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The Russian feed industry feels the sting of Western sanctions
Since the beginning of the Ukraine crisis, the feed industry in Russia has been in turmoil, hit by supply disruptions, expensive logistics and unprecedented uncertainty.
BY MARIEKE PLOEGMAKERS, EDITOR ALL ABOUT FEED A
Russia is roughly 90% dependent on feed additives.
mass exodus of Western businesses is one of the major challenges the Russian feed industry now has to face. At the time of writing, almost 500 companies have announced their withdrawal from
Russia, research conducted by the Yale School of Manage- ment showed. Some feed companies have also joined this trend. For exam- ple, the Danish agribusiness cooperative DLG has announced a decision to stop all its commercial activities, including its production of vitamins and minerals in Russia. All import and export operations were also due to be suspended. For several years, DLG has had a successful collaboration with Alltech in Russia. However, most Western companies remain careful when it comes to their future plans in the Russian market. In a state- ment on its website, Cargill, for instance, said it will scale back
its business activities and has stopped investment in Russia, though the company has not provided any additional details. “We will continue to operate our essential food and feed facil- ities in Russia. Food is a basic human right and should never be used as a weapon. This region plays a significant role in our global food system and is a critical source for key ingredi- ents in basic staples like bread, infant formula, and cereal,” the company said. A similar statement has been issued by ADM, which promised to scale down its business in Russia, but not leave the country altogether. “Our footprint in Russia is very limited, and we have made the decision today to scale down operations in Russia that are not related to the production and transport of essential food commodities and ingredients. And we will of course continue to comply with all sanctions, laws, and regulations,” ADM said.
Localised business is in trouble Local business of foreign companies in Russia currently has to deal with more than just mounting reputational risks. During a press conference in Vladimir Oblast on March 29, NPAO De Heus, a joint venture between De Heus and Russian company MKorma, reported that the company would maintain its op- eration in the country producing feed and feed additives. A local newspaper Zebra also said that NPAO De Heus even continues to invest; it is currently building a 12,000 square metre warehouse to facilitate an increase in production. How- ever, the company raises concerns over a lack of foreign raw materials and equipment. Currently, import and export oper- ations have been hampered by Western sanctions against Russian banks. Besides, the world’s largest shipping compa- nies Maersk, MSC, and CMA CGM suspended booking trans- port to and from Russia. “At the moment, raw material re- serves are enough to maintain operations for three to four months, as 30% of raw materials used [in the production pro- cess] are imported from China, EU, India, and South Korea,” the company said in a statement, adding that the price of im- ported raw materials had tripled. “At the production site, more than 80% of imported equip- ment is from EU countries. All spare parts are ordered in the
22 ▶ ALL ABOUT FEED | Volume 30, No. 3, 2022
PHOTO: ANNE VAN DER WOUDE
PHOTO: SCHARFSINN
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