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Russian meat industry claims not to care about food embargo

Post a commentBy Vladislav Vorotnikov , 10-Jul-2017

Russian meat producers remain upbeat despite the extended food embargo
Russian meat producers remain upbeat despite the extended food embargo

Despite statements from Russian officials, the effect of the Russian food embargo, recently extended to the end of 2018, on the domestic market is expected to be very limited, as key meat suppliers continue to be banned by veterinary restrictions, while the strong devaluation of the country’s currency has hampered product import margins in general. 

Sergey Yushin, chairman of the Russian National Meat Association, told GlobalMeatNews that he would not overestimate the effect of the food embargo on the domestic meat market. 

Russian manufacturers have invested heavily in new technologies, capacities and genetic material in recent years, so the pace of growth in the country’s meat industry almost exceeded the world average rate by threefold during a number of years prior to introduction of these counter measures,” said Yushin. 

In particular, Yushin noted, the food embargo had had almost no effect on the beef sector, as roughly 95% of import supplies were accounted for by countries not subject to the sanctions. Supplies from the US and Australia were banned prior to the introduction of the embargo, due to problems with growth stimulators, including ractopamine and trenbolone. 

Europe was not supplying Russia with pork products for seven months prior to the embargo because of the African swine fever (ASF)-related ban. So, at the time when the counter measures were put in place, the domestic market had already got used to the absence of European pigmeat. The only noticeable effect was that Canada lost the ability to make deliveries, but those have been replaced successfully by Brazil and, today, 90% of pork supplies come from this country,” Yushin added. 

Moreover, in late 2014 and early 2015, Russia authorised four Chinese pig producers to export to the country, Yushin indicated, explaining that it would be wrong, therefore, to speak about any serious effect on the pig market, as some importers lost access, but others were granted permission to start deliveries. The devaluation of the Russian rouble has been a much more important factor in the reduction of import supplies since 2014. 

“A similar situation has been seen in the poultry market as, due to the devaluation effect, the domestic poultry price appears to be one of the lowest in the world. However, the dynamic in that market was clear long before the food embargo, as Russia managed to cut imports from 1.2 million tonnes (t) in 2000 to only 454,000t in 2014,” said Yushin. 

Meat processing might be at stake 

Lyubov Burdienko, commercial director of the information-analytical agency EMEAT, told GlobalMeatNews that, in her opinion, lifting the food embargo now would mean disrupting, to some extent, the positive development trend in the domestic meat industry, as it would cause a rise in the imports of cheap meat for the meat processing sector. 

“As a consequence, there could be an oversupply of expensive domestic meat in the market and our producers would need to reduce prices, which could lead to bankruptcies. In my opinion, it is now critical to keep curbing imports and maintaining domestic production, so as to bring the matter to its logical conclusion: implementing all the investment projects initiated in the [domestic] livestock sector and waiting until new volumes start to enter not only the domestic, but also the global market, as most of these projects are export-oriented,” she said. 

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