July 11, 2006

Europe relaxes Russian meat quotas

Russia's Economic Development Ministry has persuaded the EU to relax Russia's meat quotas to allow it to import more meat from outside the EU.

The ministry hopes this would stabilise its domestic beef market, which has seen prices soaring as much as 40 percent from early this year.

Other than the 343,000 tonnes of meat that Russia could buy from the EU, Russia is now allowed to buy from other countries 150,000 tonnes in August and 83,000 tonnes in September, according to the agreement authorised by European Commissioner for Trade, Peter Mandelson.

Russian meat imports has been under a quota since 2003. The quotas, split according to meat types, are further split according to the country of origin. The US has the biggest quota for poultry (74 percent), while the EU leads in beef (78 percent) and pork (50 percent).

The urgency in addressing the quota problem results from the need to curb beef prices in Russia, said a source with Economic Development Ministry.

Beef prices have soared 10 to 40 percent since early this year, according to Russia's National Meat Association.

The beef shortage became more acute as Argentina had a self-imposed ban and EU banned Brazilian meat due to disease, said Alexander Kuznetsov, who heads Gazreserv, one of the biggest importers of meat.

Since Europe is already importing the meat itself, it is not possible to get the required amount from there, Kuznetsov said.

As a result, Russian meat imports went down drastically. If the EU had not yielded to Russia's proposal, domestic prices for beef would have risen even more, said Sergey Yushin, head of National Meat Association.

Even with relaxed quotas now, Russian beef importers are not very optimistic. Stabilising the market requires lifting the ban on Brazilian meat, they say, as there are no other countries to source from even with relaxed quotas.