The volume of export sales of Russian poultry meat may increase by 45% from 210 thousand tons in 2019 to more than 300 thousand tons by the end of 2020, forecasts the Center for Industry Expertise of Russian Agricultural Bank (RusAg, the Bank). Favorable developments for manufacturers will mainly depend on the continued positive dynamics of supplies to four key markets – China, Kazakhstan, Ukraine and Saudi Arabia. Kazakhstan and Ukraine are traditional markets for Russian poultry producers. Deliveries to Saudi Arabia began in 2018. Exports to China have been developing since last year.
“Since the opening of the Chinese market for Russian poultry meat producers in 2019, this country has become the main importer of domestic poultry farms with a share of more than 50% of the total volume of Russian export sales,” – says Andrey Dalnov, Head of the Center for Industry Expertise at RusAg.
Export feature of this direction is the demand for chicken paws: this category of by-products accounts for more than 50% of Russian exports to China. Chicken paws are the only product in Russian exports that are perceived fundamentally differently by domestic and foreign consumers. Russians are not ready to buy chicken paws in significant volumes and before the development of exports to China, Vietnam and Hong Kong, where chicken paws are considered a healthy delicacy, the bulk of this type of product was sent for processing into meat and bone meal.
Wing is another popular item in shipments to China. The influence on the domestic Russian market is very noticeable. Despite the relative decrease in activity in the HoReCa channel in the first half of 2020, the average price of a wing in Russia during this period increased by more than 10%. At the same time, prices for most other items for poultry meat, on the contrary, have decreased.
Saudi Arabia may become the second most important non-CIS market for Russian poultry meat producers after China in 2020, says Andrey Dalnov, Head of the Center for Industry Expertise at RusAg.
“At the moment, Saudi Arabia occupies 4-5% of the total Russian exports of poultry meat. In Russian supplies to the countries of the Middle East, there is traditionally a small carcass weighing 1-1.2 kg, while the domestic market produces a heavier carcass with a lower production cost. The production of small carcasses for export is associated with higher costs, but some producers do it in order to diversify distribution channels, which should provide more stable margins,” – explains Andrey Dalnov.
Kazakhstan, with a share of 15% of Russian exports of poultry meat, and Ukraine, with a share of 13%, is traditional sales markets for Russian producers from among the neighboring countries. Both the carcass and the main cutting positions are present in exports to these countries. Prices in the markets of the ‘near abroad’, as a rule, correlate with the domestic prices of the Russian market.
From the point of view of expanding the geography of supplies, it is necessary to note the countries of the African continent. In 2020, Liberia, Benin and Angola are noticeable in Russian exports.
“Supplies to Angola are interesting because this country is a traditional target market for Brazilian producers: exporters and importers speak a common Portuguese language,” – says Andrey Dalnov.
In addition, Russian supplies to the Democratic Republic of the Congo and Ghana have skyrocketed. Deliveries to Ghana in August exceeded 1,000 tons, which became a record for Russian exporters to African countries in a month.
When entering foreign markets, Russian poultry producers compete with the world’s leading producers from the USA, Brazil and the EU. The growth of Russian supplies of poultry meat indicates the maturity of the domestic market, as well as the high efficiency and competitiveness of producers engaged in the development of exports, summarized in the Center for Industry Expertise of Russian Agricultural Bank.
RusAg is a pivotal bank for Russian poultry exporters. In 8M 2020, the Bank issued about RUB 47.4 billion to exporters of poultry meat, which is 6% over the level of the same period in 2019.