Vladimir Yevtushenkov will invest 2 billion rubles in a dairy farm

The plans - to increase production by more than 3 times.
10.10.2018
Vedomosti
Origin source
The agroholding Steppe, which is part of Sistema’s Vladimir Yevtushenkov AFC, will build a dairy farm in the Rostov region, Andrei Neduzhko, general director of the agroholding, told Vedomosti. The design capacity is 33,000 tons. It, together with the farm launched in March 2018 in the Krasnodar Territory and another new enterprise under construction there, will increase production more than 3 times from 40,000 tons in 2017 to more than 130,000 tons in 2022, said Neduzhko.

The plans of the “Steppe” are also known to the Minister of Agriculture and Food of the Rostov region Konstantin Rachalovsky. The memorandum on the construction of the enterprise region and agricultural holding October 10 sign at the exhibition "Golden Autumn", said the representative of "Steppe".

Agroholding Steppe took up milk in 2016 after the acquisition of the Rodina enterprise in the Krasnodar Territory. In addition to the dairy direction, the agroholding is engaged in the production of fruits, vegetables, and grain crops. In 2017, the “Steppes” revenue increased by 22% to 10.2 billion rubles, adjusted operating profit (OIBDA) - by 40.6% to 4 billion rubles. The total land bank of agricultural assets of Sistema is 380,000 hectares. Among them, in addition to Steppe, RZ Agro is a joint venture of Sistema and members of the Louis-Dreyfus family.

The new farm in the Rostov region is designed for 3,000 heads of dairy herds, says Neduzhko. It will be located on the lands of one of the “Steppe” farms. Investments will amount to 2 billion rubles, which will provide Alfa Bank, said Neduzhko and confirmed the representative of the bank.

Rostov project "Step" is not limited. In addition to existing projects, the agroholding will build two more “mega-farms” by 2022, says Neduzhko, without disclosing their parameters. In the future, Steppe intends to enter the top five largest milk producers in the country.

Now the largest producer of raw milk is the Ekoniva agricultural holding Stefan Dürr. In 2017, Ekoniva released 297,000 tons of milk.

Neduzhko considers dairy business attractive. Steppe has developed technology for the efficient construction of new farms, the yield for them is twice as high as the national average, says Neduzhko: about 11,000 tons per cow per year for Steppe, 5,700 tons are average for Russian enterprises, according to Soyuzmolok.

Indeed, large modern farms have a high EBITDA margin of around 40%, says Soyuzmolok's executive director Artem Belov. The state support also helps, Belov said: from 2017 the state will compensate investors for 30% of the construction costs of dairy farms, banks provide loans at a preferential rate of up to 5%.

Increase production and other large market participants.

Production of Ekoniva in 2018 will increase by 70% to 500,000 tons due to the launch of new dairy complexes in the Kaluga, Voronezh, Ryazan, Novosibirsk regions, Dürr said. The expansion of production and Damate Group in the Tyumen region continues, the representative of the group added: in 2017, the group's enterprises produced 6,200 tons of milk, and in January-September - already 21,700 tons, by 2020 Damate would increase production to 55,000 t.

There is room for growth in the market, Dürr believes: Russia does not yet provide for its own needs in milk. In 2017, own production provided 75% of the milk requirement, according to Soyuzmolok.

In addition, the market is weakly consolidated, so large and efficient manufacturers will grow, and small obsolete enterprises will be closed, according to Dürr.

According to Neduzhko, the need for high-quality milk will increase with the tightening of state policy and withdrawal from the market of falsification. He predicts stable and long-term demand from processors. Now, according to him, “Steppe” mainly supplies milk for processing to the Korenovsky milk canning factory.

All regions have different types of raw milk, but there is a need for high-quality milk, says Marina Balabanova, vice president for corporate relations at Danone in Russia and the CIS. Danone concludes long-term contracts with suppliers for stable deliveries. In particular, the company cooperates with Damate: under the terms of the contract, all the milk produced at the Tyumen farm is delivered to the Danone plant.

The Ministry of Agriculture predicts an increase in milk production by 1.2% to 31.6 million tons in 2018, TASS reported on Oct. 9 data from Agriculture Minister Dmitry Patrushev. But the increase in production at enterprises will be greater - by 2.5–3% to 22 million tons, predicts Belov from Soyuzmolok.

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