Oil and Gas Not the Only Export from Yamal… Also Reindeer Meat

November 24, 2009 • Philip BurgessBlog

There was an interesting interview in RusBusiness News recently with Aleksandr Mazharov, the Director of the Department for International and Interregional Relations of YaNAO (Yamal Nenets Autonomous Okrug). Obviously, the vast majority and indeed focus of the Yamal economy is its oil and gas reserves.  95.5% of the regions exported products were oil and gas in 2008. However, there has recently emerged a new export – reindeer meat and hides – and Mazharov proudly points out that the region is the only one in Russia exporting these products to the European Union.

Europe has not opened its borders to us straight away. For a number of years we drafted the necessary documents, underwent lengthy approval and control procedures, and only then the EU issued a certificate allowing the supplies of products of the northern reindeer herding to European countries. We have to take into account the fact that the only territory certified is the Yamal district where the main slaughter and meat processing enterprise – the Yamal Reindeer Company – is based.

Despite the fact that the exported products only take a rather narrow niche the competition we have to fight is very serious. There are Finnish producers working in the same segment, and, as strange as it may sound, companies in New Zealand.

Mazharov went on to highlight the quality of their reindeer products, the health benefits of reindeer meat, the plans to increase the sale of soft antlers for the Chinese market,  and the partnerships with the Finnish company Kometos Oy.

In a near future the first train of the Finnish deer slaughter line will be commissioned in the Yamal village Antipayuta (Tazovskiy district). Similar enterprises should appear in the village of Seyakha (Yamal district) and the trading post Yuribey (Tazovskiy district). In the future the trading post Payuta should acquire its own slaughter and freezer complex.

This would represent a significant increase in slaughterhouse capacity as currently there is only one slaughterhouse in the region capable of slaughtering reindeer meat to EU standards and packaging, based in Yar-Sale. You can read the full interview here, or read below

Yamal is a region of tough climate and rich mineral wealth. 90% of Russian gas, more than 14% of Russian oil and 54% gas condensate are produced here. It would seem impossible for Yamal to change its image of the country’s “gas store”; however, this is what the government of the autonomous Okrug is trying to achieve. Aleksandr Mazharov, the Director of the Department for International and Interregional Relations of YaNAO, spoke of what the new Yamal brand will be in an interview to RusBusinessNews.

– Mr Mazharov, according to Standard & Poor’s Yamal has positive international investment rating BB+ which corresponds to ruAA+ by the Russian scale. How attractive is the region to foreign business?

There is no doubt that Yamal is a region of great interest for foreign business. This applies, first of all, to the fuel and energy sector.

On 24 September 2009 the Russian Prime Minister Vladimir Putin conducted a working meeting on the issue of the development of gas fields of the Yamal peninsula. CEOs of the largest oil and gas companies took part in the discussion; these included Wulf Bernotat, Chairman of the Board of E.ON, Shell’s CEO Peter Voser, Mitsui and Mitsubishi presidents Masami Iijima and Yorihiko Kojima, as well as Paolo Scaroni, the Head of Italy’s Eni. They were invited to take part in projects being prepared for the implementation in the Autonomous Okrug.

This event gave a strong momentum to the development of plans for the construction of processing capacities, transport infrastructure, energy system facilities on the territory of YaNAO, including those with significant share of foreign investment. The planned scope of measures is aimed at the establishment of a firm foundation for the development of the Autonomous Okrug as the Russian “outpost” on the Arctic territory securing the future access to the Arctic shelf.

– In the conditions of financial crisis the demand for natural resources Yamal is so rich with has started declining. How did this reflect on the region?

– Financial crisis only confirmed for Russia the importance of diversification of economic relations with foreign partners and the need to develop alternative sectors with the involvement of foreign capital. This concerns, first of all, such mono-industry regions as Yamal.

The decline in the demand for mineral resources and the fall of the prices for energy resources, of course, affected the foreign trade turnover. If we compare the results of January-September 2009 with indicators of the same period last year the trade turnover has decreased 2.5 times – down to 183 million US dollars. I think this is a temporary trend and after the recession the growth of economies of the world’s leading states will inevitably begin, this includes Russia, and this will lead to the new wave of demand for energy.

In order to decrease the dependency of the region on the affect of these macroeconomic factors the Administration of the region at the moment is focusing its efforts on the development of long term multi-vector external economic links not involving oil and gas production. Particular attention and support is given to projects aimed at the creation of new jobs, development of production and processing capacities directly within the Autonomous Okrug.

This list includes projects on export of meat and hides of reindeer and the development of the tourism sector. The number of tourists travelling Yamal is growing every year. Only in January-September this year the Okrug was visited by 5 thousand Russian tourists and 200 travellers from abroad. I am sure this industry has an enormous potential.

– What are the specifics of the promotion of reindeer herding products from YaNAO in Russian and international markets?

– Due to objective causes Yamal cannot boast a broad range of exports. Such factors as the geographic position, climate peculiarities, the specific nature of economy, and sparse population are unimportant for the majority of Russian regions; they often play the prevailing role in the conditions of the Extreme North, though.

