July 25, 2005

USDA: Meat smuggling increasing in Russia
 

Russian producers are beginning to complain that prices are falling due to a glut of smuggled meat.

Following criticism from President Putin that meat prices continue to rise too quickly, Russian meat industry representatives are now pressing the case that the opposite is actually true. 

They claim that Russian meat prices are now declining due to smuggling. In fact, both rising prices and higher rates of smuggling accurately describe the situation in the first half of 2005. 

Few industry sources dispute that smuggling has once again become an important factor in the Russian meat market. While smuggling in its classic sense is not as pronounced as in the late 1990's, various schemes to change the product's country of origin through minor processing or mislabeling have proliferated.

Artificially high prices-resulting from meat and poultry TRQs and barriers to enter the new import trading structure-have created incentives for meat smuggling.

As a result, significant quantities of meat have been brought into Russia outside of the formal import structure in 2005. Though it is hard to confirm the exact level of illegal imports, it is having an impact in the meat market, especially in prices in certain regions near Russia's borders.

Prices, however, have not turned downward for most meats nationwide.

As a result, the Russian Government is under increasing pressure to restrain price growth to a moderate rate to keep both consumers and producers happy, while eliminating illegal imports.

For the full USDA report, click here.