Turkey growers brace for new price increases
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Rising costs for equipment, logistics, packaging and high competition for workers are driving up the price of poultry meat. For example, the Cherkizovo group plans to increase selling prices for turkey products by 6.5% from September. In retail, turkey is more expensive than chicken and pork, and growth in demand for it is slowing down due to the modest dynamics of household incomes, analysts say.
Cherkizovo, a large meat producer, plans to increase prices for turkey products under its own brands and private label chains by an average of 6.5% from September 4. Kommersant has a copy of the notification from the director of Trade House Cherkizovo, Oleg Zakov, to partners dated July 31. Cherkizovo declined to comment.
Cherkizovo explains the need to raise prices with the departure of some manufacturers of spare parts and equipment for processing turkeys from the Russian Federation, which led to a doubling of the cost of the process. Also, the cost of hatching eggs increased by 19%, by 10% – by transport services, by 20% – by packaging materials. In addition, personnel costs increased by 19% in the first quarter of 2023 due to growing competition for workers in various sectors of the economy.
The current price increase covers only part of the cost increase, according to Cherkizovo’s letter.
Vkusvill confirmed receipt of a notification of a price increase for turkey from Cherkizovo. In X5 Group (Pyaterochka, Perekrestok, Chizhik), Magnit, Lenta, Metro and Azbuka Vkusa, Kommersant did not respond. The Ministry of Agriculture admits that production costs, as well as the seasonality factor, affect the price dynamics of turkeys.
Cherkizovo, owned by the Mikhailov family, ranks second in Russia in terms of turkey production (Pava-Pava brand), with a slaughter weight of 80,500 tonnes in 2022, according to Agrifood Strategies and the National Association of Turkey Producers. Cherkizovo also produces sausages, chicken meat, and pork. The first place in the production of turkey is occupied by the Damate Group of Companies with 215.5 thousand tons over the past year. The company did not provide a comment.
In recent years, prices for various types of meat have been rising more and more actively. According to Rosstat, the leader in the rise in prices was chicken, the average retail prices for which have increased by 11.42% since December 2022, to 196.93 rubles. for 1 kg (see “Kommersant” dated August 4). Pork rose in price by 3.04%, to 308.38 rubles. for 1 kg.
An idea in June cost an average of 446.61 rubles. for 1 kg. According to Kommersant’s sources on the market, selling prices for turkey meat from manufacturers are on average at the level of 320-340 rubles. per 1 kg thigh and breast fillet.
The turkey market is completely dependent on competing types of meat, and the dynamics of the segment can only be assessed in relation to chicken and pork, prices for which have increased by a total of 30% by August 2023, explains Albert Davleev, president of Agrifood Strategies. According to him, prices for thigh fillet and turkey breast fillet increased by an average of 10-12% over the year.
Kommersant’s sources in the industry claim that we are talking about a price increase of up to 20% per year. In the case of Cherkizovo, Kommersant’s interlocutors say, an additional factor for raising prices could be “problems with the safety of turkey livestock at some enterprises.”
According to preliminary data from Agrifood Strategies, in the first half of the year, the production of turkey meat in Russia as a whole increased by 7–8% yoy, to 219.8–221.8 thousand tons. According to Mr. Davleev, the demand for turkey as an alternative to chicken and beef is increasing in Russia. At the same time, the output of beef and mutton is not growing, and there is “a slight deficit” in the chicken meat market.
Director of Yakov & Partners Oleg Shenderyuk, however, notes that the growth rate of turkey consumption in Russia has begun to slow down and is unlikely to exceed 3–5% per year in the future due to a limited increase in household incomes. The Ministry of Agriculture, on the contrary, believes that the consumption of this meat is growing steadily, adding that over the past five years, Russia has risen from seventh to second place in the production of turkeys in the world, almost doubling its output.
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