September 29, 2003

 

 

Russia Blames Quota For Higher Meat Prices

 

Meat quotas introduced by the government earlier this year have led to price increases and damaged the market, meat importers, lawmakers and government officials said Wednesday, and called for an improved quotas system next year.

 

"The measures didn't work," said Ivan Starikov, chairman of the Federation Council's committee for agriculture and food policy, and a former deputy economics minister. "The livestock decrease continues, while meat prices are rising."

 

And while importers and producers agree that the quota system has been bad for beef and pork, they say it has been worse for poultry.

 

Russia introduced quotas for beef and pork on April 1, and on for poultry on May 1. While beef and pork quotas have been fixed according to importers' volumes recorded by the State Customs Committee for the last three years, poultry quotas were allocated by country. As a result, up to 77 percent of poultry imports can come from the United States.

 

Sergei Yushin, head of the National Meat Association's executive committee, said the idea of protecting domestic meat producers and processors has, in reality, led to a 50 percent wholesale price increase for poultry, sausages and other meat products made from minced poultry.

 

Starikov said it was not just wholesale prices that had grown, but retail prices as well. "At Moscow retail food chains, a kilo of broiler chicken was 50 rubles in January. Now it is 80 rubles and more," he said.

 

But Dmitry Yanin, the chairman of the Confederation of Consumer Societies, said the consequences were "not thought through."

 

He said consumers now have "no choice" in the price and quality of meat, adding that importers were forced to buy their poultry mostly from the United States and the European Union.

 

"Poultry from Brazil and China is cheaper, but importers have to buy more expensive American and European chicken," Yushin said. He said the quotas were the price Russia had to pay in its quest to join the World Trade Organization.

 

Yushin said that the Economic Development and Trade Ministry, which is currently working out the quotas for 2004, had said the country principle could also be applied in future when distributing beef and pork quotas.

 

Economic Development and Trade Minister German Gref last month agreed there was a need for a revised meat quota and distribution system. The Agriculture Ministry, as well as various meat producers' associations, will soon submit their proposals for a revised mechanism to Gref's ministry.

 

Pavel Vintovkin, head of the Agriculture Ministry's food market regulation department, said that despite the defects in the system, "we shouldn't kill the idea [of quotas]."

 

But the Meat Association sees some positive aspects to the introduction of the quota system, as the practice of setting up so-called one-day firms to strike informal deals has been eliminated.

 

"The meat market has been cleared up," Yushin said. "The number of importers that have licenses has fallen by more than 50 percent."