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Russian Federation

Russian Federation – Meat sector review


Meat sector review

FAO Investment Centre


COUNTRy HIGHLIGHTS

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Report No. 15
I3533E/1/11.13

http://www.fao.org/investment/en

Russian Federation: Meat sector review


Report No. 15 - July 2014
FAO INVESTMENT CENTRE
Russian Federation
Meat sector review

Dmitry Prikhodko
Economist, Investment Centre Division, FAO
Albert Davleyev
National Meat Consultant, Investment Centre Division, FAO

country highlights
prepared under the FAO/EBRD Cooperation

Rome, 2014
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Cover photo: ©Dreamstime


TABLE OF CONTENTS

Foreword v
Acknowledgements vi
Acronyms and abbreviations viii
Executive summary xi

1  lobal medium-term meat market outlook


G
with focus on the Russian Federation 1
2 The Russian Federation meat sector in brief 11
3 Detailed review of the meat sector 25
4 Meat processing 60
5 Meat market concentration 68
6 Meat trade 87
7 Meat prices 96
8 Policy 99

Annex 1 Distribution of poultry, swine and cattle


inventories by region and type of farm in 2010 120
Annex 2 Main breeds and crosses 133
Annex 3 Meat production technologies 140
Annex 4 Applicable state standards in the Russian
Federation 149
Annex 5 Profitability of poultry, pork, and beef
production in various administrative subjects
of the Russian Federation 153
Annex 6 Leading meat brands 156
Annex 7 Major agroholdings and meat producers in the
Russian Federation 158
Annex 8 Recent investments in the poultry sector 168

iii
Annex 9 Broiler meat production (Far East Russian
Federation): investment model assumptions,
results and sensitivity 171
Annex 10 Recent investments in the pork sector 174
Annex 11 Recent investments in the beef sector 178
Annex 12 Foreign meat trade 180

iv
Foreword

In recent years, the rise of agroholding farms, combined with


strong consumer demand, higher incomes and substantial state
support, have prompted an increase of meat production in the
Russian Federation. Despite its improved self-sufficiency in the
sector, the country will remain one of the principle global meat
importers in the foreseeable future. The reduced import tariffs
following Russia’s accession to the World Trade Organization
(WTO) will put pressure on local meat producers to become more
competitive. To do so, they will need to invest in the efficiency of
primary production and higher food quality and safety standards.

This review of the Russian meat sector, conducted by the Food


and Agriculture Organization of the United Nations (FAO) and the
European Bank for Reconstruction and Development (EBRD), aims
to inform policy makers and investors and promote a more efficient
and inclusive meat sector. It provides information on the role of
the Russian Federation in global meat markets, on production and
consumption of meat in the country, as well as relevant trade and
policy measures. The review presents international comparisons
on meat production efficiency, sector concentration and support
measures. It also provides information on major players in the
Russian meat market and identifies key sector constraints and
opportunities.

Readers interested in learning about mid-term prospects in the


meat market are encouraged to read the latest version of the
Agricultural Outlook jointly produced by the Organization for
Economic Co-operation and Development (OECD) and FAO1.

1 http://www.oecd.org/site/oecd-faoagriculturaloutlook/.

v
Acknowledgements

This sector review was prepared by the Investment Centre


Division of FAO in the context of the cooperation between FAO
and the EBRD. It was financed by FAO and EBRD’s Special
Shareholder Fund.

Dimitry Prikhodko, Economist, Investment Centre Division, FAO,


and Albert Davleyev, President, Agrifood Strategies, a Moscow-
based agribusiness consultancy company, are the main authors
of this report. Mr Prikhodko also led the team of other co-authors
that contributed to the study. Inna Punda, Agribusiness Officer,
Investment Centre Division, FAO, reviewed the initial version of
the report and carried out desk research on Russia’s meat trade
with Ukraine and within the Customs Union of Belarus, Kazakhstan
and the Russian Federation. Vasyl Hovhera, Economist, Investment
Centre Division, FAO, provided inputs on meat consumption and
on the profitability of broiler meat production. Arianna Carità,
Economist, Investment Centre Division, FAO, assisted in reviewing
the study and prepared the executive summary. On the EBRD
side, Marta Bruska, Operational Leader for this project, provided
leadership and coordination.

The FAO/EBRD team would like to express its sincere gratitude


to Natalya Zhukova, Senior Banker, Agribusiness, EBRD, Moscow,
and Oona Schreiner, Banker, Agribusiness, EBRD, for their
constructive comments on current issues and trends in the
Russian meat sector. The authors would also like to thank Eugenia
Serova, Director, Rural Infrastructure and Agro-industries Division,
FAO, for her guidance and inputs at the initial stages of the review.

The report benefited from useful comments by Pedro Marcelo


Arias, Economist, Trade and Markets Division, FAO. Specials
thanks are extended to Hsin Huang, Secretary General of the
International Meat Secretariat (IMS), for his careful review and
valuable suggestions.

The authors would also like to thank Emmanuel Hidier, Senior


Economist, Investment Centre Division, FAO, and Claudio
Gregorio, Chief, Europe, Central Asia, Near East, North Africa,
Latin American and Caribbean Service, FAO, for their support and
guidance, and Genevieve Joy, Sarah Mercadante and Maria Ricci,

vi
Communications support, Investment Centre Division, FAO, for
assisting with the finalization and publication of the report. Maaike
Loogman, Joana Maison Aidoo, Eleonora De Feo and Monica
Romanelli, Investment Centre Division, FAO, provided excellent
administrative support throughout the course of this project.

vii
Acronyms and abbreviations

AI avian influenza
AMS aggregate measurement of support
ASF African swine fever
EBITDA earnings before interest, taxes depreciation and
amortization
EBRD European Bank for Reconstruction and Development
EU European Union
FAO Food and Agriculture Organization of the United
Nations
FAPRI Food and Agricultural Policy Research Institute
FIRA First Independent Rating Agency
FMD foot-and-mouth disease
FOB free on board
FSSS Federal Service of State Statistics
GDP gross domestic product
GK group of companies
GNI gross national income
GOR Government of Russian Federation
HACCP hazard analysis and critical control points
HORECA retail, hotel, restaurant and catering services
HS harmonized system
IMS International Meat Secretariat
IRR internal rate of return
KMPP Kornshtadt meat processing plant
LSE London Stock Exchange
MPS market price support
NPC nominal protection coefficient
NPV net present value
OECD Organisation for Economic Co-operation and
Development
OIE World Organisation for Animal Health
OJSC open joint-stock company

