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The fastest growing company in the world will work in the Far East

Rusagro General Director Maxim Basov: "We are ready to increase production as soon as we get more opportunities for export to the countries of the Asia-Pacific region"

- Maxim Dmitrievich, not so long ago in the media there was information that Rusagro is coming out of the Mikhailovsky project and saying goodbye to the ambitious plans to "fill up cheap pork" with the Far Eastern regions of the Russian Federation. Did you really have a question with your participation in the TOP: to continue or to get out?

The fastest growing company in the world will work in the Far East
- Nothing like this. The point is that we do not rely on traditional Russian, perhaps, but on economic logic, we act in real time. The case is moving, negotiations are underway with the federal and regional authorities. Simply, it seems, journalists too harshly interpreted and exaggerated our reaction.

At some point, we did not really like that during the past year, almost no documents were signed that determine which infrastructure facilities in the TOR will be built at the expense of the budget. But, at the end of December the agreement was concluded, now we have two residents in Mikhailovskoye, both of whom have signed relevant documents with the Corporation for the Development of the Far East.

For today, everything is clearly defined. For the construction of modern pig complexes in Primorye, three types of infrastructure are required: gas, electric and road. The first was not taken by either the Rusagro Corporation or the province's leadership, as this is the sphere of the natural monopolist's compen- sation - Gazprom. We have with him and Mezhregiongaz separate joint plans as to which facilities and in what time frame will be built.

As for the roads and electrification, then, in agreement with the Far East Development Corporation, we will be allocated the necessary capacities. At the same time, part of the infrastructure will be built at the expense of the federal and regional budgets, the rest - with our own funds. Processes will go simultaneously and in parallel.

- And when will this happen?

- Over the next three years - 2016 th, 2017-th и 2018-th We need to create an infrastructure. Until 2019 year, we should be given gas. Unfortunately, the gasification of these territories was not included in the program of Gazprom. We need now to work with the management of the Mikhailovsky district, so that the plan for gasification of Primorsky Krai be supplemented accordingly. If something does not succeed, it means that we will have to gasify some of the facilities ourselves or work on liquefied gas. But all these problems are completely solved.

- Do federal and regional authorities help in the implementation of your project?

Yes, it should be noted here that even for the planned promotion of the project, which will develop for more than one year, operational decisions and assistance of the federal regional authorities are needed, and the Far Eastern and Far Eastern representative office for the development of the Far East does not refuse us. We are in direct contact with the heads of these departments and receive timely support.

- What will be the total volume of investments in Mikhailovsky projects?

- I will not name the exact figure - the currency rate changes every year, and with it the nominal volume of ruble investments. I can only say that the project consists of three parts, now it is officially announced that we undertake obligations on the first of them, the cost of which is about 22 25 billion rubles. The second and third phases will add up to about 30 billion in total. But we will proceed to them, if everything goes well - first of all, if we manage to “open” the Chinese and Japanese markets for our products.

In order to meet the demand of the entire Far East, we need only one and a half lines of construction of pig complexes. The remaining capacities are designed for export. But it does not happen by itself, this is preceded by the signing of agreements, for example, between the state veterinary services of China and Russia on admission to the Chinese market of meat products of our production. Also, a concrete object - the slaughterhouse, which we are building in the Mikhailovsky district, must be certified in accordance with the requirements of Chinese law.

Now Russian meat is delivered to China not directly, but through a chain of intermediaries in other countries. But there is a hope that this year two Russian enterprises will receive similar permits and we will pass such certification too. Such things take time: the meat market in all countries is tightly regulated, strict rules of veterinary control apply everywhere. But this is a profitable business for Russia, and we certainly need to develop the export of meat - chicken, pork, other types of products ... The largest foreign pork markets are Japan and China, where prices are much higher than ours. That's why we are building in Primorye our complexes: they will allow us to bring chilled meat from one of the lowest prime costs in the world to the most expensive markets.

- And what is the reason that our cost of pork production is one of the lowest in the world?

- We have the cheapest grain in the world, this is due to the large volumes of its production and the fact that it is unprofitable to export it because of transportation costs. Our price in the market is the world price minus transportation costs. Simply speaking, if 1 kg of pork needs 3 kg of feed, then the costs usually need to be multiplied by at least three times (the feed is still required to be delivered). And we have an advantage in this respect. Therefore in Russia the cost price of meat production is second only to Brazilian, and we have a very high profitability - about 30%.

Pork Russia provides itself for 90%, imports - less than one tenth of the total output, depending on the situation in the consumer market. And consumption is now declining because of a decline in living standards, and production is growing. It is clear that we need to find new opportunities for export. They gradually open, and this applies to other types of food. Before, we just imported food products, now we are turning into a good supplier. We are actively engaged in the promotion of our products in the world market and we are confident that we will be able to open it for ourselves on a large scale.

- What prevented you from earning such ambitious projects before the widely announced "turn to the east" and the creation of TOPs?

