Cherkizovo eyes expansion of poultry exports

Russian meat giant, Cherkizovo plans to increase its poultry exports in order to reap the benefits of a weaker ruble as domestic prices come under pressure from faltering consumption, local media, the Moscow Times reports.

Although the rouble has firmed over the past three months, Sergei Mikhailov said that Cherkizovo should have taken advantage of the weaker rouble, which plunged last year on falling oil prices and Western sanctions over Ukraine.

Poultry exports up by 10%

He said the company would aim to export 10%, up from between 1 and 2% currently, and target consumers in the Middle East, Africa and China.

“If demand in Russia contracts, we will be forced to export, and if the rouble weakens, it will also be a more efficient exercise. We have been seeing for six months now that theoretically we should have routed everything to exports,” Mikhailov said.

Decline in domestic consumption

Mikhailov said the company’s base-case scenario implied meat consumption in Russia would decline to 67-68 kilograms per capita in 2015 from 71-72 kilograms last year as Russia slips into recession. Poultry accounts for around 50% of all meat consumption in Russia.

As demand falters, poultry prices have fallen by 15-20% in roubles since September-October, he said, although the rouble weakness has fuelled the cost of grain and medicines.

Mikhailov said the decline of consumption would make 2015 a more challenging year for Cherkizovo, which would shift its focus from boosting production to cutting costs and increasing the share of more profitable branded products in its sales mix.