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OKVED Russian Classification of Economic Activities
PPP purchasing price parity
PSE producer support estimate
PSF private subsidiary farming
RAAS Russian Academy of Agricultural Sciences
RUR Russian rouble
SANPIN sanitary norms and rules
SCT single commodity transfers
SPS sanitary and phytosanitary (measures)
TCI Investment Centre Division of the Food and Agricultural
Organization
TRQ tariff-rate quota
USDA United States Department of Agriculture
VAT value added tax
VNIIMP All-Russia Scientific Research Institute of Meat
Processing Industry
VNIIMS All-Russia Scientific Research Institute Of Meat Cattle
Breeding
VNIIZZH All-Russia Scientific Research Institute of Animal
Protection
VPSS Veterinary and Phytosanitary Surveillance Service
WB World Bank
WTO World Trade Organization

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Russian Federation - Meat sector review

Executive summary

Market development and business considerations


The Russian Federation in the global meat market
World food demand has seen massive changes, including a shift
from staple foods to animal proteins and vegetable oils. In the
short to medium term, this trend in global food demand will
continue. There will be an increased demand for vegetable oils,
meat, sugar, dairy products and livestock feed made from coarse
grains and oilseed meals.

There are numerous mid-term forecasts for the Russian Federation’s


meat sector. Most of them agree on the following trends: (i) the
consumption of poultry and pork meat will increase; (ii) the
consumption of beef will decrease or stabilize; and (iii) the Russian
Federation will remain a net importer of meat on the world market.

According to OECD and FAO projections, meat imports from the


Russian Federation will decrease from 3 to 1.3 million tonnes,
owing to an anticipated growth in domestic chicken meat and
pork production. The country’s share in global meat imports
is anticipated to decrease from 12 percent in 2006–2010, to
4 percent in 2021. While the Russian Federation will continue
to play an important role in the international meat market, it will
fall from its position as the largest meat importing country in
2006–2010 to the fourth largest global meat importer by 2021,
behind Japan, sub-Saharan African countries, and Saudi Arabia.

A growing and evolving domestic market


Between 2005 and 2010, the value of the Russian meat market
increased by 75 percent, reaching about RUR 930 billion in
current prices (equivalent to USD 31 billion) due to growing meat
consumption. As a result of higher consumers income, meat
consumption in the Russian Federation has been on the rise since
the late 1990s. From 2005–2010, the per capita consumption of
all meats and meat products increased by 22 percent to reach
64 kg per person per year. Poultry meat consumption increased
by 31 percent between 2005 and 2010 to reach 25 kg per person,
while pork consumption increased by 38 percent to reach 21 kg
per capita. On the other hand, the per capita consumption of beef

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and veal decreased by 0.5 percent, down to only 17 kg, during the
same period.

Despite a significant anticipated growth by 2021, the per capita


consumption of meat in the Russian Federation will most likely
remain below that in the United States of America (USA), Brazil,
Argentina, Australia and the European Union EU-27, but will exceed
the consumption of meat in Ukraine, Mexico, South Korea and
China. In recent years, the Russian meat market has experienced
some notable transformations, in particular (i) a shift from beef to
poultry meat consumption; (ii) the progressive exit of household
farms from the market and the expansion of larger commercial farms
involved in meat production; and (iii) an increased supply of fresh,
chilled meat at the expense of frozen products. The emergence of
a large newly affluent urban population in Russian cities has also
boosted the development of the retail sector in the country, which
has influenced the way meat is sold and consumed. Chicken meat,
especially in the form of chicken meat cuts, has replaced beef in
everyday diets. However, pork consumption is likely to grow even
faster, as it is consumed in many processed ways: sausages,
smoked meat, meat delicacies and other value-added products.

From 2005 to 2010, total meat production increased from


7.7 million tonnes to 10.6 million tonnes, with chicken meat
production growing from 1.4 million tonnes to 2.8 million tonnes
and pork production increasing from 1.6 million tonnes to
2.3 million tonnes, according to official statistics. On the other
hand, beef production decreased by 5 percent from 1.8 to
1.7 million tonnes during the same period, reflecting ongoing
adjustments in the closely related dairy sector.

The production, processing and supply structure of the meat


sector has shown a clear trend towards vertical integration, with
inefficient producers going bankrupt and an increased share of
commercial farms at the expense of smallholder producers. The
share of larger commercial farms in poultry meat production
increased from 79 percent in 2005 to 88 percent in 2010 and from
33 to 53 percent in the pork sector, with the remainder being
produced by smallholder farms. As beef production is not generally
considered profitable by commercial farms, their share in cattle
meat production decreased from 36 percent in 2005 to 32 percent
in 2010, while the remaining share of smallholders and individual
farms increased.

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Russian Federation - Meat sector review

Decreasing role of imports


Imports of meat and edible meat offal decreased by 27 percent
from 3.3 million tonnes in 2007 to 2.4 million tonnes in 2012,
mostly due to a drastic 64 percent decrease in poultry meat
imports during that period. Prior to 2010, poultry meat was the
main kind of meat imported into the Russian Federation. It is now
the third most important type of imported meat after pork and
beef. Imports of edible meat offal for further processing have been
quite stable at about 300 000 tonnes per year and are an important
source of raw material for meat processors.

Significant room to improve production efficiency


Although Russian meat producers have been effectively protected
from import competition by high-tariff and non-tariff barriers, some
improvements in meat production efficiency have taken place
thanks to an increase in competition among domestic producers.
For instance, broiler meat production indicators considerably
improved from 2005–2010 thanks to better feeding and nutrition,
as well as investment in the modernization of production facilities.
As a result, the average daily weight gain of broilers increased
from 32 grams in 2000 to 47 grams in 2010. The feed conversion
improved from 2.7 kg to 1.85 kg of feed per 1 kg of broiler.
However, only leading Russian producers such as Cherkizovo
or Miratorg reach feed conversion rates of 1.68 – a level that
compares to what Brazilian producers achieve to date. Despite
certain improvements in livestock production performance,
Russian pork producers lag behind major pork producers from
countries such as the USA, Brazil, and the EU.

Strong meat prices will result in sustained export earnings for


major global exporters, which will encourage large meat exporting
countries to further invest in improving and expanding production
and exports despite the high prevailing incidence of food safety
and sanitary import bans. These investments in exporting countries
will likely put a greater pressure on Russian producers to improve
their production efficiency.

As consumers become increasingly aware of sanitary issues,


meat producers and processors in the Russian Federation will
need to pay more attention to ensuring food safety. Despite
improvements in this area and the adoption of the national hazard
analysis and critical control points (HACCP) standards, not all meat
producers meet national food safety regulations. Producers need
to pay particular attention to bacteriological contamination and
maximum residue levels. Independent research on salmonella

xiii
prevalence revealed that salmonella was present for 32 percent of
whole chickens sold in the Russian Federation, compared to 4 to
16 percent in the USA and the EU. Continuous improvements and
investment in food safety will be a key factor for local producers to
gain market shares.

