Sanctions are not alone. Who is to blame for pet food shortages

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Sanctions are not alone. Who is to blame for pet food shortages
Sanctions are not alone. Who is to blame for pet food shortages
6 July, 14:28Photo: Александр Дыбин
In 2022, Russians are having trouble buying pet food. Familiar brands are disappearing from stores, food prices are rising. This is explained by the crisis, the rupture of supply chains and sanctions. But problems arose a year or two ago. Why is it so - read in the material of "Novye Izvestia".

Alexander Dybin

An animal shelter employee Svetlana from Chelyabinsk told Novye Izvestia that this year she faced a sharp increase in prices and the disappearance of a number of brands.

“Indeed, there were problems with supplies, prices were constantly rising. On ProPlan and Royal prices increased by 4 times. Husse food disappeared altogether, but it was suitable for the animals. Deliveries were delayed even from a local manufacturer that operates in our region”, - the interlocutor said.

Interruptions at the global level are also noted in the press service of the Ozon marketplace.

“In the first quarter of 2022, we delivered 2.4 times more feed than in the first quarter of last year. Unit sales of pet food in the first quarter increased by more than 3 times year on year. The top user preferences are formed by both foreign brands and domestic pet food manufacturers, the company said. - In the first quarter, the number of pet food sellers on Ozon grew 2.3 times year-on-year. In the spring, many suppliers and manufacturers of animal feed experienced supply difficulties, but managed to rebuild the supply chains and now the supply situation has returned to normal”.

According to Kirill Dmitriyev, Chairman of the Board of the Union of Pet Business Enterprises, Chairman of the Opora Rossii Pet Business Commission, supply problems began not in 2022, but earlier, during the pandemic. At the same time, one of the main reasons for interruptions in imported feed is the position of regulatory authorities.

“The feed market has been in a fever for several years”, - the expert says, - “the problem is that a significant part of feed manufacturers in Russia, whether they are multinational corporations or local companies, have not reached 100% localization of production. I think localization is about 75%. At the same time, Russian factories depend on the supply of raw materials, minerals, vitamins, equipment service, spare parts, and software. Another important factor is that for the past few years, the Rosselkhoznadzor has been consistently fighting against imported feed, finding either GMOs in them, or something that is not declared in the composition. In this case, special highly sensitive tests are used, which even show traces of some ingredients. A common complaint is that they cannot detect protein in the feed, for example, lamb, but fix chicken protein. But the food is produced at high temperatures, the protein just breaks down, and the presence of traces of chicken protein is an accidental drift after production”.

The expert notes that a significant number of brands were banned from being imported into the country due to the content of genetically modified components: cereals and soybeans. At the same time, GMOs in feed are not prohibited by themselves, but the registration procedure is practically impossible. According to Russian laws, it is necessary to register each line of GMOs, and this should be done by the producer of raw materials, and not by the final product. And they simply do not need to go through a complex and lengthy procedure.

“A situation has arisen when these GMO lines in the EU and the US are quietly used in products for people, and the Rosselkhoznadzor requires registration for animal feed”, - says Kirill Dmitriyev. “Also, recently the agency has started blocking entire countries, following the logic that if you can't trace products in one batch, then you can't trust all the products from that country. So Holland, the USA, Canada, Germany, Spain, Poland, Bulgaria, the Baltic States were closed. This led to a total shortage of brands. The business had to adapt, they began to order more from Russian manufacturers, but there are not as many of them as we would like and they have limited capacity. Well, a line of 25 thousand tons cannot start producing 30-40 thousand. We need to take another line, and this is not so easy in the face of a shortage of loans, current rates and sanctions. The production of feed is not recognized as the processing of agricultural products, although in fact it is so. And business cannot take advantage of all the benefits and support measures”.

That being said, the pet food market looks quite attractive. In 2021, the volume of feed in Russia was about 1 million tons, and the turnover was 200 billion rubles. This makes entrepreneurs from other areas pay attention to this market. For example, in Kopeysk (Chelyabinsk region), a stew-producing enterprise has launched the production of wet dog food.

“Three months ago, we started receiving offers from customers for animal feed”, - says businessman Ivan Verakhin, - “they calculated and made a recipe. We assembled a focus group, fed 20 dogs for free for a month, received feedback and launched production. Entering the market turned out to be quite easy, as many people left the market. Now sales go through the Internet, first they take a sample, then they buy a month's supply".

However, according to Kirill Dmitriev, Russian manufacturers are overwhelmed with orders, they lack raw materials, packaging, cans, film, white paper, cardboard and paints. The market will be rebuilt and soon economic factors will start to speak.

“According to my assessment, the potential of Russian factories has been exhausted and it is necessary to look for opportunities to import the same packaging”, - the expert says. - Increased demand leads to the fact that our manufacturers have a queue of customers. Yes, they are good, but it is not good for the customer. Nobody can tell you exactly when your order will be made. In addition, the factories have switched to a 100% prepayment regime. If earlier they thought about where to sell the goods, now they work only with an advance payment. This can also be understood, they need to buy raw materials, packaging, which are jumping in price. Until you buy, you will not understand how much your cost will be.

In this situation, someone will have to take over the cash gap between production and sale. Feed can lie on the shelves for up to two years, and the seller needs to pay for a new batch now. Perhaps this burden will fall on the wholesaler if they can access credit.

“New plants in the Russian Federation are very late, we have to open 4-5 plants a year annually in order to have time to saturate the market,” says Kirill Dmitriev, “some feed is not produced in the Russian Federation at all. For example, dietary, for animals with disabilities, functional, super premium food. This could be solved by importing from friendly countries. China, Southeast Asia, part of Europe, Latin America, even South Africa, but the attitude of the Rosselkhoznadzor to new importers is just as tough as to the old ones, it is also difficult for them to enter our market. Plus, the situation is complicated by logistics. Previously, the cost of delivering cargo by truck from Europe cost 2.5 thousand euros, now it is up to 15 thousand. And that's just shipping. I think that the business will eventually adapt to any conditions, it’s a pity if we don’t have the opportunity to get the necessary food for pets with health problems”.

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