September 22, 2006

 

Russian meat imports up while beef production down significantly
 

 

Russia meat imports increased 29.5 percent year-on-year in the first half of 2006, according to a USDA GAIN report

 

Russia imported about half a million tonnes of fresh and frozen meat during the first half of 2006, with a total value of US$930 million

 

Local beef production continued its decline and the pork sector grew slower than previously forecast, the report noted.

 

The beef industry is expected to continue its decade-long implosion, as investments continue to prove more attractive in other agricultural sectors. Decreased feed production in 2006 may also negatively influence livestock breeding in 2007, the report added. 

 

Although agricultural production and the food processing industries are expanding, the growth still lags behind surging demand, thus fuelling the need for imports and pushing up prices.

 

According to the USDA, a modest increase in pork production and a significant decline in beef production is expected.

 

Processed meat production was up 12.1 percent on-year totaling 1.1 million tonnes for the first half of 2006. 

 

As of August 1, 2006, there were 22.6 million head of cattle in Russia, a drop of 5.5 percent from the same date in 2005. 

 

Cow numbers, which accounted for almost half the figure, declined 6.4 percent on-year.

 

However, pig inventories increased 5 percent to 15.6 million head and poultry increased 10.8 percent to 251 million birds.

 

Total Russian meat production for the first eight months of 2006 was 3.7 million tonnes, 3.7 percent higher than for the same period last year, according to the USDA.  

 

Pork production was up four percent and poultry production jumped 16.3 percent, while beef fell 6.5 percent. 

 

Meat and poultry production on large farms increased 8 percent to 2.05 million tonnes, with pork and poultry production increased and beef production falling.

 

The Moscow city government has been encouraging local agro-holdings to invest in agricultural production.  As a result, Moscow agro-holdings acquired 100 regional plants that more than doubled domestic meat supplies.

 

Hay production decreased 15 percent for the first seven months of 2006 in comparison with 2005.  In total, feed production fell 10 percent in the first eight months of 2006 compared with the previous year.  This, coupled with the growth in the pork and poultry industries may create a feed shortage next year, the report said.

 

Despite the fall in local beef production, consumption would remain more of less stable thanks to imports. Pork consumption is forecast to increase slightly while beef consumption would drop.

 

Beef and pork imports increased 16.9 percent and 38.6 percent respectively.

 

Due to last year's lower prices and duties, Russia imported meat exceeded quotas. 

 

Roughly 180,000 tonnes of beef were imported at over quota with Brazil, Argentina, Uruguay, and Paraguay the main exporting countries. 

 

Brazilian beef exports to Russia continue to grow despite an import ban still in effect against seven Brazilian states. This is because large exporters simply transferred beef production to states that were not banned.

 

Grants worth US$1.2 billion were allocated to modernise and expand the livestock industry during the first six months of 2006.  The total sum is expected to reach US$1.5 billion by the end of 2006. 

 

Russian agricultural producers have raised US$3.9 billion in loans in 2006 for the construction and upgrade of meat and dairy complexes as part of the National Agriculture Development Project.  Subsidised loans enabled US$3.9 billion to be raised.

 

Some Russian meat sector analysts feel that the expansion of subsidised imports, outdated processing methods, and lack of trade networks may pose difficulties for the industry, the report said.