News last update:14 Jan 2016

Russia: 90% of feedmills are behind the times in techology

Russia’s feed industry is currently under a great deal of pressure due to a number of factors, which are seriously hampering the industry’s development and could lead to stagnation in the near future.

This was the opinion expressed by the Alex Dumoulin, Director General Unigrain, a Russian producer and distributor of feed, at the recent "Grain Industry in the XXI Century" conference in Moscow. According to him one of the most serious of these factors is the technological backwardness of feedmills in Russia.

"The growth of a balanced feed production in Russia is hampered by the technological backwardness of 90% of existing feedmills, as well as their distance from the consumer, the shortage of professional staff, rising taxes and prices for raw materials, protein and vitamin supplements. The situation is not helped by the tendency in Russian to simplify the feed production process as well as companies creating a lot of small feed production enterprises rather one large hi-tech enterprise" he said.

Dumoulin also noted that the feed production market in Russia, which is now booming despite all of these factors, may soon move into a stage of stagnation, when the rising demand is met fully.

"Profitability of feed producers, which currently stands at about 15%, will sooner or later fall when the existing demand is met. This will happen in the next 5-7 years. After this we will see the feed production industry go down the same route as the flour industry" he said

According to him, the flour market in Russia is in a stagnant state, while millers have margins below the official rate of inflation, just about 5-5.5%. This leads to an excess of existing facilities: 50% of Russian flour mills are currently underloaded. He predicts that the same could happen in the feed industry.

Or register to be able to comment.