ANALYSIS - The Russian meat sector has a mixed and varied year in 2013, with low margins in the first half of the year because of record feed prices and low prices for the main types of meat and in the second half of the year a rise in margins as feed prices reduced, writes Chris Harris.
According to the Russian market analysts, the Institute for Agricultural Market Studies, IKAR, the weakest part of the sector by the end of the year was the poultry sector, because oversupply and low prices forced values down to rock bottom.
Over the year Russia’s self-sufficiency in meat rose from 72 per cent to 76 per cent, although IKAR says that different methods of calculating self-sufficiency could make the figures a little arbitrary.
However, Russia is gradually reducing its dependence on meat imports.
In 2007, Russia was among the leading commodity importers in the world. Last year the country had fallen to fifth place.
The leading exporter of meat to Russia is Brazil, which last year shipped 400,000 tonnes of meat into the country.
However, neighbouring states such as Belarus are moving up the trading ladder, which last year exported 300,000 tonnes of meat products to Russia.
Last year also saw a gradual fall in meat exports from Russia. Exports of meat including offal reached 50,000 tonnes last year with central and South East Asia being the main export markets.
Despite the problems with African Swine Fever in the Russian pig herd, Russia saw a gradual rise in exports of pig meat to South East Asia, which last year were between 8,000 and 10,000 tonnes.
The main destination for pig meat exports has been China and in particular Hong Kong.
There was also a growth in finished meat product exports, which IKAR estimates might have reached 45,000 tonnes in 2013. More than 80 per cent of Russian meat product exports went to Kazakhstan.
IKAR also estimated that domestic meat production is growing at a rate of 5.7 per cent a year, with a growth rate of 10 per cent in the pig sector and about six per cent in the poultry meat sector.
However the cattle sector saw a drop in production of about one per cent.
IKAR said that the beef sector has undergone considerable structural changes, with the main source of beef coming from dairy cattle.
However the livestock numbers are falling and the breeding herd and base for meat production is also shrinking.
While Russia is seeing a reduction in the breeding base, there are growing numbers of crossbred beef cattle. Over the year, numbers of cross bred cattle rose from 1.56 million head to 1.9 million – a rise of 22 per cent.
According to IKAR, the growth in these beef herds compared to the total cattle population will see a growth in beef production.
However, about a third of the Russian beef market comes from imports largely from South America and Belarus. In the next two to three year IKAP says there will be a growth in high quality beef on the market, but total beef production is unlikely to grow.
The pig sector is continuing to evolve, although economic growth in the sector is fairly static.
Much of the development has been on existing farms and properties and there has been little greenfield build.
IKAR says that by the end of 2013 production in all forms of production units will hit 2.81 million tonnes – a rise of 10 per cent. Growth in the corporate sector will reach 15 per cent. This rapid growth in the corporate industrialised production is also forcing a decline in the numbers of smallholdings, largely because of the problems surrounding African Swine Fever.
Despite the success of domestic producers to increase production in Russia, the country remains a major importer.
In 2013 the imported share of the Russian pig meat market was 29 per cent.
However, growth in domestic production is expected to be between three and four per cent a year and this year growth in production is expected to reach more than 350,000 tonnes live weight.
One of the m ain drivers in growth in the Russian meat sector is the growth in poultry meat production.
However after a rapid growth in production over the last three years – a growth of 10 per cent compound average growth rate – the growth rate is expected to have fallen slightly, while still remaining high.
IKAR said that production by the end of 2013 will have increased by six per cent, reaching 3.85 million tonnes deadweight.
In 2014, IKAR predicts an increase in production of between 210,000 and 230,000 tonnes liveweight – a rise of 4.4 per cent.
The poultry market in Russia is largely confined to corporate integrated intense production, which holds about 90 per cent market share.
As domestic production has increased the share of the market from imported product has fallen to 13 per cent. Imports are largely supplied by the US, Brazil and Belarus.
IKAR is also optimistic about the export potential for domestic Russian poultry production because of the peculiarities of pricing of parts of the carcase and because of market saturation.
TheCattleSite News Desk