October 25, 2005

Russia's meat sector faces development challenges

Russia's meat sector faces development challenges in light of increasing reliance on imports, analysts said.

Official statistics stated that domestic meat production rose from 1.7 million tonnes in 2003 to 1.8 million tonnes in 2004. Total manufacture of meat products rose by 248, 000 tonnes.

Meanwhile, Russian meat consumption has also risen, mainly due to higher disposable incomes. Russian meat consumption is currently between 50 and 55 kilograms of meat a person, compared with 40 kilograms a person in 2000.

The government sought to achieve its target for an average meat consumption of 70 kilograms a person, through encouraging domestic producers' help towards this end.

However, there were two main obstacles to Russia's meat sector development.

Firstly, meat as raw materials was limited due to fewer cattle, little growth in pig- breeding and only slight development in poultry production. Limited cattle numbers might cause a shift in consumption away from beef, which currently accounted for 40 percent of domestic meat consumption.

Secondly, growing power of retailers might reduce producers' profit margins. So far, the government has only tried to regulate quotas for meat-processing factories.