Recent investments, risks and profitability


The Russian meat sector has recently experienced an investment
boom due to high profits and growing demand sustained by
market protection and state support programmes. According
to available information on ongoing and planned investments
for 2009–2014, the Russian meat sector has attracted a total of
USD 7.2 billion in investment. Poultry production on its own has
attracted about 44 percent of all meat sector investments, while
pork and beef production have attracted 33 percent and 15 percent
respectively. An additional USD 540 million in investment was
also observed in the meat processing sector. It should be noted,
however, that the recent global economic recession has forced
some Russian companies to review their ambitious business
expansion plans and put some meat production projects on hold.

Similar to those in other countries, Russian meat producers


face a number risks: (i) adverse production conditions and poor
infrastructure (low production efficiency, poor feed quality,
exposure to volatile feed grain prices, difficult access to
transportation infrastructure, power outages, etc.); (ii)) animal and
poultry disease outbreaks and food safety hazards (avian influenza,
African swine fever, foot-and-mouth disease, etc.); (iii)) investment
and financial risks (increase in interest rates, etc.); and (iv) policy-
related risks (changing government priorities, high level of market
protection, etc.). These are described in Chapter 2 of this report.

The analysis conducted in this review shows that, while


investments in new broiler meat production can still be profitable
in the Russian Federation under standard market assumptions on
local input/output prices and the cost of capital, such investments
have a rather long average payback period of nine years and are
highly sensitive to feed price increases. An increase in feed costs
of only 10 percent would make these investments unprofitable.
At the same time, a reasonable improvement in feed conversion
would increase the investments internal rate of return (IRR) from
15 to 18 percent and decrease the payback period to eight years.

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Russian Federation - Meat sector review

Foreseen meat processing consolidation


Russian meat processing, unlike poultry meat production, is
characterized by rather low consolidation owing to the country’s
vast national territory, consumers’ preferences for local regional
producers and trademarks, and a general lack of the processors’
capacity to market brands at the national level. It is very likely that
sector consolidation will occur in the near future. In order to meet
its potential, the private sector needs to modernize and improve
its basic production efficiency. These improvements would require
substantial private investment in areas such food safety and
biosecurity, environmental sustainability through the introduction of
better livestock management practices, and improved breeding stock.

Policy considerations
The fast growth experienced by the meat sector in the Russian
Federation in recent years has been supported by policy
measures, including import tariffs and domestic support. Although
competitiveness features as one of Russia’s main agricultural
policy goals, the country’s agricultural support system has
been driven by a progressive policy orientation towards import
substitution and higher self-sufficiency in meat and other food
products. While livestock production may play an important role
in economic growth and the need for adequate investment in that
sector is clear, Russia’s food self-sufficiency approach may be
questioned from an economic point of view.

Meat market protection and support come at a high price


Russia’s agricultural policy objectives have been pursued at a
relatively high cost to Russian taxpayers and consumers. Most
support is provided through market price support, supply of inputs
and fixed capital (investment subsidies and interest rates), all of
which are among the most market distorting policy measures.

According to OECD’s monitoring of annual monetary transfers from


consumers and taxpayers to farmers, measured as the Producer
Support Estimate (PSE), Russian producers of grains and oilseeds
– the main sources of feed protein in the country – appear to be
“taxed”. At the same time, annual transfers to domestic producers
of poultry and livestock averaged RUR 227 billion (USD 6,3 billion)
throughout 2008–2010. More specifically, 20 percent of gross
income received by beef and veal farmers, 45 percent of incomes
from pork and 34 percent of incomes from poultry meat came
from consumers and taxpayers. Russia’s main interventions in the
sector consist of market-price support. Due to tariff and non-tariff

xv
measures, domestic prices for beef, pork and poultry end up being
much higher that international reference prices.

Improving competitiveness
Russian meat producers have a favourable access to feed
grains and meals as the country is a net exporter of wheat,
barley, corn and sunflower meals and other compound feed
ingredients. Therefore, improving the competitiveness of Russian
meat producers primarily means bridging the gap between the
domestic and import parity prices. The gap between domestic and
international prices increased considerably from USD 470–900 per
tonne of various kinds of meat in 2001 to USD 900–1 200 in 2010.
Domestic pork prices were often twice as high as international
pork prices at import parity levels. Domestic beef appeared to be
more competitive with imports than poultry and pork.

Protectionist policies will not help the domestic meat industry to


become competitive in the long-term. While the level of domestic
market protection and state support remain very high in the
Russian Federation, other major meat producers, like the USA and
Brazil, have limited price-distorting support measures or, as it is the
case for the EU, tend to reduce their support measures to meat
producers.

WTO accession
The Russian Government managed to defend a substantial
domestic market protection level at World Trade Organization
(WTO) accession, including Tariff-Rate Quotas (TRQs) for poultry
meat and beef with high out-of-quota rates. For pork, the Russian
Federation has agreed to a TRQ of 400 000 tonnes for fresh,
chilled and frozen pork with a zero in-quota tariff. As of 1 January
2020, the Russian Federation will adopt a tariff-only regime for
pork with a bound duty of 25 percent. Therefore, the domestic
pork market will be more open to import competition.

State support programmes


State support programmes focus on extending long-term credit
at low interest rates to livestock breeding and other regional
programmes. They have attracted many entrepreneurs. For
example, interest rate subsidies for livestock production from
the federal budget – aimed at supporting the construction,
reconstruction and modernization of livestock and poultry
facilities – totaled RUR 2.36 billion (USD 66 million) and attracted
RUR 155 billion (USD 4,3 billion) worth of credit to 492 projects

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Russian Federation - Meat sector review

in 2010 alone. In 2011, overall state subsidies to the livestock and


poultry industries, disbursed under various support programmes,
amounted to RUR 22.8 billion (USD 636 million). As domestic
meat markets appear to be highly distorted, the extent to which
investment decisions have been driven by rational business
considerations is unclear. Many companies also complain about
the excessive documentation requirements and the lack of
transparency in decision making by officials responsible for the
distribution of state support.

To ensure the long-term competitiveness of Russia’s meat sector,


it would be highly desirable to refocus domestic budget support
to food safety improvements, feed quality monitoring, research,
education, training and other non-distorting support measures.

