The President and Chairman of the Board of the Russian Meat Union answered the questions of the Kommersant-Dengi magazine on the air of the Silver Rain radio station.

1. Are you a loner or a team player?

- Team player. I am a romantic, so pragmatic business partners should always be with me.

2. What type of activity could you change your job for?

- Well, probably on travel and something related to humanism. The older I get, the more I want to help those who are weak, who are suffering. I myself am from a city where there was an earthquake similar to the one that happened recently in China. Therefore, humanism for me is not a common place. And if I had the opportunity, I would choose a job related to humanitarian problems.

3. How long do you plan to do what you are doing now?

- I think another five years. So that the tactics within the framework of the agri-food strategy of Russia are fully implemented and have an inevitable character. Today we can say that there is no force that can lead Russia astray from this path, but there are current difficulties, unfortunately. Therefore, we must support with our capabilities and knowledge those who can implement this. These are investors, these are ministries and departments. I think that in five years Russia will feed the world and it will be beneficial for it - from the point of view of the economy and from the point of view of the humanitarian.

4. Are you saving on something?

- Yes, I can say that my family has changed the consumption pattern just like many families. And we consume more poultry meat. Moreover, I can say that I do not need a prestigious car. I believe that this just characterizes a more civilized person - in comparison with a person who escaped from a society where there was nothing, into a society where everything is. And the same tendency, like mine, is observed among many of my acquaintances and partners.

5. What hobbies do you care about money for?

- For hobbies that bring me pleasure, I always feel sorry for money. I am an altruist: I don’t feel sorry for money if it goes to educate children or help relatives.

6. What do you spend your free time on and what would you like to spend?

- I read a lot, and it gives me great pleasure. And I write a lot on professional topics, but not for publication, but for myself. This is also a pleasure for me. In addition, I like to cook myself - I do it at home, for my loved ones.

7. Who or what had the greatest influence on the choice of activity?

- It's family. My parents ran food businesses.

8. What do you consider to be your main victory?

- My victories are collective. And the main victory of the Meat Union of Russia professional community was that we succeeded in conducting an investigation and making such decisions on foreign economic activity that allowed us to preserve the meat-processing industry.

9. Who do you envy?

- I envy people who do not worry so deeply and empathize with the difficulties, illnesses of other people. Because for me it is always a great suffering.

10. What is more important to you than money?

- Equilibrium in my environment. And the health of loved ones, of course, is more valuable than money. And the confidence that tomorrow will be better than the day before yesterday.

Mushegh Lorisovich Mamikonyan was born on July 15, 1959. Until 1991, he was engaged in science, then worked at the Cherkizovsky meat processing plant, becoming by 1998 the head of its directorate. Since the same year - the permanent head of the Meat Union of the Russian Federation. Since 2003 - General Director of Lianozovsky Sausage Plant OJSC. Laureate of the State Prize of the Russian Federation in the field of science and technology.

The prospects of import substitution in the food sector are of interest to the widest layers of the population. Moreover, the range of expectations here is quite large - from pessimistic, almost panicky sentiments to blind faith in the limitless possibilities of our agro-industrial complex. Experts prefer to assess the situation as carefully as possible, which in no way excludes a fair amount of optimism in forecasts. One of such specialists, whose authoritative opinion should be heeded, is Mushegh Mamikonyan, President of the Meat Council of the Common Economic Space.

- Taking into account the sanctions, the decrease in Russian imports of meat products, there is now a lot of talk about the need for import substitution, the accelerated development of our own meat industry. How critical is the situation on the Russian meat market today?

- I would not call it critical. Why? Let's take a short historical excursion. Before the collapse of the USSR, the Russian Federation consumed about 11 million tons of meat annually. Moreover, its price was conditionally planned. It was too low, so the meat shortage was due to the wrong distribution and pricing system. When market reforms took place and new pricing opportunities emerged, they opened the gates for imports, fearing supply disruptions to certain regions.

It was a forced, but erroneous, from my point of view, measure of the Government of the Russian Federation. If we limited ourselves only to market pricing, this would be quite enough.

- An incentive for your own production?

- And our own production was very large! 11 million tons of meat is even too much. If there was only a price reform (release of prices), everything would fall into place, because the cost of beef production was very high. But at the same time, its price was lower than the price on the market or in the store for poultry meat. This is nonsense.

In 1991, Russia consumed 45% of beef because its target price was very low, did not reflect actual costs, and only 18–20% of poultry meat. The rest is pork. Naturally, it was produced in such proportions, because we had practically no dependence on imports.

