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Bank Backs Russian Company to Raise Output

by 5m Editor
19 February 2010, at 9:50am

RUSSIA - Sberbank is to fund the increase in poultry output by Cherkizovo, which will partially off set the drop in supplies following the present ban on US poultry meat imports.

According to Moscow Times, Cherkizovo has announced that Sberbank would fund its project to boost poultry output as Moscow seeks to show Washington that it can boost its own output and survive without imports from the US.

The statement from private London-listed meat producer Cherkizovo announcing the funding comes as Russia and the US are expected to begin a second round of talks to resolve a dispute over US poultry supplies.

Russia, which spent $800 million on US poultry in 2008, has banned imports from its largest supplier on concerns about the common U.S. practice of treating the meat with chlorine to kill bacteria that can cause food poisoning.

The government suspended imports from 19 January and has taken a hard line with Washington, accusing it of flouting food safety laws. The United States says its poultry is safe, and some critics say Russia's ban could be politically motivated.

Sergei Mikhailov, chief executive of Cherkizovo Group, said: "Cherkizovo welcomes the government of Russia's recent provisions aimed at stimulating demand for national poultry producers by reducing poultry import quotas and restricting the use of chlorine in poultry processing."

He added that Cherkizovo will double production at its Penza poultry cluster by building a new incubation facility, one of the largest in Europe, adding "state-of-the-art slaughtering facilities" and about 100 bird houses.

Sberbank will invest $83 million, while Cherkizovo itself will contribute $37 million. The project will be completed by the end of 2011, doubling the annual capacity of the factory to 120,000 metric tons of live-weight poultry meat, according to Moscow Times.

The US is allowed to export to Russia 600,000 metric tons of poultry meat this year under a government-issued quota equal to roughly one-sixth of Russian poultry consumption.

This means that new facilities at Cherkizovo could replace about one-tenth of US supplies.

Together with the previously announced expansion of its Bryansk poultry cluster, also co-financed with Sberbank, Cherkizovo expects to increase its total poultry production by 40 per cent in 2012.

Russia is currently the world's largest importer of meat but seeks to become more self-sufficient.

Analysts have said large US poultry imports to Russia have often become hostage to chilly political relations between the two countries, reports Moscow Times. Moscow and Washington have announced a resetting of political relations after US President Barack Obama took office but have yet to overcome obstacles to reaching a key deal on reducing Cold War arsenals of nuclear weapons.