Effective food safety vs. sanitary-based trade restrictions


While ensuring food safety is a paramount task for all
governments, it appears that the attention of Russia’s food
safety authorities primarily focuses on imported meat products.
Furthermore, some WTO member countries have pointed out that
Russia’s sanitary regulations regarding maximum residue levels are
often not scientifically based.

It would be highly desirable for the Russian Federation to build


a comprehensive national food safety monitoring system. This
system would monitor microbiological, antibiotic and other residue
levels on a continuous basis and keep track of improvements
in food safety over time, thus building consumer confidence
regardless of product origin.

As knowledge becomes increasingly important in the livestock


and poultry sectors, public investment in education and training
will also be critically important. For the moment, the lack of
professional skills at all levels – from nutritionists to farm managers
– often forces private companies to invest in their own educational
programmes. Public-private partnerships in the field of agricultural
education could also address this critical gap.

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Russian Federation - Meat sector review

Chapter 1 - Global medium-term meat


market outlook with focus on the Russian
Federation

Production
Global demand for meats will increase and mostly stem from large
economies in Asia, crude oil exporting countries and Latin America
according to the FAO-OECD Agricultural Outlook (2012)2. Poultry
meat will lead this anticipated growth as the cheapest and most
accessible source of meat protein overtaking pork as the largest
meat sector by 2021 (see Figure 1).

Figure 1: World beef, pork and poultry production and forecast,


1998-2021

140
Forecast
120
million tonnes

100
80
60
40
20
0
1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Beef and veal (cwe) Pig meat (cwe) Poultry meat (rtc)

Source: OECD-FAO Agricultural Outlook 2012.

High feed costs in 2010-2012, a slowdown in demand and weak


economic conditions combined to reduce producer returns in
the livestock sector, encouraging producers to reduce animal
inventories, which slowed total meat production in the years prior

2 This chapter includes findings from the FAO-OECD Agricultural Outlook and its
medium-term projections for the period 2012-2021. Because FAO and OECD
Secretariats revise projections on an annual basis, the readers are encouraged to
refer to the latest projections available. The outlook database, including historical
data and projections, is available through the joint OECD-FAO internet site: www.
agri-outlook.org.

1
to 2012. Higher producer prices, with feed costs easing in the
short term, can be expected to improve meat margins and set the
stage for some expansion in production of red meats and poultry
in 2012-2013.

It is anticipated that global production of beef, pork and poultry


meat will increase from 262 million tonnes in 2005-2010 (average
annual) to 330 million tonnes in 2021 (up 26 percent) in response
to growing demand. During the same period, production of the
same kinds of meat in the Russian Federation is anticipated
to increase from 6 million tonnes to 9.4 million tonnes (up
56 percent). Because of anticipated increases in poultry meat,
the Russian Federation will increase its share in global meat
production from 2 percent in 2006-2010 (on average) to 3 percent
by 2021 (see Figure 2).

Figure 2: Global meat production, share of the Russian


Federation’s production and forecast, 2001-2021
350 3
300 314 319 325 330
298 303 309
278 282 286 292
million tonnes

250 262 2
234

percent
200

150
1
100

50 7,3
4.6 6.0 7.3 7.7 8.0 8.3 8.4 8.6 8.7 8.9 9.0 9.2 9.4
- 0
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
01

05

06

10

11

12

13

14

15

16

17

18

19

20

21

World production Russian production Share of Russian Federation


(left axis) (left axis) in production (right axis)

Source: OECD-FAO Agricultural Outlook 2012.


Note: The meat total combines beef, pork and poultry meat only.

Global bovine production, which has stagnated in recent years,


is anticipated to start growing more rapidly as herds rebuild.
However, poultry will likely remain the fastest growing sector
(2.2 percent p.a.) and will produce the highest volume of all meats
worldwide by 2021.

Productivity growth throughout the global meat production chain


has been significant in recent years. Herds have improved through
better breeding and herd management practices, especially
improved feeding practices. These improvements have enabled

2
Russian Federation - Meat sector review

growth in meat production efficiency. Despite rising input costs,


meat production has grown about 300 percent in the past
50 years, and livestock inventories – the number of cattle,
swine, chicken and ovine animals – have grown by 57 percent,
137 percent, 400 percent and 49 percent respectively. The change
in offtake3, or the quantity of meat produced per animal, has
therefore increased substantially over time.

Historical growth in offtake ratios has been high for a number of


emerging countries, particularly Brazil and China. In India and the
Russian Federation, growth in offtake ratios has been for pork
(see Table 1). The offtake ratios depend on many factors, such as
the type of meat production system (intensive, pastoral, etc.),
consumer preferences and other factors that vary greatly among
countries. For instance, offtake ratios and their growth appear very
low for some countries in Africa as animals may be kept for farm
and work purposes.

Apart from increased farm productivity, improvements in supply


chain management, in particular cold chain management, have and
will continue to have a very important impact on the growth of this
sector. This is especially true in many developing countries where
storage and transportation of meat have been limited.

3 Offtake ratios are computed as gross meat production divided by animal


inventories.

3
4
Table 1: Trends in meat offtake ratios in selected countries

Bovine meat Pork Poultry meat

Offtake Offtake Offtake


Growth Projected Growth Projected Growth Projected
ratio ratio ratio

2005-09 1985-2011 2012-21 2005-09 1985-2011 2012-21 2005-09 1985-2011 2012-21


kg/head percent/yr percent/yr kg/head percent/yr percent/yr kg/head percent/yr percent/yr
Argentina 60 0.5 0.3 122 4.2 2.3 14 4.6 2.5
Australia 158 1.3 0.7 144 1.2 0.7 9 1.4 0.8
Brazil 45 2.5 1.5 83 5.3 3.2 9 4.4 2.7
Canada 126 0.1 0 174 2 1.1 7 0.7 0.4
China 55 8.5 4.9 108 3 1.7 3 3.2 1.8
EU-27 91 0.1 0 144 1 0.7 8 0.5 0.3
Japan 133 -0.3 -0.2 130 -0.2 -0.1 13 1.8 1.1
Russian
80 -2.7 -1.7 122 3.2 2 5 8.4 1.1
Federation
South Africa 57 1.1 0.5 139 2.9 1.5 7.7 0.1 0
United States
120 0.8 0.5 153 0.9 0.5 8 1.4 0.8
of America
World 42 0.3 0.3 111 1.5 1.2 4.6 1.2 0.8
Source: OECD and FAO Secretariats.
Note: Growth estimates for the European Union (EU-27) and the world are limited to the period starting from 1996, the Russian Federation from 1992.
Russian Federation - Meat sector review

Trade
The latest available OECD-FAO projections at the time of preparing
this report suggested that global imports of beef, pork and poultry
meat will increase from 24 million tonnes per year (on average) in
2006-2010 to 31 million tonnes in 2021, an increase of 27 percent.
The Russian Federation will decrease its meat imports from 3 to
1.3 million tonnes in the same period (down 57 percent) due to
anticipated growth in domestic chicken meat and pork production.
The share of the Russian Federation in global meat imports will
also decrease from 12 percent in 2006-2010 to about 4 percent in
2021 (see Figure 3). From being the largest meat importers in the
world in 2006-2010, by 2021 the Russian Federation is anticipated
to move to the fourth position on the global import list after Japan,
the sub-Saharan African countries and Saudi Arabia (see Figure 4).

