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All news / Profitability in the poultry industry has fallen

  • 26 May 2022, 10:40

The profitability of the poultry industry is now at its lowest point in the past few years. Sergey Lakhtyukhov, General Director of the National Union of Poultry Breeders (NSP), spoke about this at the Agroinvestor conference “Meat and animal feed industry. Prospects for Development in 2022”, which took place on May 24 in Moscow.Profitability in the poultry industry has fallen

In the first quarter, the increase in production in the industry amounted to 9.4% - this is a rather serious indicator, Lakhtyukhov said. The main industrial supply of meat in Russia today is pork and poultry, both in the consumer sector and in the processing segment. In March, according to the NSP, the supply of poultry meat amounted to 409 thousand tons, having increased by 35 thousand tons compared to February and by 21 thousand tons compared to the same period last year. At the same time, the supply of pork also increased in March. “As a result, we see a colossal supply of meat on the market,” Lakhtyukhov stressed.

He recalled that in the second half of last year, when there was a temporary decline in production, there were discussions about the possibility of regulating prices on the market, which resulted in the adoption of a decision on duty-free import of pork and beef into the country. The additional volume of meat on the market had a negative impact on the economy of poultry enterprises and reduced the investment attractiveness of the industry. “He is an oppression for prices. For the end consumer, this is, of course, good, but for manufacturers who are now working with minimal profitability, this situation causes serious concern,” said Lakhtyukhov.

The situation is aggravated by the increase in prices for grain and soybeans, which, according to the head of the union, are the main cost items for poultry farmers. “As a result, the profitability and marginality of our poultry companies is now at its lowest level over the past few years,” he stressed.

Salvation in this situation is to increase exports. “This is a reliable price regulation mechanism. And if it were not for the additional volumes of products exported from Russia, the price for the main types of meat could be even lower,” said Lakhtyukhov. According to the NSP, in the first quarter, the volume of exports of poultry products increased by more than 50%, despite all the difficulties with logistics. “Russian poultry meat is the cheapest in the world and at the same time of high quality,” Lakhtyukhov explained. Among the buyers are China, Saudi Arabia, the directions of Southeast Asia, African countries.

In April, according to preliminary data from the NSP, the export of poultry products continued to grow and increased by 20% compared to the same period in 2021. However, the union is not ready to make optimistic export forecasts for the whole year. “The established logistics chains have been broken, companies are switching to completely new logistics mechanisms for export deliveries. We will see how successfully they will be built in the near future, ”Lakhtyukhov added.

Now the main risk for poultry enterprises is a decrease in the purchasing power of the population. “Our production volumes are growing, and hopes for the May holidays and good weather, unfortunately, did not come true. We did not have such a rush demand, which was observed for meat in the same period in previous years. We hope that June will win back to some extent, but so far the stocks in the warehouses of poultry farmers are only growing, ”Lakhtyukhov shared.

In a short time, poultry enterprises increased the production of not only marketable products, but also hatching eggs. Some industry analysts in previous years feared a shortage of it, however, according to Lakhtyukhov, thanks to state support measures, by the end of 2021, the share of domestically produced hatching eggs was 84%, while in 2020 the ratio of imported and domestic hatching eggs was at the level of 20% to 80% respectively. This year, the country continues to increase the production of hatching eggs, Lahtyukhov added.