With market pricing and market reforms, the product that wins in cost, that is, poultry meat, inevitably wins. In the evolution from the irrational to the rational, it must win not only in our market, but throughout the world. This is exactly what has been happening for the last 30-40 years.

With market pricing and market reforms, the product that wins in cost, that is, poultry meat, inevitably wins.

Over the past 12 years - in connection with the new economic policy that is being pursued in the agricultural sector - the situation has changed in our country. Various projects for the development of the agro-industrial complex have created good conditions for investors. They can, for example, take out subsidized loans. This is a good enough incentive.

Many investors went first of all to poultry farming, because they know how to count and understand that the money spent here quickly pays off.

- And has the structure of consumption changed?

- Yes, and very important. We have completely turned the market around. Beef and poultry meat swapped places on it. Today, beef accounts for about 20% of consumption, and poultry - 45%. The share of pork consumption remained practically unchanged.

Poultry farming in the Russian Federation was one of the first to achieve import substitution, because the share of imports is less than 10% - this is just the permissible norm. However, every country should try and sell for export. But for pig breeding, I think Russia will not be able to export pork for many years to come because of African swine fever. But poultry farming, having provided the population of Russia with products, should try to enter export markets in the coming years.

The society, the people got the impression that our dependence on imports is very big. This is not the case.

- Interestingly, everyone is concerned about the issue of import substitution, and you are talking about export ...

- Today Russia produces a huge amount of food compared to what was produced in the late 1990s. At the same time, society and people have the impression that our dependence on imports is very large. This is not the case.

For example, we are the largest grain exporter in the world. At the same time, this means that we sell a huge amount of protein along with grain. If we only take a balance of how much protein we ship through grain and how much protein we buy through meat, we end up as net exporters.

What is happening in the industry right now is not so bad. It is not difficult to achieve complete import substitution. We will displace imports of pork and beef by increasing the production of poultry meat, because society rationally and prudently increases the share of consumption of these products more and more.

- That is, the share of poultry meat in the consumption structure will continue to grow?

- Naturally. It is very attractive for strong producers in Russia in terms of cost. These are producers who will at the same time indirectly displace imports of pork and beef. At the same time, we see publications that say that additional production of a conditionally million tons of pork requires huge investments and time - about 6 years.

Meanwhile, I want to express a seditious thought from the point of view of many colleagues. I am a supporter of the transfer of animal husbandry, in addition to dairy farming, to an organic rhythm of development. Not to stimulate it with state funds, because today it is more important to direct these funds to the production of milk and vegetable products, where there is a high proportion of dependence on imports. In the meat group, the problem has been practically solved or, due to the inertia of development, will be solved in the near future, but the state does not reflect this in further agrarian policy. Meanwhile, strong companies can, by crowding out imports and weak producers, increase their production, even without new subsidies.

I believe that meat production has already been established. The base is such that market growth of 300-400 thousand tons per year is quite real. Moreover, it must be borne in mind that consumption will be a little "addicted". According to the correlation of 1998, 2008, the economic crisis is reflected in the real income of households. They reduce consumption, including meat.

This is not so sensitive, because, taking into account the state of the Russian economy and income, we already consume a sufficient amount of meat. Even more than the average Eastern European could afford under these conditions.

Let's remember 2007, the pre-crisis year, but, as they say, “well-fed”. Then we consumed 8.9 million tons of meat, of which 3.2 million tons were imported. In 2014, we already produce 8.6 million tons of meat ourselves! This is another confirmation of the fact that domestic meat production is growing fast enough.

Imports will be squeezed out also for the reason that the current exchange rate makes it absolutely economically inexpedient.

This year we will see a 50% drop in meat imports. Next year - about 40%.

I want to express a thought that is seditious from the point of view of many colleagues. I am a supporter of transferring animal husbandry, in addition to dairy farming, to an organic rhythm of development.

- And we will not notice this?

- We will not notice, there will be price volatility, then everything will stabilize. And in 2016 the share of imports in our market will be about 5-7%. Another thing is that if society will live better in the new macroeconomic conditions, more meat will be required in the future. And the meat industry will find an answer to these challenges. There will be organic growth, consolidation of companies. Today, the largest companies do not have a significant market share. We have the first five companies in terms of production volume equal to one company in Brazil or the United States. Our companies will enlarge, unite and strengthen. And to increase the volume of supplies to the market.