Figure 3: Global imports of meat, share of the Russian


Federation’s imports and forecast, 2001-2021
35 14
13 30 30 31
30 29 29 30
12 28 28 28 12
27 27
25 24 10
9
million tonnes

20 19 8
percent
7
15 7 6
6
6 6 5 5
10 5 4
4 4
5 2
2.4 3.0 2.3 2.0 1.9 1.7 1.7 1.6 1.6 1.5 1.5 1.3 1.3
0 0
20 20 20 20 20 20 20 20 20 20
12 13 14 15 16 17 18 19 20 21
20 201
20 g

20 g 05
av

av -20
01

06
11 0
-

World trade Russian imports Share of Russian Federation


(left axis) (left axis) in production (right axis)

Source: OECD-FAO Agricultural Outlook 2012.


Note: The meat total combines beef, pork and poultry meat.

5
Figure 4: Net meat trade balance in 2006-2010 and forecast for
2021 of major exporters and importers

Brazil
United States
European Union-27
Canada
Australia
Thailand
India
Argentina
New Zealand
Uruguay
Ukraine
Kazakhstan
Turkey
Malaysia
Indonesia
China
Republic of South Africa
Philippines
Egypt
Viet Nam
Mexico
Korea
Russian Federation
Saudi Arabia
Sub Sharan Africa
Japan
-3 000 -1 000 1 000 3 000 5 000 7 000
2006-2010 (average) 2021 (forecast)

Source: OECD-FAO Agricultural Outlook 2012.


Note: The meat total combines beef, pork and poultry meat.

The growth in world meat imports is forecast despite strong


anticipated meat prices through 2021. Population, income growth
and high-income elasticity of demand will drive meat imports of
developing countries.

Led mostly by an expansion of poultry and beef shipments, world


meat exports will increase to respond to the growing demand.
The bulk of the growth is expected to originate largely from North
and South America, which will account for nearly 70 percent of
the total increase in all meat exported by 2021. The two largest
contributors to export growth are the USA and Brazil, both of
which will strengthen their dominance in world meat trade. By
2021, the USA and Brazil will generate nearly 80 percent of the
expansion of world poultry trade.

6
Russian Federation - Meat sector review

Brazil, Australia, India, Canada, Argentina, New Zealand, Uruguay


and Paraguay will be the main exporters of beef. Japan, the
Russian Federation, the USA, Korea and Egypt will be its major
importers. It is also expected that Iran and Viet Nam will continue
increasing beef imports in the future.

The EU, USA, Canada and Brazil will remain the main exporters
of pork with Japan, the Koreas, Mexico, the Russian Federation
and the sub-Saharan Africa countries being the main buyers by
2021. As for poultry meat, Brazil, the USA, Thailand, the EU and
Argentina are expected to be the main exporters with the sub-
Saharan Africa countries, Saudi Arabia, Viet Nam, Mexico and
China being the main poultry meat importers by 2021.

Consumption
World consumption of beef, pork and poultry meat will continue
to grow at one of the highest rates among major agricultural
commodities. Together with other factors such as changing
consumer attitudes and preferences and relative prices, overall
meat demand will be affected by two factors: population and
income growth. In the past 30 years worldwide population growth
contributed 60 percent to the overall growth in meat consumption
with the remaining 40 percent being attributed to an increase
of per capita income and per capita consumption growth. As
shown on Figure 5, average global meat per capita consumption
directly correlated4 with the per capita gross national income (GNI)
measured at the purchasing price parity basis (PPP).

4 The correlation index between per capita meat consumption and gross national
income (GNI) in 1980-2009 was 0.978 – pointing to a very strong correlation.
Although the correlation was direct, it was less than proportionate. An average
of 4.79 percent annual increase in per capita GNI generated an average 1.06
percent annual increase in per capita meat consumption, as consumers were also
allocating income to other products and services.

7
Figure 5: World per capita meat consumption and income,
1980-2009
12 000 43
current international dollars
10 000 38

8 000
33
6 000

kg
28
4 000
23
2 000

0 18
19 1 1 1 1 1 1 1 1 1 2 2 2 2 2
80 982 984 986 988 990 992 994 996 998 000 002 004 006 008

PPP GNI per capita (left axis) Consumption per capita (right axis)

Source: Authors’ calculations based on FAO Stat and World Bank Data.

It is expected that global per capita meat consumption will


increase until 2021 with poultry accounting for 70 percent of
anticipated growth (see Figure 6).

Growth in developing countries is forecast to capture 82 percent


of the additional global consumption by 2021. The per capita
consumption of meat in the USA, the EU and Japan is not
anticipated to change significantly from the levels observed in
2006-2010. However, it is anticipated to increase considerably in
Uruguay, Brazil, Argentina, Chile, Malaysia, the Russian Federation,
Ukraine and other countries, reflecting consumer income growth.
In Eastern Europe, consumption of red meat still has a substantial
growth potential and will also increase.

8
Russian Federation - Meat sector review

Figure 6: Annual per capita meat consumption in 2006-2010


and forecast until 2021

120
100 97 97 93
90 87
83
80
70 64
61 60
60 54 53 53 52 49 49
kg

97 87 47 46
40 75 34 34
71 78 78 61 65 25 23
20 50 50 38 44 46 41 42 41 38
35 33 31
18 19
0

a
Fe stra 7

Ja e
es

W Vie bia
na

av am
y

de lia

Uk ia

nd
Ko e

of nza ico

Th ey
Ka Me a

i A na

Tu n
B l
il

al e
ae

ric
ia Au n-2

ag
ite gua

in
Ar raz

re
l
tio

ut sta

pa
s
i
at

rk
Ch
an enti

ud Chi

la
ay

x
Isr

ra
ra

tN
Af

er
ra
St

Sa kh
o

ai
u

ni
g
Ur

h
d

M
U

ld
Sa

or
Un

n
pe

ss
ro

ic
Ru
Eu

bl
pu
Re

2006 - 2010 (average) 2021 (average)

Source: OECD-FAO Agricultural Outlook 2012.


