Russia's poultry feed prices are facing problems

The official statistics of the Russian Federal Bureau of Statistics stated that in 2015, Russian poultry feed prices soared by nearly 20%, an absolute record, and this growth trend will continue in 2016.

At the same time, the prices of poultry and eggs are also under pressure from oversupply, and these trends are likely to lead to a decline in the profits of the Russian poultry industry.

Poultry feed price

In February of this year, the average carcass price of Russian broilers was 118 roubles (US$ 1.79) per kilogram, a decrease of 5% from the same period in 2015. During this period, the price of poultry feed increased from 157.86 million rubles (240 US dollars) to 175.99 million rubles (267 US dollars).

According to a report from the Central Bank of Russia, potential problems with the 2016 crop harvest may lead to further increases in poultry feed prices. Therefore, those poultry factories with low profit margins will be bankrupt.

70% of production cost

According to estimates of the Russian Federation of Feed Producers, current feeds account for nearly 70% of Russian poultry and egg production costs. In early 2016, Russia required 2.4 kg of feed for each kilogram of poultry meat, and the production of 10 eggs would generate 1.24 kg of feed costs.

As a result, a $1 increase in feed costs will cause poultry producers' production costs to increase by $0.70. In addition to the devaluation pressure of the ruble, producers have to face increasing pressure on the price of feed additives and premixes, and Russian feed additives and premixes are mostly imported.

Hidden poultry feed market

Valery Afanasiev, Russia's director of feed production, said that it is difficult to predict the prices of poultry feed and poultry because Russia's 30% to 40% of the markets are "in the shadows," and this part of the product is difficult to count. The Russian Federal Bureau of Statistics stated that Russia’s farmers produced a total of 13 million tons of poultry feed in 2015, and according to estimates from the Russian Poultry Farmers Union, the actual demand was between 16 million and 17 million tons.