Russia's largest turkey producer Eurodon is planning to open its first farm for industrial scale production of ducks. The company wants to re-educate Russian consumers about duck meat and expects higher margins than average in the poultry sector.
By Vladislav Vorotnikov
Russian publication Kommersant interviewing industry experts concluded that Eurodon is actually going to ‘shake-up’ the duck meat market in the country. Currently duck meat consumption in Russia is estimated at a maximum level of 70,000 tonnes per year, or 2% of the total poultry meat production. The new enterprise of Eurodon is designed for the production of 20,000 tonnes of duck meat in the first stage with the prospect of increasing this level to 40,000 tonnes. The first stage brought with it an investment of RUB 5 bln (US$ 170 mln). Eurodons management expects that the margin on exclusive and chilled -instead of frozen- duck meat will be higher than the average margin in the poultry industry.
Profitable niche product
Duck meat was very popular in the times of the Soviet Union, but with the collapse of the country and the dismantling of collective farms - the main producers of this type of meat - the product no longer found its way to market. Accordingly consumption of duck meat plummeted. Once, the Soviet Union had a population of 200 million ducks, and this has now been reduced to practically nothing. However, CEO of Eurodon, Vadim Vaneev is quite optimistic about the opportunities in the duck meat market. He is confident that restoring the culture of consumption of duck meat in Russia will be no more difficult than to teach the citizens to eat turkey, which the company has already actually done.
“Duck meat has become a niche product and we have to revive the consumer culture which was almost lost over the last 20 years”. He continues: “We were the first company on the Russian market producing and marketing turkey - a meat which almost no one consumed. We have reached our goals there, so I don’t think it will be any more difficult with duck meat,” mused Vaneev. Authorities generally support his opinion.
“The production of niche products that give relatively small amounts of output often have a very high level of profitability. Taking into account the current over production of chicken meat and the falling profitability in this segment, we can safely say that niche products, such as duck, geese, quail can be of great assistance for poultry farmers in financial terms,” said Michael Chkanikov, a member of the Public Council under the Ministry of Agriculture of Russia.
Scaling up fast
The first phase of the Eurodon duck meat complex with an annual industrial output of 20,000 tonnes is expecting to opened this autumn. The farm will be located in the Miller area of the country’s Rostov region. In order to control the quality and biological safety at all stages of the production process, the company Donstar, an Eurodon affiliated company, will build the whole cycle of the production complex. The design will follow a proven concept. It will incorporate feed milling, hatchery, parent stock, commercial stock as well as processing and logistics capacities, just like the Eurodon turkey facilities. In addition, the project was originally formed as a model, that, over time can be replicated in other areas and regions of Russia.
In total, Donstar already owns 43,000 heads of ducks. In the near future the company intends to open a hatchery with a capacity of 11.5 million eggs per year. Since mid-summer 2012 the company started to produce meat in test mode - gradually reaching the planned capacity of 20,000 tonnes of duck meat in a year. In parallel, it is beginning the construction of the second phase of the project - with a capacity of 40,000 tonnes of meat a year.
All production facilities are created with the use of the latest technology, including a lot of know-how. All poultry houses have abundant systems of heating, water and electrical supply. Poultry houses are fully mechanised and automated. Computers monitor the temperature, humidity, ventilation, availability of water and feed (in the first week ducks can eat without limitation) and control the feed composition.
From frozen to chilled meat
According to experts the project is of great importance because it increases the competitiveness of the whole industry. Dmitry Patrushev, chairman of the Management Board of JSC Russian Agricultural Bank, said that the fast development of the poultry industry in Russia depends on the construction of such high-tech complexes and the expansion of the product range. This is why the Russian Agricultural Bank is supporting similar projects across the country.
For the average Russian family this means that the once traditional tasty low-fat white duck will be back on the dining table. Each family in Russia still owns a duck roaster, research has shown. Vaneev claims that the duck meat of Eurodon will be marketed at a competitive price. “In our store, chilled duck will cost about 200 rubles (US$ 6.8) per kilogram, which will successfully compete with the frozen product,” Vaneev promises. Experts believe that the new project will give an added stimulus to the development of the market of duck meat in the country.
Meat consumption for Russians largely depends on its availability. When the only available duck meat in store is of poor quality, imported and frozen, it is clear that the demand for such meat will not be very high. Chilled meat of Peking duck - will be fundamentally different. Besides that, affordability will be the crucial factor that will spur the market. Predictions show that thanks to such projects like Eurodon has now initiated, the market of duck meat could grow to 120,000-140,000 tonnes by 2020, which is almost two times higher than compared to the current level.
Doubts about duck potential
However, not all experts believe in the potential of the duck meat market in Russia. “With the saturation of the chicken meat market, such projects claim to occupy a niche market. However, this raises some concerns, as the Russian consumer is still prone to some conservatism when choosing a particular type of meat. Even turkey, and not to mention duck meat, is considered far too exotic for the average Russian consumer. In this situation, one should recall the famous saying ‘Demand creates supply’. To date, there is no increased interest in duck meat from domestic consumers,” explains Sergei Chernishov, of the analytical agency EMEAT.
“Imports from abroad are relatively small - according to our data, duck meat imports in 2012 amounted to only 1.1% of the total imports of poultry meat. Investors in such projects have a chance to explore the niche opportunities, but if we talk about the future development of the duck meat market, here we can not safely say that this market will develop and grow rapidly. Given the extremely small number of investment projects in the production of duck meat and the
stagnation in imports of this type of meat in Russia, it is difficult to expect a high rate of growth of the duck meat market in the coming years,” Chernishov concludes.