Note: The meat total combines of beef, pork and poultry meat. Data may differ from
official consumption estimates made by the Russian Government provided in this report.

Uncertainties
The meat sector is highly sensitive to macroeconomic conditions
policy conditions and animal health and food safety issues; this
poses a significant risk to the validity of the projections provided
in this chapter. Changes in oil prices and civil unrest have the
potential to impact world meat trade. Animal diseases and changes
in food safety regulations have the potential to affect domestic
and regional meat production and consumers’ preferences. For
instance, the Russian Federation imposed sanitary restrictions
on meat imports from a number of Brazilian states in May 2011.
The ban resulted in a substantial contraction of bilateral trade on
beef and pork and the end of two years of almost uninterrupted
monthly increases of world meat prices.

Increasing consumer awareness of the livestock sector’s use of


water resources, its contribution to greenhouse gas emissions
and animal welfare issues will also likely affect demand for
different kinds of meat, especially in developed countries. These
factors affecting demand also need to be considered by potential
investors.

9
It is currently expected that strong meat prices will result in
sustained export earnings, which will encourage large meat
exporting countries to further invest in production and exports
despite the high incidence of food-safety and sanitary import bans.
This investment in exporting countries will likely put increased
competitive pressure on producers in the Russian Federation as
the country is expected to liberalize meat imports in line with its
WTO commitments.

10
Russian Federation - Meat sector review

Chapter 2 - The Russian Federation meat


sector in brief

Importance of the meat sector for the economy


Agriculture accounted for about 6 percent of Russian Federation’s
gross domestic product (GDP) in 2010. The livestock sector
inclusive of all livestock, dairy and poultry – accounted for about
50-55 percent of agriculture output with the remaining output
coming from crops and plant products (mostly grain, oilseeds,
pulses, fruits, vegetables, etc.). Beef, veal, pork, poultry, sheep,
goat and other kinds of meat accounted for about 38-43 percent of
overall livestock sector production in 2005-2010 and 19-23 percent
of the total agricultural production (see Table 2).

Table 2: Role of livestock and meat in Russian agriculture and


economy, billion RUR, 2005-2010

Indicator 2005 2006 2007 2008 2009 2010

GDP 21 610 26 917 33 248 41 277 38 809 45 166


of which:

Agricultural products 1 381 1 571 1 932 2 461 2 516 2 619

Agricultural products, %
6.4 5.8 5.8 6 6.5 5.8
GDP
of which:

Livestock sector 711 806 929 1 155 1 277 1 439

of which:

Meat from livestock and


295 328 367 442 556 591
poultry

Meat, % GDP 1.4 1.2 1.1 1.1 1.4 1.3

Meat, % ag output 21.4 20.9 19 18 22.1 22.6

Meat, % livestock sector 41.5 40.7 39.5 38.3 43.6 41.1

Source: Based on Federal Service of State Statistics (FSSS) of Russian Federation.


Note: Found in “Russian Classification of Economic Activities (OKVED), # 01.02, under
subsection DA 15.1 “Production of meat and meat products”.

11
The percentage of the population employed in agriculture
(including both crop and livestock production) declined from
10 percent in 2005 to 8 percent in 2011 according to official
statistics (FSSS) as trade, finance, construction and other sectors
attract more employees.

According to official statistics, 606 000 people were employed


in meat production in 20105. As their productivity increases, the
number of employees involved in meat production and processing
declines and incomes increase (see Table 3).

Table 3: Employees and incomes in meat and meat product


production, 2005-2010
Change
2005 2006 2007 2008 2009 2010 2011 vs.
2005
Payroll fund for all
employees, 50 54 63 72 77 82 65%
RUR billion/year
Average number of all
employees, 1 167 1 003 888 695 639 606 - 48%
thousand persons
Average annual gross
income per employee, 3 544 4 515 5 948 8 583 10 056 11 294 219%
RUR/month
Source: FSSS.
Note: Income in current prices.

The meat processing industry alone accounts for about 7 percent


of the 2.5 million people employed in the country’s food processing
industry. The number of employees in the meat processing sector
increased from 165 000 people in 2005 to 189 000 people in 2010,
reflecting an overall expansion. This expansion underlines the
importance of the industry as a source of local job creation.

In addition to formal employment, raising livestock and poultry play


a significant role in informal or self-employment in the Russian
Federation as smallholder producers still account for a sizable
share in total livestock production. Despite the decreasing share of
smallholder farms in total livestock production – from 54 percent
(2.7 million tonnes of livestock in slaughter height) in 2003 to 34

5 Found in “Russian Classification of Economic Activities (OKVED), # 01.02, under


subsection DA 15.1 “Production of meat and meat products”.

12
Russian Federation - Meat sector review

percent (2.5 million tonnes) in 2011,compared with commercial


farms that increased livestock production from 2.2 to
4.8 million tonnes – small livestock producers are still an
important source of rural employment and incomes in the Russian
Federation. Poultry, pork and beef account for 91 percent of all
meat products in the Russian Federation (2010, FAO Stat) namely:
poultry meat for 38 percent of all meat output, pork for 32 percent
and beef and veal for 21 percent. According to national statistics,
mutton and lamb are important meats especially in the Southern
and North Caucasian Federal Districts. The latter types of meat
were not included in this review because sheep meat accounts for
only 2 percent, horse meat for 1 percent and other types of meat
for 4 percent of the nation-wide total meat output.

Meat market development and outlook until 2021


The Russian meat sector has been undergoing a major transition,
which is largely unprecedented in modern history and has followed
the breakup of the Soviet Union in 1991. The downward trend in
cattle inventories began in 1990. Cattle numbers declined from
59 million heads to 28 million heads in 2000 and then below
21 million heads in 2010, thus registering a tremendous 65 percent
decrease in livestock numbers since 1990. This downward trend
has slowed in recent years, but it is still ongoing. Amongst all
transition economies in the EBRD regions of operation, only
Ukraine witnessed such a drastic decrease in the number of cattle
herds: from 25 million heads in 1990 to 5 million in 2010, or an
80 percent decrease.

The decrease in livestock inventories can partially be attributed


to the adjustments in the closely related dairy sector. As farmers
increased productivity of the milk heard, they continued slaughtering
dairy and dual-purpose cows. Specialized beef production is almost
non-existent in the Russian Federation, so dairy and dual-purpose
cows slaughter has been reflected in lower cattle inventories and
decrease of domestic beef production potential. This downward
trend in cattle inventories inevitably resulted in decreased domestic
beef production and increased imports.

