In Russia, demand for meat is increasing

Meat and sausage soon luxury goods?

In Russia, the demand for meat has increased significantly. This is the result of an evaluation by the Russian meat industry. For the first quarter of 2004, Russian market observers report a year-on-year increase in real income of 13,9 percent. At the same time, demand for poultry and meat products increased by four percent. The production of sausage and meat products increased by ten to 25 percent. Significantly lower stocks of meat, the serious decline in meat imports and higher production costs at producer level caused meat prices to rise sharply.

In the first quarter of 2004, almost 50 percent less meat was imported into Russia than in the same period of the previous year, both in terms of quantity and value. Exporters lost about 250 million US dollars in sales as a result. The imponderables in the issuing of import licenses and the brief ban on imports by the Russian authorities led to this restriction. Figures from April point to a return to normalization in import volumes. There are even reports of disproportionately high imports.

Destocking of cattle and pigs

According to Moscow experts, Russia will continue to be dependent on meat and milk imports in the coming years. The own meat production is not sufficient to cover the demand. With a degree of self-sufficiency of around 70 percent for pork and 60 percent for beef, the Russian market is one of the most important sales markets for the EU and overseas countries.

Within the last 14 years, the Russian cattle and pig stocks have been reduced by 58 percent to only 24,1 million cattle and 16,2 million pigs. A current forecast suggests that this trend will continue: During the current calendar year, the number of cattle is expected to decrease by four percent and the number of pigs by 1,8 percent.

Increasing indebtedness on the part of farms, aging technical equipment, few opportunities to obtain long-term credit and a poor harvest last year led to this development. As a result of the scarce harvest caused by the heat, feed grain and compound feed prices rose sharply. According to Russian market experts, this led to a 17 percent increase in compound feed prices. As in many Eastern European countries, this is associated with a greater reduction in livestock. The animals are often the "pocket stocks" of the companies: In unfavorable times, fewer animals are simply kept. This trend applies even more to large companies than to smaller companies that operate for self-sufficiency.

Import quotas cause prices to rise

The call for state support and safeguarding of livestock breeding therefore grew steadily. The Russian government took this into account by introducing import quotas for beef, pork and poultry in April last year. The provision of low-interest loans and advances in animal husbandry are only likely to have a positive impact in the longer term.

Since the introduction of the quotas, the prices for imported goods and domestic meat have risen surprisingly sharply. At the wholesale level, imported beef cost 46 percent more at the end of May this calendar year, and imported pork cost 52 percent more than at the end of April last year. In the same period, producer prices for pork climbed 48 percent. Market experts assume that the rising price trend for beef will continue, especially since the largest foreign supplier - Ukraine - is showing a decline in primary production.

Source: Bonn [ZmP]