Sergey Mikhailov participates in a meeting with Dmitry Medvedev

February 19, 2019

Moscow, Russia – 18 February 2019 – Sergey Mikhailov, CEO of Cherkizovo Group, shared his outlook on the supplies of Russian meat products to China at a meeting with Dmitry Medvedev, Prime Minister of the Russian Federation. The event took place at the Russian Investment Forum in Sochi.

With 23 Russian poultry producers gaining access to the Chinese market, the country has reached a significant milestone on its way to meeting the President’s target of selling USD 45 bn worth of agricultural exports.

According to Sergey Mikhailov, Cherkizovo estimates Russian exports to China through neighboring countries at around 60 kt in 2018 at the average price of USD 0.75 per kg. “Direct access to the Chinese market will allow Russian producers to at least double the average price to USD 1.5 per kg and eventually grow exports to 150 kt. Cherkizovo plans to contribute 30 kt. As a result, the Russian poultry supplies to China will hit USD 200–250 m,” said Sergey Mikhailov.

Pork producers can be next to enjoy the status of eligible importers. In China, this market has much more room than its poultry counterpart, and Cherkizovo expects a rapid growth in the country’s pork imports over the coming years. About a million of pigs have been killed in China due to African swine fever. This comes at a time when even a 10% reduction in the number of animals would require a 5–7 mtpa increase in imports to maintain the usual consumption rates.

“Russian exports to China can be as large as 200–300 ktpa, which is equal to USD 300–400 m. Before we can supply directly, an agreement must be reached with China on how to zone Russia in terms of African swine fever and on a list of Russian companies adhering to high biosafety standards that will go through selective qualification procedures as exporters,” noted Sergey Mikhailov.

Importantly, direct by-product supplies to China will provide a boost to Russian companies’ margins and help improve their competitiveness in other export markets.

Sergey Mikhailov also met with the leaders of the regions where Cherkizovo Group operates, including Ivan Belozertsev, Governor of the Penza Region, Viktor Tomenko, Governor of the Altai Territory, Alexander Gusev, Governor of the Voronezh Region, Igor Artamonov, Head of the Lipetsk Region Administration, Roman Starovoyt, Interim Governor of the Kursk Region, and other. Among the many topics discussed were the pork farms under construction in the Penza Region, the upgrade of the recently acquired Altaisky Broiler in the Altai Territory, and major investment projects in the pipeline for the Black Earth Region.