Finnfund

Reindeer have long sustained the native peoples of Siberia. This traditional way of life could now help to develop the declining northern areas. The key to improving the profitability of sustainable animal husbandry is more advanced processing and marketing of reindeer products.

Kometos Oy has been supplying modern reindeer slaughterhouses to northern areas of Russia since the early 1990s. Now the Finnish company is a partner in the ZAO Izhma Reindeer Meat joint venture, which has established a meat processing plant at Dijur in the Komi Republic. In summer 2005 the company will also be erecting a new reindeer slaughterhouse in the area.

“The plant will have the capacity to handle 600-700 tonnes of meat a year,” estimates Kometos’ managing director Raimo Niemi. “That’s about 60% of all reindeer slaughtered in Komi.”

Kometos' managing director Raimo Niemi at Finnfund's 25th Anniversary Seminar in May

Kometos’ partners in the joint venture are local reindeer herders and businessmen. Finnfund is also participating as a financier, with an investment of about 2.5 million euros.

“In the longer term the locals are expected to take over the company entirely,” Niemi adds.

Processing increases incomes in poor areas

It’s important for the welfare of a low-income area to process reindeer meat on site as fully as possible. It would be less desirable to freeze entire carcasses or roughly butchered ones and export them to food processing factories in the big cities, Niemi points out.

Finland has been involved in developing northern areas of Russia since the 1990s. The Finnish Ministry of Trade and Industry has established joint commercial groups for northern Russian areas and a “reindeer working group” operates under these auspices in the reindeer husbandry areas.

The working group contains representatives of both countries. Alongside Kometos, the Education Centre of the Sámi Area and the Finnish Game and Fisheries Research Institute have been active in this work.

Even high quality needs marketing

This cooperation has been of benefit to the Komi Republic too, because the Education Centre of the Sámi Area has taken charge of training the joint venture’s employees. The course teaches western regulations on reindeer butchery and those who complete it can work without supervision in all jobs related to meat processing.

“The purpose of the course is to ensure that operations are efficient, hygienic and skilful so that the food leaving the slaughterhouse and the processing plant is safe and of excellent quality,” Niemi explains.

No matter how high the quality of the products, effective marketing and new sales channels are also needed to raise demand. Packaging, too, has to be designed to attract customers. Kometos has established a separate marketing company in Moscow to promote sales of reindeer products. Raimo Niemi lists city restaurants, catering companies and specialist shops as the most important customer groups.

The Russian domestic market alone has enormous potential for reindeer meat sales, he believes, because of the growing and increasingly wealthy middle class. He estimates that the northern areas could easily accommodate 30-50 new reindeer slaughterhouses and ten processing plants to satisfy the demand.

Facilities in use around the year

Kometos, based in the southwest Finnish town of Kauhajoki, designs and manufactures production and handling equipment for the food processing sector as well as complete product lines and production plants. The company has long experience of project exports to Russia. In just over ten years it has built a large number of reindeer production plants in northern Russia, in the Murmansk and Tyumen regions, the Komi Republic, the Yamal Peninsula and so on.

The plants are constructed as ready modules in Kauhajoki and transported by ship, land or rail to the site where they are erected.

Transport times are long because slaughterhouses are needed in the places where reindeer migrate in the autumn. The culling period for reindeer lasts only three winter months. The plants are in use around the year, however, because the joint venture also buys, processes and resells game, berries and mushrooms.

“For local inhabitants, sale of these products is a significant source of extra income,” Niemi explains.

No interference with traditions

ZAO Izhma Reindeer Meat concentrates on slaughtering reindeer and processing their meat. The company does not intend to become involved in reindeer husbandry, so as to avoid disturbing the balance of a traditional livelihood.

The reindeer husbandry practiced mainly by native peoples has encountered many difficulties in Russia over the past few decades. Since the break-up of the Soviet Union, government subsidies and traditional distribution channels for the meat have disappeared. With the crisis in reindeer collective farming, unemployment in the northern areas has risen and social problems have worsened.

Reindeer husbandry has also been hurt by damage to the environment, particularly by the unsustainable growth of the oil and gas industry, which has destroyed large grazing areas. Mining has also brought environmental problems to many districts.

Finnfund has granted a loan for investments in slaughtering and processing facilities. Raimo Niemi also applauds its “important role as a catalyst and in assisting in putting together the financial package”.

Finnfund is also interested in financing ongoing investments by Kometos in northern Russian areas.

For further information at Finnfund please contact Ms Helena Korhonen

tel. +358 9 3484 3307, email firstname.lastname@finnfund.fi