Demand for Poultry will Start Growing Within a Month

23.11.2005 Kommersant

Demand for Poultry will Start Growing Within a Month

Ivan Kapitonov, head of sales department of Rubeg Group

- Russian producers of poultry claim that the demand for their production has reduced and the prices for it have fallen down because of avian flu. Are such phenomena characteristic for the imported production?

- According to our estimation there is practically no difference for the consumer between the imported and home chicken meat, thus the demand has drastically fallen down for the poultry meat category on the whole, irrespective of its origin. Because of these constant discussions about humans developing avian flu virus, we continue to observe the unusually low demand for poultry. According to our estimation, consumption fall has amounted to 20% for chicken meat, turkey meat and other meat types. As a result, the selling price for imported products has fallen by 10-15%. For example, our company had to reduce the price in the wholesale section for chicken halves from the USA, from 54 rubles to 45 rubles per kilogram. If we talk about the market on the whole, the cost for a frozen whole chicken that was 60 rubles per kilogram in September does not exceed 50 rubles today.

- How long in your opinion will such cost fall last?

- We believe that within a month the demand for the poultry meat will not only stabilize but also start growing. Several factors are promoting this today. Firstly, it is the attractive price, secondly, the coming holidays, during which we always observe increase in the consumption of all types of meat. Generally, such increase amounted to 10-15%. I think that nothing will prevent the market from growing up to similar size this season as well. Besides, on the eve of holidays, the consumption of untraditional poultry types such as ducks and geese increases significantly. According to our estimation, in the nearest future the price for meat will go back to its previous level in the connection with the increase in chicken, turkey, and other poultry meat consumption. This (though by implication) will be promoted by another factor: until now, the consumption of poultry was steadily increasing by 20% per year.

- But the consumers can switch to other types of meat, pork, for example.

- This is practically impossible. Chicken meat always was and still is the most available source of natural protein for the most part of the population. Annually our company imports 160 thousand tons of meat. Poultry meat accounts for nearly 50% of that meat (70 thousand tons), the other part is equally divided between pork, beef, and by-products. This approximately reflects the picture of meat consumption in the country. In a certain moment in the avian flu story, pork and beef were in much demand. The observed increase by 3-5% was quite brief, however.

- What in your opinion is it connected with?

- There was practically nothing that could replace chicken meat in the ration of our citizens. The main volume of foreign meat is imported to Russia within the framework of the importation quota. By the time there appeared information in the press about avian flu, the main quota had been already chosen by the importers, and the increase in the volume of pork and beef importation did not take place. Domestic cattle-breeding was not able to provide with the needed amount of these meat types for replacement. The second vital factor, due to which poultry meat preserved its share in the consumption structure, was the price. Most of Russian people cannot simply afford a nearly double increase in the expenditure for meat purchase. The price gap between the price of red meat (pork, beef- “Kommersant”) and chicken meat in the world market is about one dollar: if 1kg of chicken meat costs 1$ in the world market, then the prices for beef and pork are 2$ and 1,8$, respectively.

- How did the changes in the market that occurred in connection with avian flu influenced the work of the company?

- There were practically no changes for the importers. We import meat from wealthy countries where there are no hotbeds of avian flu, such as the USA and Brazil. Therefore, we did not have to change suppliers and redirect on supplies from other countries. The only thing is that because of demand decrease, we had to engage additional storage facilities to store the products in Saint Petersburg. But these are insignificant expenditures – more 0,3 rubles for a ton per month.

Interview by Maria Shevchenko Saint Petersburg.