March 2, 2012

A trend of a significant reduction of independent feed production companies in relation to the same enterprises over recent years has been noted by Russian national association of feed producers' representatives at a recent Compound Feed 2012 Moscow conference.

In February the Russian Federal Antimonopoly Service granted two motions on the purchase of shares of individual feed mills by different poultry farms. In particular it is reported that the large poultry complex Kochubeevskoe of Stavropol Territory is going to buy 100% shares of Belorechensk feed mill. In addition, the poultry farm Vasilyevskaya (Penza Region), which is part of Cherkizovo, announced plans to increase its ownership stake in Penza bread-making plant from 62.2% to 93.4% of shares.

According to experts, investing in feed mills can quickly pay off for poultry companies since it may decrease the primary cost of production process by about RUB8-10 (US$0.27-0.34) per kilogramme. "This is logical: if we have our own feed and we feed it to our poultry, we do not have to buy it on the side, so the cost of the final products is reduced. Therefore today to ensure that the production rate will continue to grow, we need to increase capacity of our own compound feed production," said a spokesman for the Cherkizovo group of companies.

Russian feed production experts say the number of independent enterprises over the past three years has decreased by 35%, and is still rapidly declining. As the result, representatives of associations of producers repeatedly noted that about 25% of feed in Russia is not included in the statistics.