Since the beginning of the year, Russian pork and beef prices have risen by nearly 25%, according to a recent report by the Specialized Center of Accounting in Agribusiness, part of Russia’s Agriculture Ministry.
Ministry experts link the increase in meat prices to the depreciation of the rouble. Since December 2013, the rouble has fallen by about 15% against the dollar and the euro, and continues to do so. In this context, the Ministry admitted, there is a possibility that meat prices could rise further.
However, according to the National Meat Association’s head of executive committee Sergei Yushin, the rouble’s deprecation is not a major factor in the recent meat price increases.
"Of course, 35-40% of the Russian beef market consists of imports, while for pork this figure is about 25-30%. But the dynamic of the exchange rate is not the determining factor in [meat] prices as our companies also observed volatile currency exchange rates in countries that export meat to Russia. In Brazil, for example, the rate of the real also dropped against the dollar," he said.
Yushin said that the recent jump in pork prices could be explained by a "psychological factor", after the decision of the Russian authorities to stop importing pork from the European Union. "Initially, after that, the price jumped but then the market and consumers saw that there were shipments from abroad coming to our country [from other markets], and we still have Belarus as a large supplier, so prices have now started to fall."
Experts added that psychological factors could also play an important role in potential price rises in March.
"The authorities are trying to reassure the population; however, it is obvious that beef and pork prices will continue to increase. All the prerequisites are there, including the depreciation of the rouble, the shortage of pork in the market, as well as concerns about the deterioration of the general economic environment. The possibility of sanctions by Western countries and the worsening of the economic situation in Russia promise to strongly push food, including meat, prices up," said agricultural analyst Eugene Gerden.
However, Yushin disagreed with experts’ forecasts that the prices in the domestic market would continue to rise during March.
"Feed is now cheaper than in 2012, and the cost of feed accounts for about 70% of the price of meat. More than half of feed is grain and we produce grain in Russia. So I think that there are no reasons for further price rises," he said.