Stabilizing poultry, pork industries slows Russian feed production

16.06.2017

Since 2008, the Russian feed sector has experienced an annual growth between 7% to 10%. This surge in the feed sector has been supported by strong growth in the livestock and poultry sectors, the introduction of new technologies and improvements in the quality of the feed produced in Russia. However, major weaknesses continue to plague the sector, including a lack of regulation, outdated facilities and technologies, and insufficient domestic production of acids and vitamins. At the Russian Feed Industry Conference in April 2017, participants discussed opportunities and constraints for the Russian feed sector.

A report on the current developments of the feed sector in Russia was presented by Valeriy Afanasyev, president of the Russian Feed Union. According to the Union’s data, Russia’s feed sector’s average annual growth in production, between 2008 and 2014, was 12%. This growth was driven primarily by the steady development of both the poultry and the pork industries. However, in 2015 the annual increase in production of feeds compared to 2014 slowed to 4.7%. Most experts attributed the decrease in the annual growth trend to a stabilization in consumer demand for poultry and a resultant slowdown in the development of the poultry industry.

In 2016, Russia’s production of compound feeds was estimated at 25.8 million tonnes, about a 4% increase over feed production in 2015. This estimate represents official data published by the Russian Statistical Agency (Rosstat). Afanasyev forecasts that over the next ten years the annual growth in feed production will average between 3% and 4%, driven by feed demand from the pork, livestock and aquaculture sectors, and by 2025 the total production of compound feed is forecast at 38 million tonnes.

The Russian Feed Union forecasts that by 2025, production of feed for poultry will reach 18 million tonnes, an increase of 29% over production of feed for poultry in 2016. Feed for pork is forecast to demonstrate the most significant increase of 61% to 15 million tonnes, while feed for livestock is forecast to reach 2 million tonnes, a 50% increase over production in 2016.

Afanasyev also noted that production of feed for aquaculture has a strong potential. The Feed Union estimates feed production for aquaculture in Russia at 150,000 tonnes in 2016, where the share of feed for carp species (the dominant species produced in Russian aquaculture) accounted for 120,000 tonnes, while only 30,000 tonnes of feed was for valuable fish species, such as trout and sturgeon. Currently 90% of feed for valuable species is imported.

Afanasyev highlighted some particular problems faced by the feed sector in Russia. He emphasized that as a result of the use of non-balanced feed ratios (in terms of proteins and amino acids) animals in Russia often have to consume twice the amount of feed (by volume) compared with the prescribed norms in other countries. He noted the importance of developing a more balanced feed ratio in Russia, incorporating by-products from the food industry in the production of feed, such as corn gluten, molasses, dried sugar beet chips, brewers waste and distillers dried grains. Currently, the Feed Union estimates the share of grain in animal feed in Russia is 70%, compared to only 40% to 45%, on average, in the European Union.

Because of the higher percentage of grain in feed rations, large fluctuations in grain prices can severely impact feed prices. For some poultry producers, the price of ingredients becomes the major factor in choosing a feeding formula. In market year 2015-16 and 2016-17, the supply of fodder grains increased and, as a result, prices for fodder grains decreased. However, the cost for other ingredients, such as soy, vitamins and minerals, as well as the cost of production of compound feed, may increase in market year 2017-18, and poultry producers may continue using more grain in feed than is prescribed by optimal feeding formulas. According to a recent report from the U.S. Department of Agriculture (USDA) on poultry production, on average in 2015 and 2016 Russian poultry producers increased the portion of grain in mixed feeds. However, poultry sector industry leaders continue to use feed according to the best feeding practices. Such industry leaders tend to have their own feed mills and produce feeds from raw materials that they grow themselves, the report said.

Feed for poultry accounted for 56% of the total compound feed production in 2016. This was followed by feed for pork, accounting for 35% of compound feed production and livestock with just over 8% of the total. The Union forecasts that by 2025, the share of total feed production consumed by the poultry sector will decrease 27% while the share going to pork production will see a 10% increase, reaching consumption of 39% of total compound feed production. Feed for livestock is expected to more than double and will account for 17% of total feed production. This increase will be attributable to the expansion of the livestock sector and the implementation of improved feeding ratios.


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