According to the 2008 results 95.5% of exported products made in Yamal was the fossil fuel, oil and petroleum products and 4.5% was equipment and mechanical devices. At the same time Yamal is the first Russian region exporting products of the northern reindeer herding – meat and hides of the northern reindeer – to the countries of the European Union.

Europe has not opened its borders to us straight away. For a number of years we drafted the necessary documents, underwent lengthy approval and control procedures, and only then the EU issued a certificate allowing the supplies of products of the northern reindeer herding to European countries. We have to take into account the fact that the only territory certified is the Yamal district where the main slaughter and meat processing enterprise – the Yamal Reindeer Company – is based.

Despite the fact that the exported products only take a rather narrow niche the competition we have to fight is very serious. There are Finnish producers working in the same segment, and, as strange as it may sound, companies in New Zealand.

– How do you manage surviving such formidable competition?

– The Yamal Reindeer Company counts on the high quality of the product they supply, in particular its eco qualities. It is worth pointing out that the reindeer meat is a dietary product containing a minimum amount of cholesterol. Moreover the herds have not been affected by diseases which in recent years shook the global beef and poultry markets.

The remote pastures, harsh climate, pure natural feed, lack of contact with domestic animals, and a strict veterinary control guarantee safety, eco properties, and remarkable gourmet properties of the meat. Compared to the “red” European or New Zealand meat the northern reindeer meat is valued for its more tender texture, succulence, and being purely natural. The reindeer grazes in natural conditions which rules out artificial feeding entirely.

In 2008-2009, over 180 tons of the Yamal venison was shipped to Europe. In October within the framework of the international exhibition ANUGA – 2009 agreements were reached with Brodersen & Kover GmbH (Germany) on the supply of 100 tons of venison fillets; the issue of cooperation is being negotiated with Polarika (Sweden); further discussions with Finnish colleagues are ongoing.

I have to point out that the difficult geographic position of YaNAO introduces certain corrections to the logistics process making it much more complex. Moreover, there are bureaucratic difficulties when undergoing procedures of customs and veterinary control.

As well as venison we are preparing exports of reindeer hides. Kero Leather AB (Sweden) is prepared to continue the collaboration with the Yamal deer herders. In 2010 suppliers of leather to Italian shoe and furniture makers are planning to buy several thousand reindeer hides in the polar region. Partners from Germany and Greece, as well as the Swedes, are interested in this kind of product.

– The herd numbers of domesticated reindeer in Yamal exceeds 600 thousand, this is the largest herd in the World. The production of meat and hide, probably, does not describe the limit of the potential of the reindeer herding sector, does it?

– In the future Yamal may develop the production of the most active natural substance – pantohematogen. This is a bioactive food additive which is the most effective tonic, nootropic, and biostimulating substance used for mental and physical exhaustion, asthenic conditions, neuroses, weak heart, vascular disorders, and diabetes mellitus. As valuable in terms of medicinal properties are the preparations “Dry blood for antler baths” and “Lyophilic dried blood”.

According to marketing studies the demand for pantohematogen, dry blood for antler baths and lyophilic dried blood exceeds the offer several times. In particular this applies to countries with highly developed medicine like China and South Korea. I have to point out that the price of these products in the Russian market is 3 to 5 times lower than abroad, for instance in the Chinese market.

– With which other countries, in addition to Sweden and Germany, does YaNAO actively develop cooperation? Which countries may be regarded as permanent partners, which markets have to be mastered in the future?

– The long standing and reliable partners of Yamal are the Canadian provinces of Alberta and Manitoba. NORDEP, the institutional development project in the North, is being implemented jointly with Canada for many years.

The mutually beneficial links have also been established with Finnish partners. Specialists from Kometos Oy (Finland) install and commission meat processing plants. In a near future the first train of the Finnish deer slaughter line will be commissioned in the Yamal village Antipayuta (Tazovskiy district). Similar enterprises should appear in the village of Seyakha (Yamal district) and the trading post Yuribey (Tazovskiy district). In the future the trading post Payuta should acquire its own slaughter and freezer complex.

Links with German, Italian, and American companies are important in the field of fuel and energy cooperation.

There are traditionally strong links between Yamal and Bulgaria. 1250 Yamal schoolchildren and students annually spend holidays in the recreation camp for children “Yamal” located in Kiten. We also have friendly relations with Luxembourg. Kids from Yamal visited the country within the young people’s exchange programme. I cannot omit mentioning the links in the sphere of culture and youth policies with colleagues in Austria, Serbia, Hungary and other countries.

On the whole the Okrug’s foreign economic cooperation geography is very broad. In recent times a particular attention is afforded to the development of links with China. In January-June 2009 Yamal’s trade turnover with China amounted to 33.3% of the foreign turnover total. Opening the Okrug’s representation there is planned for the next year. I would like to point out that 2010 will be extremely important to the people of Yamal as YaNAO will be celebrating its 80th anniversary.

Interview prepared by Valentina Mazharova

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