Zero tax rates for agricultural producer profits boost to Russian meat business

Zero tax rates for agricultural producer profits boost to Russian meat business

Earlier this month, Russian President Vladimir Putin set zero tax rates for agricultural producers on profits in perpetuity, boosting prospects for the country’s meat companies.

Russian poultry and pork business, the Cherkizovo Group, sees this as a good move: “Our company appreciates the decision to extend the zero rate of income tax for agricultural producers” said Sergei Mikhailov, Cherkizovo Group’s general director. “The reset of income tax will have a positive impact on our business and the industry as a whole, as it will allow manufacturers to increase long-term investment programs and increase competitiveness, which is critical since Russia joined the WTO. This decision will allow domestic agricultural companies to successfully implement new investment projects in the pork segment, where the payback period is higher.”

Cherkizovo Group is implementing a number of large-scale investment projects in its poultry and pork divisions. In its pork division, Cherkizovo has completed the construction of modern production facilities in Lipetsk, Tambov and Voronezh regions. The commissioning of the new facilities will allow the production capacity of the Group to reach 180,000 tonnes of live weight per year.

In its poultry division, Cherkizovo Group is implementing projects to double the capacity of the Bryansk and Penza clusters.

The Group’s largest investment project is the construction of an agriculture facility in Elets (Lipetsk region), worth more than 20 billion rubles. The agro-industrial complex will include a hatchery for 240 million eggs a year, five broiler sites for 10 million birds with a slaughter and poultry processing capacity of 24 tons per hour, and a moderncomplex to produce fodder with a capacity of 90 tons per hour. After the commissioning of the Elets complex, the total production capacity of Cherkizovo Group’s Poultry segment will exceed 500,000 tonnes in live weight. It is planned that the complex will reach full capacity by 2015 and the construction of the feed mill is currently underway.

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