March 26, 2010

Rise in customs duty hit Russian meat processors

A recent hike in customs duty from 5% to 40% on imports of live cattle in Russia has heavily impacted its meat processing industry.

The new duties threaten the survival of many Russian meat processing and slaughtering enterprises, said Arsen Karapetyan, executive director of Neima meat processing.
 

Slaughtering houses have nowhere to buy low-cost livestock due to the new duty. This results in them having to work with smaller meat volumes but with higher production costs, according to Karapetyan.
 

The cost of a carcass obtained by local processing plants has already soared by 20% this year. This translates to higher price of locally produced chilled meat, making it uncompetitive compared to imported frozen meat.
 

With the surge in customs duties, the Russian government hopes to stimulate the development of local animal farms as imported livestock becomes more costly.
 

Local analysts contend Russia may not be able produce sufficient livestock to meet local demand any time soon, which could bring a disastrous end to current Russian meat processing industry.