INTERVIEW: Rusagro to build 3 bln rbl pork plant in Tambov Region

Interview with Rusagro CEO Maxim Basov

MOSCOW, Feb 3 (PRIME) -- Russian food and farming company Rusagro Group plans to build a pork processing plant worth about 3 billion rubles in the Tambov Region, the company’s CEO Maxim Basov said in an interview with PRIME on Friday.

Basov said he expected the project to be co-financed by the government. Agriculture Minister Yelena Skrynnik said in January, that 6 billion rubles were to be allocated from the federal budget in 2012 in order to develop deep processing of pork in the country.

“If it proves to be true, we are going to build, in the Tambov region, an up-to-date slaughterhouse with a meat processing facility”, Basov said. He added that the situation with funding was expected to clarify within a month.

The annual capacity of the pork processing plant is estimated at around 90,000–100,000 tonnes of meat, Basov also said.

If the construction is launched in 2012, the plant is to start production in two years, he added.

Basov said that Rusagro Group also planned to work out a marketing concept for its proposed retail brand in the future. The company does not currently have its own retail brand in the domestic meat sector. “We are studying market conditions now”, Basov said.

Rusagro Group is currently implementing two pork production projects – in the Tambov and Belgorod regions, Basov reiterated.

The project in the Tambov Region envisages the construction of seven pork complexes in the region. The company invested 2.5 billion rubles into the project in 2011, while the major task of construction is expected to be completed in 2012.

Rusagro Group also plans to launch the seventh pig farm at its pork production complex in the Belgorod Region. The company invested 800 million rubles in the project in 2011, and the total investments are estimated at over 1 billion rubles.

The Tambov Region project is expected to reach its full annual capacity of 115,000 tonnes of pork in 2013, while the annual capacity of the Belgorod Region project is seen to increase to 90,000 tonnes per year from the current 63,000 tonnes by the same date.

“Thus, we are going to produce a total of about 200,000 tonnes of pork in 2014 and become Russia’s second largest pork producer following Miratorg”, Basov said.

Rusagro Group earlier planned to build a 20 billion ruble pork production complex in the Chelyabinsk Region. Meanwhile, the company indefinitely halted the project in the middle of 2011 due to uncertainty of Russia’s accession to the World Trade Organization (WTO).

“We plan to decide on the project by the end of 2012, after Russia becomes a plenipotentiary member of the organization and all the terms and supporting mechanisms (for domestic producers) become clear”, Basov said.

He said that pork prices on the domestic market recently reached record highs. “This happened because of a high increase in demand of pork in Russia last year, while the growth of (pork) supplies was moderate,” Basov said. He added that the domestic demand for pork was expected to continue to grow higher than the supplies in 2012.

Basov said he expected the group’s combined investments at around 10 billion rubles–11 billion rubles in 2012, excluding expenses on the proposed pork production project in the Tambov Region, compared to about 9 billion rubles in 2011.

In addition, Rusagro plans to increase its land bank, which stood at 420,000 hectares as of late 2011. “We are going to buy additional 150,000 hectares over the next three years”, Basov said, adding that the company was primarily interested in land plots in the Tambov, Belgorod, and Voronezh regions.

Speaking about Rusagro Group’s exports operations, Basov said that the group exported sugar to Kazakhstan and a number of Asian states. The sugar exports amounted to about 15,000 tonnes in the past agriculture season.

“We suspended (export supplies), as it is senseless to sell large volumes (of sugar). Our internal (sugar) market still suffers deficit. And I think that the price will further grow”, he said.

Basov added that margarine exports amounted to 25,000 tonnes in 2011 with output of 35,000 tonnes. The company also started exporting sunflower oil in early 2012.

Rusagro Group’s market value has fallen over 50% since August 2011, he said. In late 2011, Ruthe company bought back its shares from markets for U.S. $9.9 million. “I think that the company is currently underestimated”, Basov said.

Established in 1995, Rusagro Group is one of Russia’s largest multi-purposes agriculture holding companies.

(30.1855 rubles – U.S. $1)

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