World meat industry news

Opportunities seen as emerging in refined produce and packaging services for a range of Hong Kong-based suppliers and distributors.

As the western‑imposed sanctions triggered by the ongoing conflict in Ukraine begin to bite, Russia’s agricultural sector and its related futures continue to provoke particular interest in many parts of the world. While the shall‑we‑shan’t‑we crude oil and natural gas supply issues preoccupy Europe and North America, Russia’s food export flows are more subject to the fluctuating agendas of many supposedly friendly nations.

It’s not difficult to see why the country’s food exports have been accorded such attention. Russia is one of the world’s largest grain suppliers, playing a strategic role in the food chain of many countries in Asia and Africa. In addition, demand for “Made in Russia” agricultural produce brands remains robust both in the Middle East and in many of the former constituent USSR nations.

It’s also true to say that Russian‑originated confectionery, flour, cereals, sunflower oil, meat and meat products have become familiar sights on shelves from as far afield as West and Central Africa and Vietnam. In 2021, the level of such exports rose by 21% year‑on‑year, valuing the sector at some US$37.1 billion. Over the same period, the share of imported food dropped by 4% to just 24% overall, according to the Russian Statistics Authority. This is in line with the generally declining trend first identified in 2014, a time when Russia introduced import embargoes on EU / US‑sourced meat and dairy products, as well as seafood, fruit, vegetables, nuts and salt.

While Russia’s Agriculture Ministry has continued to assert that the country is now self‑sufficient in terms of its core food needs, deeming the share of imported produce insignificant, in reality the situation is far from straightforward. In fact, it’s fair to say that certain constituent products of both Russia’s food exports and imports will be hard to source / allocate given how many nations have now absented themselves from the trade equation.

On the export side, the principal positively disposed buyers of Russia’s grain and sunflower oil are Turkey and Egypt, with many other former client nations no longer willing trade partners. Most notably, the lion’s share of Russia’s hard wheat grain had traditionally been destined for Italy’s pasta production, an option no longer on the table.

In an additional challenge, presiding logistics issues see some product categories only viable as western Europe‑bound exports. In particular, while Russian vegetable oil commands a truly global market, the country’s soybean oil, rapeseed oil, linseed oil, mustard and mustard oil (all of which originate on the West European side of Russia) have traditionally been destined for the EU. This is largely because any attempt to transport them eastwards would founder on the basis of the freight costs outweighing the sale value of the produce, an issue that also extends to timber exports.

In terms of the business opportunities the current situation represents for Hong Kong‑based suppliers and distributors, refined produce, notably hard wheat grains, egg poultry (including quails and turkey) and fruit juice, are probably among the most lucrative options. In addition, there are also opportunities emerging in the product packing and packaging sector with many of Europe’s leading players, including TetraPak, having announced plans to exit the Russian market.