EBRD long-term loan for leading Siberian meat processor

By Richard Wallis

The EBRD is providing an initial seven-year loan of €10 million to help a leading Siberian meat processor stave off the financial crisis by restructuring its balance sheet and funding an investment programme which will allow more shoppers to buy local produce instead of imported meat, made increasingly expensive by the rouble’s depreciation.

The EBRD’s long-term loan to Kuzbassky Pischekombinat, a vertically integrated pig breeding and meat processing company operating in the Kemerovo, Tomsk, Novosibirsk, Omsk oblasts and Altay and Krasnoyark regions of the Russian Federation, will enable it to retire earlier short-term debts, enhance operating efficiency, improve quality of finished products and cut supplier costs. The EBRD may consider a second €10 million loan in the future.

Meat is Russia’s biggest food import in terms of value after poultry products. Imports account for 30 percent of all the pork sold in Russia during 2007 and the share of imported beef was 46 percent. Brazil, Argentina and Denmark are traditionally the main meat exporters to Russia.

The company’s investment plan focuses on completing vertical integration by establishing its own pig farms, slaughterhouse and fodder plant, as well as building its own retail base in the form of mobile shops.

In implementing its investment plan the company has committed to comply with Russian and international environment, health, safety, and animal welfare standards for its pig and cattle farms, dairy, slaughterhouse and meat-processing facility. The Dutch government provided €132,500 in donor funds to finance the environmental and social due diligence which included a full Environmental Impact Assessment and Audit and public consultations with the local population.

Kuzbassky Pischekombinat was founded in 1997 by Mikhail A. Vasiliev who started a small meat-processing plant using his own funds. Today, the company is the leading meat-processor in the region, producing sausages, gourmet meat foods and semi-finished meat foods.

Kuzbassky Pischekombinat is proud to serve as an example of a strong local company in the region working with the EBRD, said Mr. Vasiliev, adding that the company was looking forward to finalising its investment programme in order to reap the benefits of more cost efficient production with the Banks help.

This project, which contributes to the modernisation of the Russian meat processing sector, shows the Bank’s commitment to sound projects backed by strong local entrepreneurs in Russia despite the difficult current financial environment, said Gilles Mettetal, Director Agribusiness at the EBRD.

The European Bank for Reconstruction and Development is the single biggest financial investor in Russia. In the agribusiness sector alone, the EBRD has directly committed more than €5.0 billion in over 330 projects across Central and Eastern Europe and the Commonwealth of Independent States.