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Cherkizovo Works to Secure Future Grain Supplies

by 5m Editor
20 September 2010, at 10:25am

RUSSIA - Poultry producer, Cherkizovo, is securing grain supplies for its future feed requirements.

Cherkizovo, Russia's top poultry producer, may buy up to 400,000 tonnes of grain to secure feed supplies following the country's drought-devastated harvest, Agrimoney.com has learned.

Sergey Mikhailov, the chief executive of the chicken and pork giant, said that the group intended to bolster its forward feed supplies by securing "grain stock for 2011 in the course of this year".

"We are currently implementing this strategy," he added.

This plan, which is could stretch over a 12-month horizon, would see the group acquire 300,000 to 400,000 tonnes of grain, a source familiar with the company explained.

The company, which owns two feed mills, has sufficient capacity to store 500,000 tonnes of grain, an amount approaching the annual output of Slovenia, and bigger than that of Albania.

However, the plans depend on the response of the government to grain prices sent soaring by the country's worst drought on record, which has cut production by more than one-third.

Russia has been attempting to ramp up domestic meat production to reduce its large reliance on imports.

Nonetheless, the government has yet to fulfil a pledge to open up its nine million tonnes of state grain reserves, a move which may reflect a desire to try to support prices sufficient to discourage stockpiling by growers.

"The government does not yet sell intervention volumes despite high storage costs in order to force farmers to sell their harvest," Agritel, the Paris-based consultancy, said.

Agrimoney reports Mr Mikhailov saying that expects the government's market control measures, which include a ban on exports and lower rail tariffs to encourage transport from distant regions, to "lead to a stabilisation" of domestic prices.

And even if prices do rise further, he forecast that consumers, rather than meat groups, would swallow the increase.

"We may expect further meat price inflation in the event of dramatic grain price increase," he said.

The comments came as Russia's prime minister, Vladimir Putin, confirmed that the country had enough grain to feed itself but would maintain its export ban until next year.