The Ministry plans to raise duties for all categories of food industry equipment from its current level of zero per cent to up to 10% in order to stimulate import replacements in this sector. Currently, 70-100% of equipment installed in Russia’s poultry and pork farms, as well as its meat processing plants, is imported, according to estimates from Russian analysts.
Lyubov Burdienko, commercial director at Russian analytical agency EMEAT, told GlobalMeatNews that the introduction of these protective duties on imported equipment would drive up the cost of production for meat in Russia. According to Burdienko, the overall share of imported equipment used by Russia’s meat industry was close to 90% at present.
Given this scenario, meat processors would have to purchase compatible imported equipment for any modernisation programs, added Burdienko. The increase in import duties would not hinder the development of Russia’s meat industry, but it would make the end-products more expensive for consumers, Burdienko forecast.
Russia imports almost all its meat industry equipment from Europe – in particular from Germany, Italy and Switzerland.
No point in increased duties
Sergey Yushin, chairman of Russia’s National Meat Association, told GlobalMeatNews it was not certain the duties would be raised. So far, this was only a proposal made by the Ministry and a final decision was yet to be taken, he said.
The only purpose of the measure would be to collect additional fees, as increased duties would not lead to any local replacement of imported equipment for Russia’s meat industry, Yushin said.
Over the past few years the Russian rouble has been devalued by almost 100%, and, since April, its exchange rate slumped another 10% against hard currency, so all foreign equipment is now more expensive for Russian customers, Yushin noted. However, no import-replacements had ensued as a result, he said.
Some simple parts and components had been made in Russia over the past few years, but it was not to the extent where import-replacements would be large-scale, Yushin said. It was also not clear why the Government might need to raise import duties now, when Russia’s meat industry was struggling to increase export sales, he added, noting that any steps negatively affecting production costs for Russian meat could undermine efforts to boost international sales.
Meat companies must be ready
Reports in Russian media have indicated that the Ministry has already informed the country’s leading meat producers, including Miratorg and Cherkizovo, about a possible increase in import duties on equipment. So far, meat companies in Russia have refrained from commenting on how such a step could impact their businesses.