RusAgro acquires another large Russian pork manufacturer

RusAgro acquires another large Russian pork manufacturer
A sow with newborn piglets at a farm in southern Russia. Photo: Vincent ter Beek

The Russian agricultural holding RusAgro has finalised the acquisition of Agrobelogorie, a prominent Belgorod-based pork manufacturer.

As a part of the deal, RusAgro purchased 20 pig farms located primarily in the Belgorod region, 3 feed mills, meat-processing capacities and a land bank of 108,000 ha, the company reported. The acquisition will make RusAgro the 2nd largest pork producer in Russia, after Miratorg.

Not a surprise

Yuri Kovalev, general director of the Russian Union of Pork Producers, told the local business newspaper Agroinvestor that the deal has not surprised the industry. “It has been predicted for some time.”In the case of Rusagro, we have always talked about the possibility of increasing capacity, including through M&A transactions.”

RusAgro has been gradually expanding its share in Agrobelogorie, first acquiring a 22.5% stake in the company a few years ago, increasing its share to 47.5% in September 2024 and purchasing the remaining half in the last round of the acquisition.

Synergy

Kovalev continued that the deal is a logical step for RusAgro. He emphasised that the company will get a powerful synergy effect from the agreement. “In such cases, they say: 1 plus 1 equals 3. This does not always happen with mergers, but in this case, most likely, it will be so,” said Kovalev.

Organic growth looks difficult

According to Kovalev, organic growth in the Russian pig farming industry looks difficult owing to the saturation of the domestic market and the country’s monetary policy. The latter is likely a reference to the Russian Central Bank’s decision to raise the key interest rate to 21% during the recent board meeting in October. The benchmark rate has made commercial loans largely unaffordable for Russian farmers, as market players indicated. 

A natural path

In the context, growth through acquisitions is a natural path for further development for companies in the pig industry, Kovalev stated. Yaroslav Kabakov, director of strategy for Finam, a Moscow-based think tank, agreed that the deal is of strategic importance for RusAgro. He explained: “The deal will strengthen the vertically integrated structure of the group, improving control over the entire chain – from feed production to processing and distribution of products, which is especially important in the current instability in the food market”.

Continuing consolidation

The deal also signals the consolidation of the Russian pig industry continues. Earlier this year, GC Agroeco bought out the business of the Rusmit Group, which runs several farms with a nameplate capacity of 40,000 tons of pork per year. The deal will likely to put GC Agroeco on the third place in the list of the Russian largest pork companies.

Vorotnikov
Vladislav Vorotnikov Eastern Europe correspondent
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