Europe’s largest feed producer plans $17m complex in Voronezh region

9 Apr '10
Oleg Kouzbit, Online News Managing Editor

Europe’s largest feed producer, Netherlands-based Nutreco International, has aired plans to set up a $17.1m, three-stage feed additives production in the Voronezh region. With a 50,000-ton capacity at Phase 1 alone the prospective plant is expected to become one of Russia’s largest. Sector experts are divided in their views; there’s a risk domestic consumers may find the plant’s premixes overpriced. However, with enzymes and most other feed components presently imported, Nutreco’s Russian project will offer the market European quality for less than the European import price.

The Netherlands’ Nutreco International has decided to build a $17.1m vitamin and mineral feed additives plant in the Voronezh region.

An agreement was reportedly inked last week between the region and the firm’s Russian subsidiary, TekhKorm.

According to TekhKorm, a specific site for the future plant hasn’t been chosen yet; but the region’s Liskinsky District looks most likely.

Timeframes have yet to be announced, but the company has told media that it will build the complex in three stages. The $11.9m Phase 1 is scheduled to break ground later this year with a projected capacity of 50,000 tons. Then Nutreco has plans to launch a $750k Phase 2 that will produce milk substitutes. When the third $4.45m stage comes online the company expects to begin making prestarters for piglets.

As a separate microproject, a scientific and research lab may be set up at the facility.

The investor profile

Nutreco International manufactures fodder, feed concentrates, vitamin and mineral premixes and additives. The Dutch company also specializes in breeding a wide variety of animals, birds and fish. It has engaged in processing agricultural produce, too. Nutreco runs about a hundred factories in more than 30 countries and sells products to more than 80 countries. In 2008, sales hit a reported $6.5bn.

As Nutreco’s 100% subsidiary operating in Russia for about a decade now Moscow-based TekhKorm sells Dutch feeds across the country and also produces provender of its own.

Win-win ‘undulation’?

Analysts are divided in their appraisal of the new project. On the one hand, cattle demand in Russia is gradually on the increase; on the other, poultry and pig farms have recently reported a slight drop in feed additive consumption. Prior years saw inverse trends, which may return.

But with the kind of diversification that Nutreco plans for the prospective Voronezh facility the feeling is that some of its products will always be in demand.

More costly…less costly

Despite its ability to spread its risk, some analysts think Nutreco’s new production site will face fierce price competition with Russian producers. Even operating out of Russia the Dutch will still have to price Voronezh premixes higher than domestic analogs, which experts say are in the same quality league.

The real growth and profit areas however, lie in enzymes, probiotics, acidulants, mold inhibitors, growth-promoting ingredients and other components essential for any feed allowance. All of these are predominantly imported today, so TekhKorm will be able to offer these products at very competitive prices.
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