World meat industry news

Experts noted that the ban on the export of amino acids deprives Russian enterprises of the opportunity to sell excess products abroad, and the zeroing of import duties leads to an increase in the volume of imported products, which also affects Russian producers.

The Association of Grain Deep Processing Enterprises initiated an open discussion on the problems of production and marketing of amino acids. Based on the results of the briefing, proposals from the Association and enterprises will be formed and sent to the relevant departments. 

Speakers at the meeting were Oleg Radin, President of the Soyuzkrakhmal Association; Alexander Petrov, General Director of JSC "AminoSib"; Aleksey Balanovsky, General Director of CJSC "Plant of Premixes No. 1"; Andrei Freiman, head of the sales department of JSC "Volzhsky Orgsintez" and Vasilina Akhramovich, director of economics and finance of CJSC "Belarusian National Biotechnological Corporation". 

There are two plants for the production of lysine in Russia - Aminosib LLC and Premix Plant No. 1 CJSC. Their total productivity is currently more than 120 thousand tons of L-lysine sulfate per year. Thus, domestic enterprises provide more than 70% of the need for this amino acid. CJSC "Belarusian National Biotechnological Corporation" is implementing an investment project, upon reaching its full capacity, dependence on imported lysine can be eliminated by 100%. JSC "Volzhsky Orgsintez" can cover 50% of the internal demand for methionine. 

Due to the zero import duties on the territory of Russia for five months of this year, the import of lysine amounted to about 40.9 thousand tons, of which 9.2 and 31.7 thousand tons in the form of sulfate and monohydrochloride, respectively. This is actually equal to imports for the whole of 2021 - about 41 thousand tons. In addition, from July 1, the Government of Russia decided to temporarily ban the export of a number of amino acids until the end of this year. This decision deprives enterprises of the opportunity to sell surplus products on the international market.

Since the beginning of this year, the price of amino acids on the Russian market has fallen by more than 40%. This happened not only because of the strengthening of the ruble, but also due to the active growth in the volume of imported products. This situation has a negative impact on the economic performance of domestic industries, which are forced to sell products at the cost level. As a result, this can lead to the suspension of the activities of enterprises.

Alexander Petrov, General Director of JSC AminoSib, explains: “We really need support from the state. In the event of a large excess of lysine in Russia, we will fill our warehouses, and the only thing left for us is the suspension of the plant. Biotechnological projects have long payback periods, which does not allow domestic producers to fully compete with importers. The construction of our factory began in 2013. To date, we have not paid back our project, according to our estimates, this will not happen before 2025.” 

Aleksey Balanovsky, General Director of CJSC Premix Plant No. 1, comments: “The current situation hinders the development of the biotechnological industry as a whole, reduces the investment attractiveness of the industry. On the part of producers, our three enterprises, Premix Plant No. 1, AminoSib and BNBK, are ready to give exact figures for the next year, what volume of production we are ready to provide. According to our data, three enterprises can fully cover the needs of the EurAsEC countries. “Premix Plant No. 1” is ready to produce 96 thousand tons of 75% L-lysine sulfate next year, where the pure substance is 60.5 thousand tons.”

Andrey Freiman, head of the sales department of JSC Volzhsky Orgsintez, which is the only producer of methionine in Russia, explained the situation with this amino acid. “In early spring, we assured the Ministry of Agriculture and the Ministry of Industry and Trade that we could cover 50% of the domestic demand of the Russian methionine market. We also completely restricted exports on our own. However, customs duties on methionine and other amino acids were still set to zero. In addition, the current situation is exacerbated by the exchange rate. If the dollar exchange rate is at the level of 50 rubles or less for three months or more, then in this situation we will have to stop the production of methionine,” Andrey Freiman said. “At the moment, there is no shortage of methionine in the domestic market. Within a month and a half, the import of methionine from Europe was completely replaced by Asian producers,” 

Vasilina Akhramovich, Economics and Finance Director of BNBK CJSC, spoke about the situation in Belarus: “In the spring, we sent several letters to the Ministry of Agriculture and Food with the justification that there was no need to reduce import duties. BNBK is reaching full capacity, we are closing the first production year. The capacities of our enterprise, together with existing plants, allow us to fully cover the needs of the EAEU countries for lysine. As far as we know, the Ministry of Agriculture and Food forwarded these letters to the EEC.” 

Vasilina Akhramovich also shared the Belarusian experience of interaction with regulatory authorities: “Together with the Government of the Republic of Belarus, we have developed the following work mechanism for the near future. The Ministry of Agriculture and Food has formed a list of target enterprises-consumers of amino acids that are guaranteed to buy amino acids from BNBC and do not resell them to the market, that is, for their own needs. We sell products to this list at a special price agreed with the Ministry of Agriculture and Food. Further pricing is being formed at the Belarusian Universal Commodity Exchange.”