World meat industry news

The Ministry of Agriculture plans to retain compensation for part of the direct costs incurred for the construction and modernization of agricultural facilities (CAPEX). This was announced by Minister of Agriculture Dmitry Patrushev during the government hour in the Federation Council. He noted that the measure stimulates production volumes precisely in those sub-sectors where it is needed.

Patrushev noted that there are different opinions in the government regarding the reimbursement of part of the capital costs, however, this measure has not been in effect for the first year, the amount of funds allocated for the reimbursement of CAPEX is growing. In 2022, about 8 billion rubles are provided for these purposes. Only facilities that the Ministry of Agriculture supports in this way are changing, Patrushev said. “We always support milk, now we will support selection and seed centers in a fairly large volume, we will also support the construction of factories for the production of fish feed,” the minister specified.

Director General of the National Union of Milk Producers (Soyuzmoloko) Artem Belov said that the dairy industry is traditionally characterized by high capital intensity, long payback periods and low profitability. “To solve these problems, the Ministry of Agriculture, with the participation of Soyuzmoloko and the business community, developed a system of state support measures, including compensation for part of the direct costs incurred, lowering the cost of using credit resources, subsidies for the volume of marketable milk produced,” he listed. “These and other support measures, including work to reduce administrative barriers in the sector, made it possible to attract new investors to the industry and ensure a stable growth rate of marketable milk production at the level of 3-4% per year.”​

Belov added that today, when the dairy sector is facing a serious increase in costs, maintaining this type of support is more important than ever. According to him, this will stimulate a further increase in gross milk yield, since the industry has not yet reached the indicators of the food security doctrine.​

Vice-President of the Russian Grain Union Alexander Korbut believes that the reimbursement of part of CAPEX is a very important and necessary measure for the agro-industrial complex. “This measure simultaneously stimulates capex and increases the responsibility of investors. This measure needs to be expanded as much as possible,” he said.

Korbut believes that the CAPEX mechanism needs to be expanded, in particular, to create capacities and equipment for storing grain on farms - this requires fairly large investments. For other elements of crop production technologies, state investments are also important. “I think we need to look at the whole chain and offer support as widely as possible. The main thing is to start this process, and agricultural producers will choose the best option on their own,” Korbut believes.

Patrushev also said that the Ministry of Agriculture is considering the possibility of reimbursing part of the costs for the production of young cattle. According to him, the relevant draft resolution is already undergoing interdepartmental coordination. He recalled that now in the livestock sector, support measures apply to the construction and modernization of livestock complexes, poultry reproducers, and processing facilities. In addition, the purchase of feed and veterinary drugs is supported. The minister added that in 2023, as part of the federal scientific and technical program, a subprogram for meat and dairy cattle, as well as feed and feed additives, will be launched.