May 20, 2023

 

Latvian poultry processor Kekava to invest in biomethane gas plant

 

Andrius Pranckevics, the chairman of Latvian poultry processor Putnu Fabrika Kekava, said the company plans to invest up to EUR 14 million (~US$15 million; EUR 1 = US$1.08) in the construction of a biomethane gas plant, aiming to reduce operational costs and restore profitability, Poultry World reported.

 

The company faced a net loss of EUR 2.5 million (~US$2.6 million) in the 2021/2022 financial year, primarily due to soaring operational expenses.

 

Pranckevics highlighted that the Baltic poultry industry has been grappling with a crisis since the onset of the COVID-19 pandemic, which was further exacerbated by decreased poultry consumption due to the closure of hotels and restaurants.

 

Last year, the Baltic region experienced a severe cost crisis, surpassing the challenges faced by the rest of Europe. Pranckevics estimated that Kekava's losses from operational costs surged to 2-3 times higher than during the initial phase of the pandemic.

 

In an effort to reduce reliance on natural gas, the company intends to construct a biomethane gas plant, which will complement their cost mitigation strategies. Kekava has already chosen a location for the plant and secured approval from local authorities to commence construction.

 

Expressing optimism for the 2022/2023 financial year, Pranckevics said that the company's cost-saving initiatives have begun to yield positive results, which they expect to reflect in their full-year financial performance.

 

There are concerns about a potential sales crisis resurfacing due to rising inflation. Pranckevics said that the Baltic countries are grappling with nearly 20% inflation, significantly higher than other parts of Europe, which has led to reduced purchasing power and increased budget constraints for consumers.

 

As a result, people have started to gradually reduce their spending on food, including meat, and opt for cheaper alternatives such as cereal products, pasta, and porridges.

 

Pranckevics saod that historically, poultry has been the most affordable source of animal protein, with a substantial price gap compared to pork. But challenges faced by European pork exports have led to a decline in pork prices, narrowing the gap between the two meats and intensifying competition in terms of pricing.

 

-      Poultry World