Gruppa Cherkizovo : Gaidar Forum participants discuss AIC digitalization at Cherkizovo's business breakfast

Moscow, Russia - January 17, 2019 - Cherkizovo Group (MOEX: GCHE), the largest vertically integrated meat producer in Russia, has organised a business breakfast devoted to the topic of digitalization in the agricultural industry.

The event was held on 16 January as part of the 10^th Gaidar Forum, and the opening speech was delivered by Alexei Gordeyev, Deputy Prime Minister of the Russian Federation. The State and the Business on the Way to Agro-Industrial Complex Digital Transformation discussion saw participation fr om governors of Russian regions, the Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor), the Ministry of Agriculture, the Ministry of Digital Development, Communications and Mass Media, and Russian Export Center, as well as a number of Russian AIC companies and major Russian banks.

Alexei Gordeyev, Deputy Prime Minister of the Russian Federation, noted the crucial importance of digitalization for agriculture. 'Today, everyone is on the same page when it comes to digital technologies. Companies know that without them they have no competitive edge and leadership prospects.' It is the government's job to create an environment for businesses to flourish, but companies need to first come up with a set of clear and prioritized requirements and initiatives for AIC digital transformation. These include things like access to big data and convenient infrastructure, or new investment sources in the form of long-term and low-interest loans.'When it comes to digital technologies, the goal is to balance various interests and cooperation in a way that would make businesses stronger while at the same time raising and improving the government's profile,' said the Deputy Prime Minister.

Sergey Mikhailov, Cherkizovo Group's CEO, mentioned the industry's need for state financial support, proposing tax incentives that encourage the implementation of state-of-the-art technologies in the AIC as a possible solution. 'There needs to be some kind of a stimulus, tax or otherwise, that would encourage companies to take the plunge on innovative solutions in the areas of digitalization, IT technologies and automation. These things require significant investment, and interest rates in Russia are still quite high,' he said. According to Sergey Mikhailov, digitalization projects tend to have long payback periods, which hinders progress in this area. He contrasted this situation with Europe, wh ere interest rates for AIC loans stand at 1.5-2%.

Another problem is the shortage of highly skilled professionals, particularly IT experts and engineers. The speakers said that the business community and the government needed to come together and create new educational programs that would focus on automation and digitalization, as well as to set up courses that would train qualified teachers for these programs.

Representatives of regional authorities also expressed interest in being part of and supporting AIC digitalization. Alexander Nikitin, Head of the Tambov Region Administration, Viktor Tomenko, Governor of the Altai Territory, and Andrey Klychkov, Governor of the Orel Region, spoke about the AIC digital transformation as it applied to the local production. Anatoly Artamonov, Governor of the Kaluga Region, proposed to digitally map all agricultural land - an idea that saw support from the other participants.

The participants agreed that new technologies are a prerequisite for the industry's development. They will give Russian companies a competitive advantage in the market and stimulate exports. In addition to benefitting performance, cutting-edge solutions help ensure high quality and safety of products. A good example of a technologically advanced and safe production facility is the fully automated dry sausage plant in Kashira that Cherkizovo Group launched in summer 2018. The Company spent RUB 7 bn on the plant, while its overall investments in IT and automation over the last three years amounted to approximately RUB 10 bn.

The business breakfast was also attended by Ivan Lebedev and Elena Fastova, Deputy Ministers of Agriculture, Alexei Sokolov, Deputy Minister of Digital Development, Communications and Mass Media, Nikolai Vlasov, Deputy Head of Rosselkhoznadzor, Roman Starovoyt, Interim Governor of the Kursk Region, Andrey Slepnev, General Director of Russian Export Center, Raisa Polyakova, General Manager of KFC Russia & CIS, and other officials. The discussion was moderated by Andrei Zyuzin, Chairman of the Board of Directors at Biruch-NT Innovation Center (EFKO Group).

To watch the video recording of the breakfast, please follow the link: https://youtube.com/watch?v=h5jqX0A1tpI