High-Level Visit to Cherkizovo's Lipetsk Pork Cluster

19 November 2012, at 8:55pm

RUSSIA - Vyacheslav Shport, Governor of the Khabarovsk Region, and other high-level dignitaries visited Cherkizovo Group's pork cluster in the Lipetsk region last week.

On 13 November, Vyacheslav Shport, the Governor of the Khabarovsk Region, and Alexander Yats, the Head of the Lazo local District Administration, visited the Lipetsk region and toured Cherkizovo's Lipetskmyasoprom pork cluster. The delegation was accompanied by Oleg Korolyov, the Lipetsk Regional Governor.

The visit was made at the instigation of Igor Babaev, Chairman of Cherkizovo's Board of Directors, who had visited Khabarovsk and other regions in the far east of Russia in late October. During his visit, Mr Babaev suggested an initiative to create a major livestock and crop cluster in the far eastern regions of Russia. In the long term (up to five years), such a cluster could provide quality domestic meat products to replace imports and meet the needs of local residents. Mr Babaev noted that the far east has significant potential for the development of successful cattle breeding, and in particular there is a good food supply, which could be used for livestock.

Governor Shport and other members of the delegation from the Khabarovsk Region spent much of their visit touring the Lipetskmyasoprom enterprise, visiting feeding grounds, breeding and rearing facilities and the feed mill. Governor Shport praised the facilities of Cherkizovo Group and said: "The work done by Cherkizovo has made a strong impression and gained a lot of respect. For several years, the company has managed to provide not only tax revenues, but also create many new jobs for the Lipetsk region."

Mr Babaev said that the creation of a pig cluster in the Lipetsk region is an example of a successful public-private partnership in the animal industries, and further cooperation such as this could be used to provide effective livestock development in the far east regions of Russia.

Mr Korolyov, commented: "Cherkizovo Group is a long standing partner of the Lipetsk region and our work together has always been positive. Cherkizovo Group's agricultural work uses only the most modern technology. The Group's products are bought both within our region and in neighboring regions; I'm sure any region would be happy to work with Cherkizovo as a credible regional investor."

OJSC Lipetskmyasoprom is an integrated pig farm that was built from scratch. Compared to other pig farms in Russia, it is unparalleled, meeting modern international technology and veterinary standards.

The production capacity of Lipetskmyasoprom is about 50,000 tonnes of live weight per year. Each module of Lipetskmyasoprom provides 4,800 sows and output of more than 100,000 head of commercial pigs (12,500 tonnes of live weight) per year. Within each module are separate stages of production, growing and fattening pigs, using modern equipment from major European manufacturers. Feed is supplied by the facility's own feed mill. The feed is made exclusively from natural components.

Cherkizovo Group

Cherkizovo Group (LSE:CHE) is the largest meat manufacturer in Russia and one of the top three companies serving Russia's poultry, pork and meat processing markets. The company is also Russia's largest producer of feed.

The Group includes seven full-cycle poultry production facilities, with a total annual capacity of 400,000 tons live weight; 14 modern pork production facilities with a total annual capacity of 180,000 tons live weight; six meat processing plants with a total annual capacity of 190,000 tons; six feed mills with a total annual capacity of 1.4 million tons; grain storage facilities with a total storage capacity exceeding 500,000 tons; and a land bank exceeding 100,000 hectares. In 2012, Cherkizovo expects to produce more than half a million tons of meat and processed meat products.

Due to its vertically integrated structure, which includes agricultural land, grain storage facilities, feed production, livestock breeding, growing and slaughtering as well as meat processing and integrated distribution, Cherkizovo has consistently delivered sustainable revenue and profit growth. In 2011, Cherkizovo's US GAAP consolidated revenue increased 24 per cent to US$1,479 million, and net profit amounted to US$147.8 million.

Within the last five years alone, Cherkizovo has invested more than US$1 billion into the development of Russia's agriculture sector. In addition to existing production facilities, the Group is also investing in a 20-billion rouble high-technology agro-industrial production complex in Elets, Lipetsk region. Cherkizovo's strategy includes both organic growth and investment in new projects, driving the consolidation of the Russian meat market. Cherkizovo shares are quoted on LSE and RTS/MICEX.