Russia’s broiler meat giant shares expansion plans

"We will refrain from forecasting exact production volumes for 2024, since they are difficult to share in a volatile external environment," a Cherkizono spokesperson said. Photo: Canva

Cherkizovo, the second-largest Russian broiler meat producer, is on track to further boost output in 2024, a spokesperson for the company told local news outlet Agroinvestor.

The spokesperson added that the growth is expected thanks to streamlining operations in the central part of European Russia and expanding the assets in Bashkiria Republic and Chelyabinsk Oblast in Urals acquired at the end of 2022.

“We will refrain from forecasting exact production volumes for 2024, since they are difficult to share in a volatile external environment,” the spokesperson said.

In 2023, Cherkizovo produced 986,000 tonnes of broiler meat (live weight), which is 17.8% up compared with the previous year. The growth was achieved thanks to the first round of the Bashkiria and Chelyabinsk assets expansion. Plus, one turkey farm switched to breeding broilers, the company explained.

The spokesperson said one of last year’s key trends in the Russian market was a surge in consumer incomes, which drove demand up. “Our production capacity met the growing demand as far our capabilities allowed,” he stated.

Bumps on the road

Cherkizovo’s representative also admitted the company faces challenges “due to a difficult geopolitical situation”. For example, he said the supply of Western equipment, technologies, and spare parts remains problematic.

According to the spokesperson, the Russian poultry industry behemoth is working to ensure an uninterrupted supply of spare parts and components for its farms and facilities by expanding the list of suppliers and localising some production in Russia.

In addition, the Russian poultry industry experienced a surge in operational costs. “In 2023, production costs continued to rise against the backdrop of rising prices for packaging materials, rising transport tariffs, as well as labour costs of an acute personnel shortage,” the spokesperson said.

The labour shortage has been one of the key problems of the Russian economy in the past 2 years. Russia lacks around 5 million workers, the Economy Institute under the Russian Academy of Science said in a study published in December 2023.

The Russian economy has almost completely exhausted the available labour resources and is left “without free hands”, Elvira Nabiullina, head of the Russian Central Bank, said during a State Duma meeting in November 2023.

Cherkizovo also emphasises the need to protect its poultry farms against animal diseases. “The company’s main focus in 2024 will be to ensure biosafety to maximise finished product output, implement an investment programme to expand production and minimise risks associated with the supply of materials and equipment,” the spokesperson concluded.