Swine inventories also decreased dramatically from 40 million


heads in 1990 to 18 million in 2000. But the downward trend
was reversed in 2005 owing to generous state support and trade
measures. Nevertheless, the Russian Federation still witnessed a
57 percent decrease in swine numbers from 1990 to 2010.
Poultry production has witnessed the fastest recovery during the

13
same period, because it is a sector that allows for a shorter payback
period on investments as compared with pork and beef production.
In 2006, poultry meat became the most important meat type
produced in the Russian Federation, and by 2010 farmers produced
180 percent more chicken meat than in the early 1990s.

There are number of outlooks on the short- and medium-term


perspectives of the Russian meat sector. These outlooks are
prepared at national and international levels and use different
approaches. Box 1 below briefly discusses the main sector
development forecasts available.

14
Russian Federation - Meat sector review

Box 1: Mid-term meat production forecasts for the Russian Federation and their
various sources

According to official statistics, production of all kinds of meat in Russia has been
growing fast while meat imports have decreased since 2009 (see Table 4). The Russian
Government, in its Strategy of Livestock Production Development in the Russian
Federation untill 20201, forecasts that the total production of all types of meat will reach
9.6 million tonnes, imports will decrease to 0.6 million and domestic consumption
will increase to 9.9 million tonnes by 2020. The same strategy envisages that Russia
will export 0.6 million tonnes of meat, including 400 000 tonnes of poultry and
200 000 tonnes of pork (Table 4).

The latest available forecast by OECD-FAO at the time of report finalization2 suggested
that the Russian meat production (beef, pork and poultry) might increase to 9.4 million
tonnes by 2020 – an estimate very similar to the Russian Ministry of Agriculture’s.
The latest results of meat trade simulations conducted by FAO in February 2013
suggest that meat imports may decrease from earlier forecasted levels; however, it is
doubtful that the Russian Federation would be able to export 0.6 million tonnes of all
kinds of meat considering its strong domestic demand.

In this review, forecasts from both the government of the Russian Federation and the
OECD-FAO Mid-term Agricultural Outlook are mostly used.

Similar to OECD-FAO Agricultural Outlook, there are other sources of mid-term market
outlook that are based on global partial-equilibrium econometric models. For instance,
the USDA’s international baseline projections3, suggest that Russian meat production
will increase to 12.5 million tonnes by 2020 (including 6.7 million tonnes of beef,
2.4 million tonnes of pork and 3.4 million tonnes of poultry meat) while imports will
remain high at about 2 million tonnes (e.g. will not show signs of drastic decrease and
will reflect more rapidly increasing domestic consumption).

Interested readers can also refer to the outlook by the Food and Agricultural Policy
Research Institute (FAPRI), which covers beef, pork and poultry sectors in the Russian
Federation and Ukraine among other countries.

1 
Approved by the Order No. 267 by the Russian Federation Ministry of Agriculture, dated 10
August 2011; published by the Ministry of Agriculture of the Russian Federation in August 2011,
http://mcx.ru/documents/document/show/16974.77.htm, Russian version only).
2 
May 2012, http://www.oecd.org/site/oecd-faoagriculturaloutlook).
3 
(January 2013), available at http://www.ers.usda.gov/data-products/international-baseline-data
aspx.

15
Figure 7 shows a historical perspective of beef and veal, pork
and poultry meat production in the Russian Federation starting in
1998. It also provides a medium-term OECD-FAO meat production
outlook until 2021 based on the 2012 projections.

Figure 7: Russian Federation’s production of beef, pork and


poultry in 1998-2011 and mid-term outlook until 2021
4 500 4 113 10
4 000 9
3 179
3 500 8
3 1191
thousand tonnes

3 000 7
2 461

percent
2 500 6
2 068
2 000 5
1 710
1 500 4
1 000 3
500 2
0 1
19 20 20 20 20 20 20 20 20 20 20 20
98 00 02 04 06 08 10 12 14 16 18 20

Beef and veal (cwe) (left axis) Pigmeat (cwe) (left axis)

Share of Russian Federation in world Poultry meat (rtc) (left axis)


beef and veal production (right axis)
Share of Russian Federation in Share of Russian Federation in
world pigmeat meat (right axis) world poultry meat (right axis)

Source: OECD-FAO 2012.

Production of meat in the Russian Federation has been growing


fast while meat imports have decreased since 2009, according to
official statistics. This trend is expected to continue in the future
(see Table 4 and for more details Box 1).

Table 4: All meats supply and demand, thousand tonnes,


2005-2020

2005 2006 2007 2008 2009 2010 2015* 2020*

Production 4 920 5 209 5 722 6 202 6 648 7 090 8 688 9 636


Consumption 7 505 7 894 8 505 9 134 9 072 9 139 9 678 9 876

Import 2 585 2 685 2 784 2 935 2 423 1 930 1 050 640

Export 0 0 1 3 6 19 100 600

Source: FSSS of Russian Federation, Meat Union of Russia and Meatinfo.


* Forecast from Strategy on Livestock Production Development in the Russian
Federation until 2020.

16
Russian Federation - Meat sector review

Overall, the Russian Federation’s consumption of all types of meat


increased by 21.8 percent – from 7.5 million tonnes in 2005 to
9.1 million tonnes in 2010 – which reflected higher consumer
incomes. According to official Russian statistics, the average
monthly nominal incomes rose 2.4 times, from RUR 8 176 in 2005
to RUR 19 960 per month in 2010.
In 2005-2010, meat imports decreased by 47.9 percent, from 2.6
to 1.9 million tonnes (see Figure 8). This decrease was mainly
because of increased domestic production, shrunken poultry
meat imports in 2010 (see Table 5) and sanitary import restrictions
imposed by the Russian veterinary authorities.

Figure 8: Russian Federation’s meat production imports and


levels of self-sufficiency, 2005-2010

10 80
9 76
8 74
7 72
million tonnes

6 70

percent
5 68
4 66
3 64
2 62
1 60
- 58
2005 2006 2007 2008 2009 2010
Production Import Self-sufficiency
(left axis) (left axis) (right axis)

Source: FSSS of Russian Federation.

Table 5 and the analysis that follows provide a snapshot of poultry,


pork and beef and veal market development and trends and official
sector development forecasts.

As seen in Figure 9 below, poultry meat production increased from


1.5 to almost 3 million tonnes between 2005 and 2010, growing
15 percent per year on average. Poultry imports during the same
period almost halved as a result of increasing domestic production,
import measures and changing consumer preferences.

