Supply and demand problem for Russian turkey

05-05-2017 | | |
Photo: ANP
Photo: ANP

The average price for turkey meat and hatching eggs in Russia may rise by 20% in the coming months, analysts predict. This follows the continuous outbreaks of avian influenza (AI) as well as restrictions entered by the country’s veterinary watchdog, Rosselhoznadzor, against import deliveries from the European Union.

On 17 April the second outbreak of AI was reported at Russia’s largest turkey manufacturer, Eurodon. At the end of 2016 Eurodon reported AI a turkey farm in Rostov Oblast.

Major culls at turkey facility

The company was forced to cull 700,000 poultry in the first week of January. This time the company culled 42,000 poultry, but the regional media Don News said that Eurodon has destroyed the entire poultry flock at the facility of 240,000 heads.

In mid-March the company released information that it had to stop supply of chilled turkey to the country’s market due to the outbreak, presumably until May. Eurodon accounts for nearly 25% of Russia’s turkey production capacities, so this step has led to price fluctuations.

Acute shortage of hatching eggs

Meanwhile, outbreaks of AI in Europe brought a new challenge to Russia’s turkey industry, as it started suffering acute shortage of hatching eggs. Albert Davleyev, the president of country’s consulting agency Agrifood Strategies told local media Kommersant that last year Russia imported 19.7 million units of hatching eggs and 75% of supplies came from Canada, Germany, France and Slovakia.

Since early 2017 deliveries from Germany and Slovakia have been restricted due to AI and the shortage of hatching eggs already started affecting manufacturers, as they forced to shift to the eggs of different breeds, thus introducing involuntary changes to the production process, Davleyev explained. At the same time, the demand in hatching eggs is steadily growing together with the production capacities, as in 2016 turkey production in Russia added 51.7% in volume to a record 227,200 tonnes and it will grow further to 250,000 tonnes, Davleyev forecasted.

In the past few months the price of hatching eggs in Russia as the result of shortage increased by nearly 10% to US$1.2 – 1.3 per unit compared to the last months of 2016, he said.

Eurodon has hold on the market

Kommersant, citing its own sources, said that in Russia there is no reasonable alternative to the import supplies of hatching eggs, as the only industrial producer of hatching eggs is Eurodon, and the company places price tag of about US$3.8 per unit. The company has denied this information saying that this is the price of “re-sellers” only, while the company is selling hatching eggs at a price several times lower. Eurodon’s information shows that last year company produced 9.1 million units of hatching eggs, including 6.1 million units for own needs and 3 million for sale.

Some poultry producers in Russia believe that with the current market situation the prices for turkey hatching eggs in the country will rise further by 15-20%, Kommersant said.