Russian seeks partner
partner to form a joint venture in the country. This move suggests
that there is increasing foreign awareness of the potential of the
food processing industry in Russia.
One of Russia's largest manufacturer of pasta and baked products, Magadan Makaronnaya Fabrika, is seeking a US partner to form a food processing joint venture in the country. This move is a good example of growing international trade cooperation within the former Soviet Union, and suggests that there is also increasing foreign awareness of the potential of the food processing industry in Russia.
The company wants to form a new company to bottle US-manufactured vegetable oil in the Magadan region of the country. The product will be marketed under a US brand name and distributed in the Russian Far East. The overall cost of the project is estimated to be in the region of €253,500.
Under the proposed terms, a US partner would contribute new or used vegetable oil bottling equipment, supply 150 tons of oil monthly in barrels, and arrange an exclusive distributorship agreement for a US vegetable oil brand in the Russian Far East territory. Magadan Makaronnaya Fabrika would provide the facililties, labour, distribution channels, purchase raw materials, and bottle and distribute the vegetable oil.
As a participant of the Magadan Free Economic Zone, the company pays only 25 per cent of customs duties and 50 per cent of federal taxes. The company has calculated that bottling the vegetable oil in Magadan will significantly reduce the retail price of the product.
This in turn would create favourable terms for distribution of the vegetable oil in the Russian Far East. It is anticipated that the pay-back period of the investment is 1.5 years with a profitability rate of 18 per cent. A sub-sovereign guarantee is a possibility after an agreement on the project investment is currently being prepared.
Information about Magadan Makaronnaya Fabrika's proposal is available on the Business Information Service for the Newly Independent States (BISNIS). This is the US government's main resource for trade and investment information on the Newly Independent States of the former Soviet Union.
Magadan Makaronnaya Fabrika is the largest manufacturer of pasta and baked goods in the Magadan region of Russia. The company produces pasta, baked goods, mayonnaise and confectionery products. It was established in 1944 and privatised in 1997.
Government-owned shares are distributed between the Magadan Regional Administration - 51 per cent, and Magadan City Administration - 37 per cent. The company's annual turnover in 2002 was about €591,700.
