August 28, 2014

Russia expects increased meat supply from Argentina

According to the Russian Ministry of Agriculture, following a meeting with Argentinean officials on August 20, Argentina will be able to double meat supply to Russian as the South American nation took advantage of trade sanctions imposed by and against Moscow.

From 15,000 tonnes in 2013, the trade towards Russia is expected to reach near 30,000 tonnes in 2015. However, industry experts doubt Argentina's ability to rapidly boost supply volumes, given the restrictions on meat exports in the country. In addition, the Consortium of Argentine Meat Exporters said that the situation is burdened by a reduction in livestock.

According to data from the Russian Federal Customs Service, Russia mainly imports chilled and frozen beef from Argentina. In 2013, beef supply to the country rose by 18% on-year and to about 8,000 tonnes. The total price of one tonne of beef was at US$3,600.

A decade ago, Argentina was one of the largest suppliers of beef to Russia with annual sales volumes of about 150,000 tonnes. Said Sergey Doronin, the deputy chairman of agrarian committee, "Argentina is one of the largest beef producers, and the country is also engaged in pig production. So, since we have imposed sanctions on imports from the EU and the US, these volumes will be replaced by other countries, including Argentina."

Kirill Cherkasov, the first deputy chairman of the Russian State Duma agrarian committee, said the recent meeting was focused not only on increasing food supplies but also on tightening control over the quality of products. "It is likely that agreements on the supply of meat products will be signed, and there may also be agreement on tightening controls, because there were problems with Argentina and Brazil over the quality of delivered products," said Cherkasov.

However, he added that much will depend on Argentina, as redirection of meat production supplies takes time. Said Daniel Khotko, an expert at the Russian Institute of Agricultural Studies, "Argentina will be able to help the Russian market with supplies of beef and poultry, but will not be able to dramatically (increase supplies)... it is clear that the country does not have the potential to replace the 200,000 tonnes of poultry that previously came to Russia from the US."

In the meantime, Russia is negotiating with other suppliers, including Belarus whose exporters are planning to double supplies from 100,000 tonnes in 2013 to almost 200,000 tonnes by 2015. Supply volumes may increase from Turkey, which is already exporting products affected by sanctions, at a record of US$1.2 billion yearly.