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Russia to cancel lower duties on beef from Brazil and Paraguay

Post a commentBy Vladislav Vorotnikov , 01-Sep-2017

Russia is to remove the lower customs duties previously enjoyed by certain nations
Russia is to remove the lower customs duties previously enjoyed by certain nations

Russia’s committee on customs and tariff regulation, headed by the Minister for Economic Development Maxim Oreshkin, has decided to start applying full customs duties on beef imported from Brazil and Paraguay “to get the price of importers in line with the price of domestic producers”

Currently, when importing beef to the Eurasian Economic Union, comprising Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan, the list of countries described in Russian government decrees as states with an “emerging agricultural industry”, including Brazil, Paraguay, Mexico and Uruguay, enjoy lowered customs duty of 75% from the basic duty, which is applied to all other importers.

According to Igor Abakumov, former member of the Public Council at Russia’s Ministry of Agriculture, the decision to cancel lower duties was justified by the need to bring the domestic market into balance and the prices of importers in line with the prices of Russian farmers.

A decline in the purchasing power of Russian consumers has resulted in a fall in demand for beef, So, to avoid stagnation, the government has taken steps to encourage exports and to tackle imports, said Abakumov. Meanwhile, it was unlikely the decision would cause a rise in beef prices in the domestic market, he added.

In 2016, Russia imported 230,000 tonnes (t) of beef, of which Brazil accounted for roughly 60% and Paraguay 30%, according to data from the National Meat Association (NMA). As previously indicated by NMA officials, imports of beef from Latin America have changed significantly in the past few years, due to currency fluctuations and other factors.

Now, Russia tends to import either premium cuts at the highest prices, or the cheapest cuts, which are used primarily in the processing industry for the production of sausages, according to the NMA.

In 2016, the production of beef in Russia decreased by 1.6% to 2.83 million tonnes (t) in slaughter weight, according to data from the State Statistical Service. Referring to this, Russian Agriculture Minister Alexander Tkachev has estimated that domestic production of beef needs to increase by some 450,000t for the country to reach self-sufficiency in beef, in similar fashion to the targets already achieved for poultry and pork.

According to Konstantin Goisman, general director of agricultural holding Doronichi, in recent years Russian meat processors avoided beef in favour of cheaper types of meat. However, those who still process beef, were now more likely to start using domestic supplies, due to the expected equation of prices between imported and domestic products, he noted.

Back in 2014, Russian President Vladimir Putin had already ordered the country’s government to rule out lower customs duties on imports of beef from exporting countries and the preferential tax regime was expected to be cancelled by October 2014. However, for some reason – possibly because of the temporary shortage of some types of meat products in Russia following the introduction of the food embargo in August 2014 – the initiative was delayed.

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