World meat industry news

The African continent is an important market for Russian agricultural products. Last year, African countries accounted for 12% of Russia's total agricultural exports. Including wheat, 11.9 million tons worth $3.3 billion were shipped, sunflower oil - 244 thousand tons worth $318 million, soybean oil - 223 thousand tons worth $260 million, barley - 944 thousand. tons for 231 million dollars.

Russian exports of meat products demonstrate high dynamics: over the period 2017-2021, deliveries to Africa increased 13 times in physical terms (up to 25 thousand tons) and 19 times in value (up to $ 38 million). Despite the specifics of the African market, Russian companies are actively exploring it, progressively expanding the range of food products supplied.

A significant part of Russian exports go to North African countries due to convenient logistics, established links with distribution networks and a high degree of Europeanization of consumption. “Currently, the main focus of Russian exporting companies is to ensure sustainable growing volumes of deliveries to the countries of North Africa. At the same time, there are states of Eastern, Western, Southern and Central Africa, which are currently underdeveloped as trading destinations, but are extremely interesting for their potential,” says Nikolai Lantsev, director of the consulting services practice at Trust Technologies.

To expand the presence of Russian products, Agroexport, together with PwC in Russia (currently Trust Technologies), the industry and expert community, developed a Concept for the development of exports of Russian agricultural products from the main market segments (grain, dairy, oil and fat, meat and confectionery products) to promising African markets. The goal of the project is to prepare a practice-oriented model for increasing supplies and increasing the competitiveness of Russian agricultural products.

9 states are selected as target markets in the concept - Tunisia, Ethiopia, Kenya, Mauritius, South Africa, Angola, Cameroon, Nigeria and Ghana. These countries account for 40% of the continent's population and a third of all African agricultural imports. About 96 million people live on the territory of 9 states, who are potential target consumers of imported products. The total volume of agricultural imports to these countries, according to ITC Trade Map, in 2021 amounted to almost 33 billion dollars.*

Thus, Russian grain is competitive and already in demand in the markets of target African countries. At the same time, grain crops have a high potential due to the expected increase in their purchases. In 2020, grain consumption in the target countries was 192 kg / person, which is 210% lower than in the EU countries. Due to population growth and limited opportunities to increase domestic production, grain imports are expected to grow by 8 million tons over the period from 2021 to 2030. Only in Nigeria and Kenya over the past 5 years, the growth of the bakery market has averaged 38% per year.

At the same time, the specifics of this segment in the target countries is a high degree of state regulation. “Russia is one of the most competitive grain suppliers to target markets in terms of price, but it is inferior to its competitors in terms of trade and economic ties. Therefore, among the main tasks are the introduction of political and diplomatic measures, the active establishment of communication at the state level, as well as marketing and information support for Russian suppliers. If now the main way to supply grain is to sell to international traders, then with the support of the state, large exporters may be interested in increasing margins through independent work with buyers in promising markets,” Lantsev emphasizes.

Another strategic direction is the deepening of cooperation in the field of trade in oil and fat products, primarily vegetable oils. Since 2016, oil imports in target countries have grown twice as fast as agricultural imports as a whole, and by 2025, oil sales to target countries will increase by another 67%. “Now more than 70% of the physical volume of imports falls on palm oil due to its availability, but this situation will change over time. Among the countries requiring special attention are South Africa, where a significant amount of sunflower oil is already consumed today, Tunisia, with a tradition of soybean oil consumption, as well as Ethiopia, Cameroon, Kenya and Ghana, where structural changes in oil consumption are expected as effective demand grows,” – told Konstantin Tikhomirov, director of the practice for providing services to government bodies and the public sector of the company Technologies of Trust. As a balanced option for entering a new market in Africa, the concept proposes direct interaction with local processing enterprises, taking into account the fact that the main Russian exporters are fairly large companies.

For meat products, the main sales channel to African countries is the sale to trading companies. The African countries studied in total import over 1.3 million tons of meat products per year, and it is estimated that 70-85% of imported meat of all kinds entering African countries is supplied through contracts of traders and subsequently sold in markets and in small private shops. The leaders in terms of import purchases are South Africa, Ghana and Angola. “According to analysts, the consumption of meat products is expected to increase in many countries of the African continent. And although the main growth will come from poultry meat as the most affordable and technologically advanced, organic growth will also be observed for all other types of meat. Therefore, Russian companies should consider Africa as a market for long-term presence and development,” notes Konstantin Korneev, Executive Director of Rincon Management. According to estimates, the potential for the supply of meat products from Russia to the priority African countries by 2030 is 148 thousand tons.

The potential for the export of Russian dairy products to Africa has not been realized. Ice cream was the first product, the stable supply of which from Russia was established and actively developed. However, significant opportunities are opening up for shipments of milk powder, whey, cheeses and butter. According to forecasts, if in 2019 the milk shortage in Africa was estimated at 8.9 million tons, then in 2025 it will be 12.9 million tons, and in 2030 it will reach 17 million tons in milk equivalent. Already today, African countries import dairy products worth $4.8 billion, and the target countries are among the top 20 African importers.

Confectionery products in the target countries are consumed in the amount of $4.6 billion per year, and the annual imports of these countries for 2016-2020 averaged $614 million. The most popular type is sweet biscuits, which are often used by the population as a lunchtime snack, the leading product groups also include chocolates and sugar confectionery. The volume of consumption of finished food products in the target countries exceeds $29 billion a year, among the leading products are cold soft drinks, instant coffee and tea, sauces, prepared meat and seafood. For a long-term presence in Africa, the optimal scenario is the localization of production to the needs of the market, and the priority countries for such a scenario are South Africa, Ghana and Kenya. “Consumers have a clear confidence in 'local' products,” explains Tikhomirov. “Therefore, a significant part of imported products is processed locally. Options include importing ingredients for localized production of more complex products, or packaging finished products in various formats in African factories.”

“The African continent is an interesting and promising direction for the development of Russian food exports. However, when working in this market, it is important to take into account a number of factors: strong differences in the level of well-being of the population, political instability in a number of countries, state regulation of prices for a number of goods, etc. The concept materials can help Russian businesses identify priority countries for organizing supplies and choose a focus assortment taking into account the characteristics of the market,” emphasizes Dmitry Krasnov, head of Agroexport.