Summarizing the above, I would like to note that the problem of import substitution for meat products will be solved due to two factors. First. Some reduction in consumption. It correlates with the macroeconomic proportions that are being formed. In the same place - the exchange rate, which makes imports impractical.

Second. The organic growth of domestic pig and poultry farming at a rate of about 400 thousand tons per year will make the factor of meat imports practically insignificant already in 2016, 2017.

- As I understand it, this applies to pork, poultry. What about beef?

- Public funds can be directed to programs of additional food assistance to the population. Look: the most important issues today are prices, inflation. The state is forced to take a dualistic position. Our economy remains a market economy, but at the same time we are trying to put pressure on prices so that they are not speculative.

I propose to direct part of the funds that go to support the agricultural sector to the social needs of the poor.

- What is the way out?

- Everything is solved very simply. We have before us an effective example of North Americans implementing the bulk of their agricultural support budget through food aid to people in need. Americans have a wealthy country, but a huge number of consumers need help.

This is a way through the green box, which is not limited to WTO agreements, to support the agricultural sector and separate social problems, social needs of society that need to be addressed, and pricing.

Socially unprotected segments of the population need to be helped, first of all, with cereals, vegetable oils, which we have in abundance.

In this case, people will direct the released funds to meat and other products.

I propose to allocate part of the funds that go to support the agricultural sector to the social needs of the poor. Food prices will be shaped in their market proportions, and people will receive free calories and partially free proteins.

This is the only way. Otherwise, we will distort both market prices and the market situation. Another question is that there is a big problem in relations between suppliers and large trade associations. Bonuses distort prices, do not provide an opportunity to respond flexibly to pricing.

The creation of alternative distribution channels - wholesale offsite, retail, seasonal fairs, the ability for farmers to gain access through markets - will somehow balance the situation. Today, a uniform system of interaction between the supplier and the retailer dominates, with chains - with a hard bonus, which is partly legal, and to a greater extent illegal. It cannot be a good price communicator for the end consumer. This is the most important task of the market and manufacturers - for the price to be more flexible and marketable.

Mamikonyan Mushegh Lorisovich,
President of the SES Meat Council.

Was born in 1959 in Gyumri (Armenia). In 1981 he graduated from the Moscow Technological Institute of the Meat and Dairy Industry with honors. In 1981-1986. was an employee of the Moscow Institute of Meat and Dairy Industry, where he defended his dissertation and received his Ph.D. in technical sciences in 1986.
In 1991-1998 worked in Moscow, in the group of companies "Cherkizovsky agro-industrial complex" as chief technologist, production manager, vice president. During this period, AIC "Cherkizovsky" becomes the leader in the meat industry of the Russian Federation.
Since 2006, he has been an independent member of the board of directors of the Cherkizovsky Agroindustrial Complex.
Has more than 50 scientific publications, patents; author of the well-known monograph "The meat industry in Russia on the threshold of the new millennium", published in 2000 and reprinted in 2002.

M. Mamikonyan is a laureate of the 1999 State Prize of the Russian Federation in the field of science and technology.

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Biography

Was born in 1959 in Gyumri.

Graduated from the Moscow Technological Institute of the Meat and Dairy Industry in 1981.

From 1981 to 1983 he worked at the Institute in the laboratory of applied biotechnology.

From 1983 to 1986 he was a graduate student of the Institute, in 1986 he defended his thesis and received the degree of candidate of technical sciences. After completing his postgraduate studies, Mr. Mamikonyan worked at the Polytechnic Institute, where he headed the department from 1988 to 1991.

In the period from 1991 to 1998, he worked at the Cherkizovsky Meat Processing Plant (Moscow), successively holding the positions of Chief Technologist, Production Director, Deputy President, Chairman of the Board of Directors.

Since 1998 - the permanent President of the Russian Meat Union.

Since 2006 - independent director, member of the board of directors of AIC Cherkizovsky.

Chairman of the Board of Directors of Protein Product LLC.

Since 2003, he has been the General Director of OJSC Lianozovsky Sausage Plant (Moscow).

Essays

Has more than 100 patents for technical and technological inventions, more than 30 scientific publications.

Achievements

• PhD in Engineering Science

Awards

• Laureate of the State Prize of the Russian Federation for 1999 (in the field of Science and Technology)

Images

Bibliography

• Armenian business elite in Russia. Biographical reference book. -Er.: Scientific and educational foundation "Noravank", 2009, article 41 ISBN 978-9939-9000-4-9