February 3, 2010

Cremonini opens domestic beef processing plant in Russia

Italian beef group, Cremonini, has opened a meat plant that will produce up to 80,000 hamburger patties an hour for McDonald's restaurants using domestically-produced beef - a formula praised by Russian authorities who are pushing for more locally-made food products.

The opening comes after President Dmitry Medvedev on Monday (Feb 1) approved a new food security doctrine, which aims at increasing the share of domestically-produced food on the market to more than 80% over the next decade.

The plant, located in Odintsovo, Moscow region, will produce 25,000 tonnes of hamburger patties a year to satisfy the needs of McDonald's restaurants in Russia. The capacity will be increased to 50,000 tonnes in the future, Cremonini said.

McDonald's confirmed in October that the chain would buy 10,000 tonnes of meat from the plant in 2010.

Agriculture Minister Yelena Skrynnik said, "The new enterprise will use Russian beef for its production and will announce its future volumes of meat purchases in advance, so that Russian farmers, when making a decision on animal breeding, will know that they have guaranteed orders."

The food security doctrine calls for at least 95% of grain and potatoes, 90% of milk and milk products, 85% of meat and salt and 80% of sugar, margarine and fish sold in Russia to be produced domestically within the decade.

A total of RUB100 billion rubles (US$3.3 billion) per year have been reserved in the budget to develop the agricultural industry enough to fulfill those goals.

Some of the objectives may be a tall order, however, as the country still imports 35% of the beef that it consumes. According to the State Statistics Service, the number of cattle raised in the country has been declining over the past two decades since the collapse of the Soviet Union and has dropped by more than half from 20.5 million heads in 1990 to 9.1 million in 2008.

As such, the plant's main challenge will be finding enough beef producers in Russia, and the Moscow region in particular, to supply the plant, said Alexander Gladyshev, head of the Odintsovo district of the Moscow region.

"We will build slaughterhouses with one of our Russian partners in the Orenburg region and will get meat supplies from various slaughterhouses located 700 kilometres to 1,500 kilometres outside Moscow," Gladyshev said.

In order to operate at full capacity, Cremonini Group is planning to build its own slaughterhouses, starting with several small enterprises in the Orenburg region, said Luigi Cremonini, the company's founder.

The 25,000-square-metre Odintsovo plant cost EUR100 million (US$139.3 million) to build and will be operated by Marr Russia, Cremonini's Russian subsidiary, the company said.