Cherkizovo welcomes Russian governments measures to support domestic meat producers

OJSC Cherkizovo Group (LSE: CHE) one of Russias leading integrated and diversified meat producers, starts to receive subsidies in line with Governments recently announced support measures.

Under Government decree ? 1247, agro-industrial companies will receive additional government support for pork, poultry and egg production. In total, there will be 9 billion roubles set aside to support Russian producers. 

Regional governments are finalising the methodology for calculating the amount of subsidies allocated to producers. The subsidies received will offset the cost of sales.

Cherkizovo Group will apply for these subsidies on the basis of its actual production volumes. This corresponds to about 382 mln roubles in poultry segment and about 168 mln roubles in pork segment.

Sergei Mikhailov, CEO of Cherkizovo Group OJSC commented on the measures taken to support producers:

We welcome the Governments announcement on subsidies for Russian producers.These measures follow an exceptionally difficult year for the Russian agro-industrial industry with extreme weather conditions leading to drought and fires, resulting in lost harvests and consequently a  steep increase in grain prices. As one of the largest vertically-integrated agro-industrial companies in Russia, Cherkizovo Group has benefited from Government support; in particular, its timely actions in the grain market, which enabled us to buy sufficient quantities of grain to meet our needs until September-October 2011.

We also welcome the recently revised poultry and pork import quotas for 2012, which have been reduced and capped at 250,000 tonnes 320,000 tonnes accordingly. The new quotas will enable Russian meat producers to continue increasing their production volumes to meet the Russian governments target to substantially reduce imports by next year.

Todays announcement will lead to the stabilization of the market and allow producers to continue the development of domestic production in tough conditions. The positive outlook we are predicting for Russias 2011 harvest will lead to a further reduction in production costs.