World meat industry news

On February 3, 2023, the Eurasian Economic Commission (EEC) agreed on the duty-free import of 100,000 tons of beef into Russia this year, according to the EEC website. The decision was made at the suggestion of Russia. The measure should provide raw materials for manufacturers of canned meat and sausage products, as well as stabilize prices for such products for consumers, the EEC said in a statement.

The representative of the Ministry of Agriculture of Russia, which initiated the benefit, says that it will provide meat processors with the necessary volumes and types of meat.

The possibility of duty-free importation was introduced in 2022. At that time, it was allowed to import 200,000 tons of beef and 100,000 tons of pork into Russia at a zero rate (the usual rates are 15% and 25%, respectively). Pork imports in 2022, according to the estimates of the National Union of Pig Breeders, increased by 53% to 17,980 tons, beef - by 1% to 289,480 tons.

The decision of the EEC was predictable, since the regulators of the countries that are members of the EAEU (Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia) are primarily aimed at stabilizing beef prices, said Sergey Yushin, head of the National Meat Association. The refusal to extend pork quotas is due to the stable cost of this meat, says Kristina Romanovskaya, general director of the Lazarevskoye farm.

A source in one of the companies specializing in the cultivation of cattle (cattle) recalls that the initiative was originally introduced to stabilize prices for processed meat products - sausages and sausages. But at the end of 2022, their price increased by 13.5% to 380 rubles. per kg, and in 2023 it can grow by another 7% to 400-410 rubles. per kg. Cattle meat is used only in premium segments of processed products, the cost of which should not be regulated for socially unprotected categories of the population, and the main share of meat in the production of sausages and sausages is poultry and pork, says the source of Vedomosti.

Director General of the National Union of Beef Producers Roman Kostyuk believes that the appearance of alternative beef on the market will not allow increasing domestic production. According to him, it is not the volume of imports that is important, which is minimal on the scale of overall production, but the signal itself that the Ministry of Agriculture can initiate such proposals, resolving momentary issues with the price.

In 2022, beef output in all categories of farms decreased by 3.6% to 1.58 million tons, the EMEAT agency calculated. The amount of the benefit was formed based on the data of the Ministry of Agriculture on the balance of production and consumption and will not have a significant impact on the volume of production in Russia, a representative of the Ministry of Economic Development is sure.

The extension of preferential imports may lead to a further decrease in investment activity in beef cattle breeding and beef production, Yushin believes. He clarifies that the payback period for even the most efficient projects exceeds 10-12 years. It will take 18 to 20 months to raise a calf to optimal weight conditions even on the highest quality feed. For a broiler, this figure is about 40 days, for pigs - 175-180 days, Yushin explains.

Russia is now provided with only 80-82% of beef, adds Kostyuk. At the same time, he continues, protective duties on pork and poultry have led to the fact that Russian companies have been able to fully meet their own consumption within 8-10 years and even exceed it, which is now provoking price reductions. Poultry output in 2022 increased by 4.4% to 5.1 million tons in carcass weight, pork - by 5% to 4.2 million tons in carcass weight, calculated in EMEAT. With beef, regulators decided to take a different path, which scares off investors by the very fact of the possible import of alternative beef, explains Kostyuk.

Russia has the potential to increase beef production both on the domestic market and for export, primarily to China, Yushin believes. The total volume of exports to China, according to NMA estimates, decreased from 21,500 to 21,000 tons in 2022.

According to Yushin, as the world economy recovers and inflation decreases, there will be a shortage of beef on the global market in the medium term. And then Russia will not only miss the chance to make money on supplies to dozens of countries around the world, but will also be forced to buy beef in South America, he predicts.

A subsidy for growing bulls introduced by the Ministry of Agriculture this year can help increase beef production in 2023, says Alexei Gruzdev, CEO of Streda Consulting. According to him, about 600 million rubles were allocated for these purposes. But the mechanism for providing the subsidy is such that not all livestock breeders will be able to take advantage of the support measure, but only specialized fattening farms or those who fatten bulls to slaughter on their own.

The issue of granting a tariff relief of 0% concerns 2023 and is a consequence of the fall in beef production in 2021-2022, assures Ekaterina Luchkina, director of the association "Association of meat processors" (ASOMP). According to her, imports do play an important role in compensating for the shortage of cattle meat and, in fact, are a lever to curb the growth of domestic prices. In 2022, it was possible to avoid a serious jump in costs only thanks to the tariff privilege, Luchkina believes. The production cycle for growing cattle is at least 2.5-3 years, and the size of the duty is not able to affect the dynamics of beef production in Russia, she says.