World meat industry news

Russia’s veterinary watchdog Rosselhoznadzor reported that some AI infected turkey meat has hit the retail market in several regions. This incident was related to the unprecedented production of infected meat that occurred all over Russia. This could have severe consequences for the country.

The food quality control system in Russia was struck hard by a recent incident concerning turkey meat in stores all over the country, which was contaminated with the highly pathogenic avian influenza virus. The incident appeared to be Rosselhoznadzor’s biggest failure, while the country’s entire food quality control system also failed. In late April, Rosselhoznadzor’s Rostov laboratory conducted tests on turkey production at Eurodon, but it found no signs of the virus. However, these batches were later found to contain the virus while on supermarket shelves. On its website Rosselhoznadzor admitted Rostov laboratory had failed, not specifying, however, how this had happened.

In mid-May Julia Melano, Rosselhoznadzor’s spokeswoman, told the outlets of the state-owned media holding VGTRK that there were some “illegal actions” taking place at Rostov laboratory. Melano said that test results which revealed the presence of the virus were either hidden, allowing the further distribution of infected products, or tests were not conducted at all. Either way, implications are grave. The infected meat could have been sold due to criminal negligence or corrupt veterinary authorities. According to Melano the regulatory bodies have already started a criminal investigation against the laboratory.

Troughout Russia turkey meat infected with HPAI was recovered by veterinary watchdog Rosselhoznadzor, with Eurodon as a source. Photo: Vladislav Vorotnikov

In the wake of the incident the source of the infection, turkey producer Eurodon, suffered nearly Rub 2.6 billion (US$ 40 million) in losses as a result of the two outbreaks. Reputational damages are impossible to estimate. There is no doubt in the industry that the scandal will also have some short-term effect on the turkey market as a whole. Some market participants already see that consumers are refraining from purchasing this type of meat. According to Eurodon the average turkey meat consumption in the country nearly doubled over the past several years. Eurodon claimed it was going to “shake” the domestic market with further investments, and with various advertisement campaigns it would urge customers to consume more turkey meat.

Bad luck or assault

The veterinary authorities failed to identify the source of the AI outbreak at Eurodon and according to the company this was probably not an accident. The company suspects some kind of diversion. The distribution of the infected produce to all over the country also raises some questions. Olga Grekova, Eurodon’s spokeswoman told Poultry World that a “reputational and informational war” is taking place against Eurodon. She further states that there are some people “who want to break Vadim Vaneev”, the founder and main shareholder of Eurodon, who has a 45% in the company, and “to conquer his agricultural empire that has been built from scratch”.

Grekova also emphasised that Eurodon has not produced chilled turkey meat since April 2017, but somehow meat is being identified as coming from Eurodon in some of the country’s regions. Up until 8 June, Rosselhoznadzor has discovered infected turkey meat in stores in Crimea and Sevastopol. According to Grekova all production batches leave the company’s production facilities with all the necessary documents. What happens after that – during storage, transportation and handling – is not known to Eurodon. Eurodon experienced some conflict in the early part of last year, which the company’s management described as a “hostile takeover attempt”. The details of those events remain unclear, but the company believes there could be a link between those events and the current challenges.

AI will cost Eurodon 15,000 tonnes of turkey meat production in 2017. Photo: Eurodon

Vaneev recently stated that the AI outbreak at the company’s facility happened “virtually out of nowhere”, and added that the number of veterinary experts in the country, including the head of Rosselhoznadzor, Sergey Dankvert, told him that this was a diversion. Eurodon reported two outbreaks of AI, first in December 2016 and second in April 2017 and Vaneev did not specify which one he was referring to. In reference to the AI-infected produce that reportedly came from his company, Vaneev said that there “is continuous pressure on Eurodon”, and the story with turkey meat infected with AI is a “provocation”.

Grekova also revealed that Eurodon is spending Rub 300 million (US$ 5 million) on enhancing veterinary security at the company’s facilities. It is believed that the company’s poultry complexes have of the highest biosecurity levels within the Russian poultry industry, so it is quite surprising that it is faced with such AI problems.

