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are not subject to Western sanctions, banks still accept inter- national transactions, though the number of sanctioned Russian banks tends to grow, he added. Mikhyuk describes the current situation in the Russian feed additives market as a perfect storm, saying that it also pre- sents local investors with some new opportunities. On the other hand, he added, none of the major importers have pulled out from the Russian market, although the foreign management of some companies have been cautious, limit- ing supplies to the Russian market. “The measures that will help importers are to avoid hysteria and not to aggravate the situation. Let the people adjust to the new reality and built new supply schemes,” Mikhyuk said. “Feed additives are a product of an exclusively humanitarian nature. All attempts to restrict civil goods will be analysed once the current storm is ended. This mainly concerns logistics companies.”
Impact of rising energy prices On the other hand, the current conflict also has the potential to hit feed additives producers in Europe. In the main produc- ing countries, energy prices increased, which has increased the cost of production, Savkina said. Just recently, BASF said it might halt production at the world’s biggest chemical plant in Ludwigshafen if the gas supply is halved under the German energy plan. German government triggered the first stage of its national gas supply emergency plan over fears that Russia might soon cut supplies if it doesn’t receive payments from foreign buyers in roubles.
“On the global market, there is an acute shortage of high-protein concentrates from Ukraine.” Lybov Savkina, Feedlot.
Shortage of high-protein concentrates The price of hydrocarbons has been seen rising since the be- ginning of the Ukraine crisis, which will boost production costs in the feed industry. “On the global market, there is a particularly acute shortage of so-called high-protein concen- trates from Ukraine, such as soybean cake. As much as 80% of European organic sunflower came from Ukraine. In addition, Germany imported large quantities of maize, rape and beet seeds, rye and sunflower seeds from both Russia and Ukraine,” Savkina warned.
Not only sanctions Western sanctions are proving to be quite painful for the Russian feed industry, although feed additives have not been directly subjected to restrictions, commented Dmitry Grachev, PhD, chairman of the Russian Feed Union (RFU), an independent department of the Russian Grain Union. “Russia is almost 100% dependent on the import of feed additives and any disruptions in logistics automatically cause fluctua- tions on our feed market”. Grachev said, “Due to our unac- ceptably low level of domestic livestock science, we are com- pletely dependent on Western scientific and technical service and know-how.” However, even if feed additive exports to Russia are subject to restrictions, this would not cause a collapse of the Russian market, Grachev said, adding that the market has been in tur- moil since 2020. “As estimated by RFU analysts, literally no more than a quarter of the European range of feed additives has been ‘squeezed’ to Russia owing to numerous regulatory barriers, cartels, and a high level of financial risk,” Grachev said. “Moreover, large-scale criminal monopolies, supported by a number of corrupt officials, have already turned the country into a convenient training ground for a variety of fraudsters, both domestic and international,” Grachev said. He explained that, for example, Russia is 60-70% self-sufficient in lysine, but medium and small market players saw a drastic ar- tificial shortage of this amino acid during the last autumn/ winter season. “Alongside lysine, threonine, choline, and some vitamins were in short supply. As a result, Russian farmers paid more for these products in 2021, taking into account the limits of least cost optimisation programmes, by a factor of two to five times compared to global prices,” he said, adding that against this background the cost diet for monogastrics jumped by 20% to 30%. Grachev add that RFU understands the difficulties that im- porters and farmers face today and does not insist on any “ex- ceptional or risky measures.” “However, there is an issue that is most critical for the Russian feed industry in relations with foreign players: the double standards of some of the largest companies in relation to corporate compliance and interna- tional antitrust rules,” Grachev said, adding that the problem originally emerged in 2020, and can become very painful in the future if large international companies fail to find a solu- tion and urgently work out “a jointly defined modus vivendi with regard to Russia.” “Some international companies have already left the market to avoid violating corporate compliance. Some companies prefer not to ‘notice’ these reasons in Russia and even indi- rectly cooperate with the feed cartel. But some international players are already directly involved in cartel schemes, thus forming and strengthening the foundation for illegal opera- tions and violation of all kinds of international rules and laws,” Grachev added.
24 ▶ ALL ABOUT FEED | Volume 30, No. 3, 2022
PHOTO: HENK RISWICK
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