- The very lack of infrastructure, about which we spoke at the very beginning. While the state did not participate in its creation, the projects were not feasible. There are few private investments, instruments of a different order and level are required - federal targeted programs, tax incentives, etc. When production is based on modern technologies, you can not get away without electricity, gas mains, new machinery, good access roads. Such scale of investments and social obligations even large business alone will not pull. And on the other hand - answering your veiled reproach - I can say that in other cases we did not expect help from the state. For example, we are engaged in plant growing for a long time and successfully, although we do not have a lot of arable land in Primorye - only 28 thousand hectares. We are interested in increasing the land bank by a hundred or two hundred thousand hectares - on how much it will turn out. In total, we have a total of 500 thousand hectares in Russia, we are planning to increase the area. In Primorye, for the time being, we do not consider the results optimal (we were slowed down at the start), but even with these more than modest areas in our farms, we already sent the first 10 thousand tons of corn from 15 thousand grown to Japan, sold a good harvest in the domestic market Soybeans. We will develop this direction and also hope for the gradual opening of new markets.

- What are your plans for the Far East in general, and for the TOR system in particular?

- In Primorye, we have three business units. One plant, which I just mentioned, the second is the oil and fat combine in Ussuriysk. He produces a food additive for animals - soybean meal, which we sell mainly in the Urals and the European part of the country, as well as packaged butter (it goes to China) and mayonnaise (more for the domestic market). The enterprise is large, about 400 person personnel work with full load. The third type of business is being created now - meat plants we plan to build for three years. We closely follow the market situation and always tried to make our strategy flexible. So, we abandoned the idea of ​​doing aquaculture, but decided to develop greenhouses and grow vegetables in a closed ground. While we build greenhouses in the European part of Russia, but eventually - if the Chinese market opens - you can extend this business to Primorye. The greenhouse can be constructed theoretically everywhere, but small units are not very interesting for us, and for large greenhouse complexes a powerful energy resource component is needed. Again, everything depends on the infrastructure. In this respect, TORs and other government support systems can give business a good starting point.

- Does the company have plans to enter the Eastern export market of sugar?

The same problem as with pork. First, we need to do a lot of work to open the Chinese and Japanese markets for Russian sugar supplies to Russia. And for this, our products must meet many of the parameters required for food in China, Japan and other countries. Today these markets are closed to us. Before, there was nothing to export, and therefore this problem was not dealt with. If we can overcome the barriers to entering the Asian markets, this will be another great opportunity for the production of additional types of agricultural production in the Far East. Such plans are in our long-term strategy.

“But for new productions, new workers are also needed.” Do you think that people will go to the Far East in large numbers?

"It's hard for me to judge what a" mass order "is. I can only say that our company has its own experience in this respect. We are now in the queue for employment in Primorye - although at first seemingly no one was burning with such a desire. But people quickly saw that we are in the Far East own construction of housing, we build modern beautiful houses on the Dutch project. Now our business volumes are not too big, so the employees need not so much. But when pig breeding complexes will be put into operation, we will talk about thousands of jobs ... I see interest now. Many of those who now work at our enterprises in the Volga region, the Urals or in the central part of the country, like the microclimate of Primorye, they are ready to live near the sea. It is also important that Asia is close, and these are the prospects for major projects in the foreseeable future. People believe in the future, and we are ready to provide it. In this respect, the interests of all - business, citizens, and the state, which now pays so much attention to the Far East, converge.

- 2015 year was not very simple for the Russian economy. What was it for your company as a whole? Are you satisfied with its results?

- For Rusagro, the year was eventful. Against the background of an unstable economic situation in the country and in the world, the company was able not only to improve the production performance of the past year, but also significantly increased its assets, hitting the list of leaders in its segment. Shares of the company increased 2 times. In addition, according to the information of investment banks, Rusagro is today the No. 1 company in terms of growth and profitability in the world. As for the increase in assets, then, just in the Far East, we acquired the only producer of soybean oil and soybean meal in the Far East. Today, the plant is loaded with 100 percent and 450 processes tons of soybeans per day. Our brand "Maslava" is officially registered in China. Therefore, we are full of optimism in the movement of our business to the East and in relation to the opportunities that will be realized as a result of work in new markets.


REFERENCE ER:

For 2015 year, Rusagro's revenue increased by 25%, to 82,5 billion rubles, according to the operating report of the agricultural holding. The growth rate was more than two times lower than in 2014, when the company's revenue for the year increased by 57%.

The largest contribution to the growth of the proceeds of the agricultural holding in 2015 year was the sale of sugar, which grew by 46%, to 32,9 billion rubles, thereby providing more than a third of the company's revenue. Proceeds from crop production increased by 32% (against 23% in 2014-m), To 14,2 billion rubles. The growth of oil and fat direction slowed down four times compared to the previous year and amounted to 16% (+ 67% a year earlier), to 17,3 billion rubles. The smallest increase in sales of meat products - only 2%, to 18,1 billion rubles., And in the fourth quarter, revenue from this direction even fell by 6% in relation to the same period of 2014.

Rusagro ranks fourth in the ranking of the largest Russian agricultural holdings compiled by BEFL following the 2014 results of the year. The company's sugar business is represented by six sugar factories in the Tambov and Belgorod regions. Rusagro’s meat business is represented on the Russian market by two enterprises: Belgorod Bacon OJSC, which has production facilities in the Shebekinsky and Volokonovsky districts of the Belgorod Region, and Tambov Bacon LLCs in the Zherdevsky, Znamensky and Sampursky districts of the Tambov region. The company's fat-and-oil division includes OJSC “Fat Plant” in Yekaterinburg and an oil extraction plant in the village of Bezenchuk, Samara Region - ZAO Samaraagroprompererabotka. In addition, the company is engaged in crop production, growing barley, sugar beet, winter wheat, peas, sunflower and other crops.