Consumer awareness

Ksenia Burdanova, the spokeswoman for Russia’s Association of Retail Companies, also known as Acort, told Poultry World there are some concerns among consumers over the spread of AI and according to retailers it could push down the demand for turkey meat in Russia. Burdanova states that in the case of further spread of the virus, a decrease in supply of turkey to the domestic market could be expected. She also revealed that Russian retailers are not considering the introduction of on-receipt inspection of turkey meat at the moment as a possible measure to counter consumer fears.

Eurodon owner Vadim Vaneev doesn’t believe that the incidents at Eurodon happened by accident. Photo: Eurodon

“Trying to control the Russian retail network will not completely eliminate the spread of the virus. Since detecting the virus in processed products is long, expensive laboratory tests are required. In addition, poultry meat isn’t sold to consumers via retail stores alone, but it also enters the market via catering enterprises etc. Since the virus circulates among birds, it is much more effective to strengthen control in places where poultry is grown, to carry out preventive and explanatory measures, such as vaccination,” Burdanova said.

Irina Ivanova, a spokeswoman for Russia’s Consumer Protecting Organization, told Poultry World that consumers are concerned that AI is overwhelming the turkey segment. “The news has been covering the spread of the virus in Russia and there have also been reports on AI outbreaks in Asia, where it is associated with the lethal incidents among humans. Consumer awareness about these being different strains and that H5N8 in Russia is not dangerous for humans, is something we struggle with,” Ivanova stated.

“Moreover, the problem is that consumers started to feel that the turkey segment has been severely affected. We know that when there are separate outbreaks, customers have no concerns about veterinary diseases but when it seems like large quantities of products are involved, customers could temporarily turn away from the potentially unsafe produce. Still, these will only lead to short-term demand fluctuations,” she added.

Sergey Yushin, the chairman of the Russian National Meat Association (NMA) said, that he, on the contrary, does not expect any problems for consumers, as infected turkey was seized in time by Rosselhaznadzor from grocery shelves and warehouses. According to Yushin, some redistribution of shares on the domestic market is possible, as Tambov Turkey, AK Damate and Krasnobor can offset the volumes withdrawn from the market by Eurodon. Still, he said, the NMA does not feel like the demand for turkey in Russia has been reduced due to this situation. “It is not this particular incident, but the general AI situation has affected the export potential of Russia’s poultry industry because currently not all regions can supply to foreign markets. However, Rosselhoznadzor is currently determining from which regions there are safe supplies,” Yushin added.

Reforming the veterinary system

According to Yushin, this incident is one of many over the past few years. Incidents of pig and beef production not meeting veterinary requirements, and sometimes with the presence of the dangerous bacteria and viruses, preceded the turkey meat incident. Those products have been seized from warehouses in the past. These incidents clearly show that veterinary control system in Russia is not perfect. “There are several reasons for this. The first one is that more than ten years ago the veterinary service in Russia was divided, it had lost its solidity and vertical management. With the administrative reform it became less efficient. Veterinary services in some regions are poorly funded, and there are instances where employees do not perform their best, or in some cases (confirmed by various court outcomes) they are involved in corruption,” Yushin said.

Eurodon facilities have the highest level of veterinary security in Russia. Photo: Government of Rostov Oblast.

“So, how can the infected produce receive a document of approval and be shipped somewhere? This is possible if veterinary specialists show complete incompetence and disinterest in inspecting the produce, or if they are receiving payment for issuing the documents. There is no other way,” he added. According to Yushin, for a long time NMA has suggested the reinstatement of a vertical organisation of the veterinary system in Russia and to merge Rosselhoznadzor and Rospotrebnadzor, thereby creating a new single organisation. Rosselhoznadzor now inspects producers of agricultural products, while Rospotrebnadzor is the sanitary body authorised to inspect products on sale.

“In addition, an important point to look at could be future amendments to the administrative legislation, especially enhancing liability for breaching the veterinary legislation. Current fines have no effect on businessmen at all because it is economically feasible. The chances of being caught is relatively low, while the fine is also meager, compared to the possible profit that they could make,” Yushin added.