Chairman of Cherkizovo Group Board of Directors Igor Babaev, First Deputy Governor of Tambov Region Alexander Dubovik, and the owners of the Spanish company Grupo Fuertes visited the construction site of JV Tambov Turkey in the region’s Pervomaisky District.
Chairman of Cherkizovo Group Board of Directors Igor Babaev and the owners of the Spanish company Grupo Fuertes.
In 2012, Cherkizovo Group and Grupo Fuertes announced the creation of the Tambov Turkey joint venture and the start of construction of a turkey meat production and processing complex in Tambov Region with capacity 40,000-50,000 tonnes of turkey meat per year and prospects for expansion. The Tambov Turkey project is being implemented with the support of the Administration of Tambov Region in partnership with the Spanish company Grupo Fuertes, Spain’s largest turkey meat producer. The total cost of the project is 7.27 billion roubles. Start-up is scheduled for the end of 2015.
Cherkizovo and Grupo Fuertes have already invested more than 1.2 billion roubles in the project since the agreement was signed.
Full-scale construction of a number of large facilities is currently underway, including a hatchery with capacity of 5.9 million eggs per year, a feed mill with production capacity of 150,000 tonnes of fodder per year, grain storage facilities with capacity of 120,000 tonnes, 4 rearing facilities with 4 units each, 9 fattening facilities with 12 units each, and a slaughtering facility with capacity of 2,000 head per hour.
During an inspection at the construction site of the rearing and fattening facilities of the largest poultry production complex in Tambov Region, Chairman of Cherkizovo Group Board of Directors Igor Babaev said: "Successful implementation of the Tambov Turkey project is extremely important not only for Cherkizovo Group, the Regional Administration and our Spanish partners, but also for ensuring food security as a whole on a Russia-wide scale. In the present situation, with an exchange of sanctions going on, we need to create conditions for European investors so that they do not export food to Russia, as was the case for many years, but instead share modern technologies and make investments for the development of Russian agriculture, which is far more important. Western companies should manufacture products in Russia."
Mr. Babaev particularly stressed the importance of federal government support for the international project: "When we reached an agreement with Grupo Fuertes on implementing joint projects in Russia, we specified guarantees for business in the form of direct investment subsidies, because Russian loans are much more expensive than those in Europe. It is crucial for projects such as Tambov Turkey to find support at both the regional and federal levels. Unfortunately, the mechanism of federal subsidies was not fully adjusted in our case. In 2012, the project was considered economically significant and received the necessary funds from the federal budget; but in 2013, there were no subsidies for the project. We sincerely hope that this year the situation will be clarified and the project will receive the necessary subsidies from the federal budget once again. Government support and subsidies for projects such as Tambov Turkey are the only reliable guarantee for European partners who may have questions about investing in agriculture in the Russian Federation."
Regional government officials also have confidence in the success of the project. Deputy Governor Nikolai Perepechin, in particular, said: "The project has enormous value. Above all, it means jobs in Pervomaisky District, and additional budget contributions and taxes. We see a fine modern complex. There were several regions where it could have been built, but we’re pleased that Cherkizovo chose Tambov. I’m sure the project will be implemented, and that Tambov is firmly behind it. As good strategists, Igor Babaev and Governor Oleg Betin saw the prospects of taking this route, and their long-term partnership will be an additional guarantee of future success."
"Tambov Turkey is a unique project for our company,” Grupo Fuertes President Tomas Fuertes said. “This is the first time our company has implemented a project in Russia’s agricultural industry. Cherkizovo Group is the largest agro-industrial company in the Russian Federation, and Mr. Babaev has been a personal friend of mine for many years, so we are pleased that Cherkizovo has become our partner. We see long-term growth prospects in the Russian agricultural sector and will consider new agricultural projects in your country.".
It is expected that the unique combination of European experience in breeding and rearing poultry and Cherkizovo Group’s experience in developing new projects in our country will allow the joint venture to quickly take its rightful place on the fast-growing Russian turkey meat market.
About Cherkizovo Group
Cherkizovo Group (LSE:CHE; MOEX:GCHE) is the largest meat and feed manufacturer in Russia. The Group is one of three leaders on the poultry meat, pork, and sausage product markets. The company's best known brands are Cherkizovsky, Petelinka, Kurinoe Tsarstvo, and Mosselprom. CEO Sergei Mikhailov and members of his family control 63% of Cherkizovo Group, and 37% of the shares are quoted on the LSE and RTS/MICEX.
Due to its vertically integrated structure, which includes agricultural land, grain storage facilities, own feed production, livestock breeding, growing and slaughtering, as well as meat processing and integrated distribution, Cherkizovo has consistently delivered sustainable revenue and profit growth. In 2013, the company's consolidated revenue exceeded $1.6 billion, and the Group produced more than 500,000 tonnes of meat products.
Cherkizovo Group’s strategy calls for organic growth and setting up new plants, as well as consolidating its assets. In the past 5 years alone, Cherkizovo Group has invested more than $1 billion in development of the domestic agroindustrial sector.
About Grupo Fuertes
Grupo Fuertes is a large Spanish holding company with more than 20 companies in its structure, most of which are involved in the agro-industrial business. They include well-known manufacturers, such as Agrifusa (agriculture), Cefusa (livestock breeding), El Pozo Alimentacion (meat production and processing), Procavi (turkey meat production and processing), Sediasa (cutting and preparing food products), Fripozo (deep-frozen products) and others.
Grupo Fuertes also owns the petrochemical company Aemedsa, Visoteles, which operates number of hotels, and the management company Profusa, which is involved in development in southeastern Spain.
Turnover of Grupo Fuertes is about 1.1 billion euros, and the holding has 5,450 employees.
Procavi, a leader on the Spanish turkey meat market with a share of more 43%, is part of Grupo Fuertes. Procavi also has a fully integrated manufacturing system with high-level control at all stages. Annual production capacity is more than 55,000 tonnes per year, or about 7 million turkeys. The company’s revenue is more than 129 million euros, and it plans to double this figure in the medium term.