been invested in the modernisation and expansion of the plant.
 
Also worth mentioning is De Heus in relation to its Lakinsk Feed Additives Plant in Vladimir Oblast, where the company is planning for an expansion.
 
These and many other similar projects are pushing up the volume of domestic production, and according to some studies it should grow to 250,000 tonnes by 2017, at least if all declared initiatives are commissioned in reality.
 
At the same time, the Russian Union of Feed Producers (RUFP) is conducting promotion programmes for Russian farmers to encourage them to use more additives and explore new approaches to boost weight gains, milk yields, as well as the quality of finished feed.
 
In the opinion of RUFP members, feed additive use in Russia per head of livestock is lower not only compared to the European Union, but even compared to neighbouring Belarus, with growth in the coming several years probably bringing overall demand to nearly 500,000 tonnes by 2020. That is a conservative estimate.
 
If the current state support programme for the agricultural sector would be continued, together with the growth of the livestock population, a more liberal estimate would be one exceeding 700,000 tonnes. This would mean that Russia has the potential to more than triple demand for feed additives within less than a decade.
 
However, this does not mean that growth is inevitable. With extremely low margins in the pork sector, oversupply in the poultry market, and fears of the lifting of the Russian food embargo after 2017, the country's livestock industry remains highly volatile. In the opinion of experts, this situation constrains any rapid rise in demand for feed additives.
 
…imports are under pressure
 
The share of imports in the feed additives market has been rapidly falling in recent years, following the collapse of the ruble against the euro in the first half of 2014, and most farmers have found it to be very expensive to continue importing.
 
According to data from the Federal Customs Service, imports has reduced from 120,000 tonnes in 2013 when it accounted for nearly half of the country's demand, to only 52,000 tonnes in 2015, meeting only a fifth of demand.
 
In general, there is no doubt that imports will continue falling further, as with the current exchange rates, there is no economy feasibility for farmers to continue importing additives, especially when there is a possibility to buy them on the domestic market.
 
Additionally, a lot of attention today is attracted to the latest anti-GMO campaign. In Russia, it is officially forbidden to use GMO components in feeding animals, and this restriction applies to both domestic produce and imports.
 
For a long time the Russian veterinary watchdog Rosselhoznadzor had not conducted tests on imports for the presence of GMO, closing their eyes to the problem of imported GMO-containing additives.
 
The situation, however, has changed, and the state budget has been invested heavily into the re-equipping of veterinary inspectors and state veterinary laboratories, enabling the conducting of regular tests on imports. Most recently in May 2016, Rosselhoznadzor had suggested that with the cases of identification of GMO in feed additives of EU-origin, their imports should be stopped completely.
 

Table 1:  Feed additive production (in tonnes) in Russia, January-June 2016

 

2014

2015

2016

January

10,424

12,919

15,638

February

10,889

12,436

15,194

March

12,062

14,906

20,851

April

12,947

15,129

16,842

May

10,994

14,232

15,678

June

10,488

14,365

 

July

10,309

14,365

 

August

10,061

14,496

 

September

11,550

13,390

 

October

13,667

15,541

 

November

14,081

29,623

 

December

16,509

28,397

 

Total

143,982

199,800

84,203

 

Table 2:  Compound feed production (in tonnes) in Russia, January-June 2016

 

2014

2015

2016

January

1,852,622

1,962,353

2,075,506

February

1,759,283

1,865,349

2,082,225

March

1,960,437

2,066,306

2,223,932

April

1,936,593

2,048,610

2,162,071

May

1,937,217

2,040,232

2,177,721

June

1,847,829

1,974,344

 

July

1,897,694

2,053,373

 

August

1,903,938

2,061,247

 

September

1,898,952

2,043,342

 

October

2,021,638

2,174,384

 

November

1,947,061

2,122,044

 

December

2,049,692

2,174,868

 

Total

23,012,956

24,586,451

10,721,455

        


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