Compound feed output in Russia

•The large differences in total feed production caused by the differing
estimates and definitions of on-farm compound feed production. Industry sources
apply the strictest definition of balanced feed rations, whereas the compound
feed output figure and calculated feed use figure levels of on-farm feed

•It is difficult to estimate the market size and
growth of the Russiona feed market as

1. Different sources have differing opinions
2. The definition of feed is not always clear
3. Double counting exists, for example in adding captive and commercial feed
   together to gain an estimate of industrial feed (because concentrates/premixes
   are sold to integrators)

The volume of the Russian compound feed
market :

• 2005-2006 – approximately $2.4-2.9 billion
• 2006-2007 – estimated $3.1-3.5 billion
• up to 2011 it will reach $4.1-4.5 billion.

At present the most successful are those compound feed factories, which are
integrated into large agribusiness holdings. Vertical integration is typical not
only for holdings, but for independent poultry and animal operations as well:
they invest in their own compound feed production. Large compound feed factories
can compete with own feed productions units if they offer additional services
and answer demand of clients: offer free consulting in animal feeding, more
flexible and convenient product delivery schemes.

There are over 100 local distributor companies in Russia who supply a full
range of feed ingredients to compound feed factories, independent feed mills,
agro holdings, poultry, swine and dairy farms. Most successful are those who
keep their own distribution network and offer feed programs with balanced feeds.
These distributors are very flexible and can provide all kinds of feed
ingredients from amino acids to enzymes to the clients upon their request.

The leading player is Provimi with six feed plants and one premix production
line to supply its feed plants – a solid distributor network. Provimi is the
only foreign player active in several regions. Furthermore, a large number of
local feed companies operate in the market.

However, industry success indicates that most of the local players are
unprofitable.

There are three main types of feed
producing outfits in Russia :

1. Compound feed enterprises
2. Grain mills
3. Grain elevators

The Federal State Statistics Services indicates that 65% of feed is produced
by independent feed mills and the remaining part by integrations. However,
industry sources estimate current independent production around 1/3 of total
industrial feed production.

Agri complexes particularly broiler farms and swine producers have started to
produce their own feed in order to improve control over cost and quality.

 

Estimates for feed production in Russia 2004-2006, million tonnes