17
Table 5: Supply and demand for different types of meat and its
forecast, thousand tonnes, 2005-2020

Indicator 2005 2006 2007 2008 2009 2010 2015* 2020*

Production 1 388 1 632 1 925 2 217 2 555 2 847 3 850 4 251

Consumption** 2 706 2 906 3 219 3 438 3 541 3 512 4 030 3 941


Poultry Import 1 318 1 274 1 295 1 224 986 661 240 90
Export 0 0 1 3 6 19 ***
60 400
Production 1 569 1 699 1 930 2 042 2 170 2 331 2 925 3 389

Consumption 2 154 2 361 2 615 2 864 2 836 2 970 3 165 3 439


Pork
Import 585 662 685 822 667 639 240 50

Export 0 0 0 0 0 0 40 200

Production 1 809 1 722 1 699 1 769 1 741 1 727 1 715 1 786

Consumption 2 484 2 456 2 488 2 643 2 502 2 463 2 285 2 286


Beef
Import 674 734 789 874 760 621 570 500
Export 0 0 0 0 0 0 0 0

Source: FSSS, Meat Union of Russia and Meatinfo.


* Forecast from Strategy on Livestock Production Development in the Russian
Federation until 2020.
** Consumption of meat and meat products calculated as raw meat equivalent. Data
exclude pork fat and edible by-products.
*** Other sources state 15 000 tonnes.

18
Russian Federation - Meat sector review

Figure 9: Russian Federation’s production, imports and


self-sufficiency in poultry meat, 2005-2010

4.0 80

3.5 70

3.0 60
million tonnes

2.5 50

percent
2.0 40

1.5 30

1.0 20

0.5 10
- 0
2005 2006 2007 2008 2009 2010

Production Import Self-sufficiency


(left axis) (left axis) (right axis)

Source: FSSS of Russian Federation

Poultry inventories, slaughter and live weight (yield6) directly


influenced meat production, and Table 6 illustrates these relations
in the Russian Federation using chicken inventories and slaughter.
It is clear that the growth in chicken inventories and slaughter was
the main reason behind increased meat production. It should be
noted that the information provided in Table 6 includes all chickens,
those raised by private households for meat and eggs as well
as the meat received from spent hens at the commercial egg
production farms.

In six years, from 2005 to 2011, chicken slaughter increased by


91 percent, while meat yield increased by only 13 percent, from
1.4 kg per head in 2005 to 1.58 kg per head in 2011. Broiler yields
are believed to have increased even more rapidly.

6 Meat yields indicate the carcass weight equivalent after animal slaughter (for cattle
or swine) or ready-to-cook equivalent for poultry meat.

19
Table 6: Chicken inventories, slaughter, yields and meat
production in the Russian Federation, 2005-2011

Change
2005 2006 2007 2008 2009 2010 2011 2011 vs.
2005

Chicken inventories
as of Jan. 1, mln 329 343 358 351 366 391 406 24%
head

Chicken slaughter,
96 108 125 132 151 166 184 91%
mln head

Chicken meat
production, mln 1.35 1.58 1.87 2.00 2.31 2.56 2.91 116%
tonnes

Yield, kg/head 1.40 1.47 1.50 1.52 1.53 1.55 1.58 13%

Source: FAO Stat based on official Russian statistics.


Note: Includes only chicken inventories and production.

The Russian Federation’s pork production expanded by 49 percent


from 2005 to 2010 and was accompanied by a 38 percent increase
in consumption. Imports continued to grow over the same period,
however, even if at the low pace of 9 percent. In 2010 imported
pork, which mostly goes for further processing, held 22 percent of
the domestic market share, compared with 27 percent in 2005.

Figure 10: Russian Federation’s production, imports and self-


sufficiency in pork, 2005-2010

3.5 80

3.0 78

2.5 76
million tonnes

74
percent

2.0

1.5 72

1.0 70

0.5 68

- 66
2005 2006 2007 2008 2009 2010

Production Import Self-sufficiency


(left axis) (left axis) (right axis)

Source: FSSS of Russian Federation.

20
Russian Federation - Meat sector review

Similar to the poultry sector, the main sources of increasing pork


production in 2005-2011 were the rise of pig inventories and
slaughter. Pig inventories in the Russian Federation increased
from 13.4 million heads in 2005 to 17.2 million heads in 2011, or
by 28 percent. The increase in slaughter during the same period
was even more impressive at 59 percent (see Table 7). Although
slaughter yields have remained almost unchanged at 84 kilograms
per head, it should be noted that pork production efficiency has
improved. In 2005, the number of slaughtered animals exceeded
beginning pig inventories by 36 percent. In 2011, pig slaughter
exceeded beginning inventories by 69 percent, pointing to
intensified pork production, shorter growing cycles and faster
animal turnover in swine production facilities.

Table 7: Pig inventories, slaughter, yields and meat production


in the Russian Federation, 2005-2011

Change
2005 2006 2007 2008 2009 2010 2011 2011 vs.
2005

Pig inventories
as of Jan 1, mln 13.4 13.5 15.9 16.3 16.2 17.2 17.2 28%
head
Pig slaughter, mln 18.3 19.4 22.3 24.1 26.0 28.0 29.1 59%
head

Pig slaughter,
percent of 136 145 140 147 161 162 169 24%
inventories

Yield, kg/head 83 84 84 85 83 83 84 1%

Pork production, 1.52 1.64 1.87 2.04 2.17 2.33 2.43 60%
mln tonnes

Source: FAO Stat based on official Russian statistics.

Unlike the increase of domestic production of poultry and pork,


beef production has continued to decline. As can be seen in Figure
11, imports of beef experienced a peak in 2008 and then started
declining, which resulted in a decreasing beef supply.

21
Figure 11: Russian Federation’s production, imports and level
of self-sufficiency in beef, 2005-2010

3 000 74

2 500 72
million tonnes

2 000 70

percent
1 500 68

1 000 66

500 64

0 0
2005 2006 2007 2008 2009 2010

Production Import Self-sufficiency


(left axis) (left axis) (right axis)

Source: FSSS of Russian Federation.

The beef and veal production decline has reflected decreasing


cattle inventories and slaughter as indicated in Table 8. During the
period of 2005-2011, Russian farmers continued cattle slaughter
at a faster pace than the cattle heard was rebuilt owing to low
profitability of raising animals. From 2005 to 2011, there was a
decrease of three million cattle heads: a drop of 13 percent.

Another reason behind decreasing cattle inventories is ongoing


adjustments in the dairy sector. As cow yields increase and
feed conversion rates improve, farmers continue to decrease
the number of dairy cows. Since Soviet Union times (and, to a
considerable extent, now) beef has been a by-product of the milk
production. Despite some success of the federal programme
“Development of meat cattle breeding in Russia for 2009-2012”
and the launch of several big projects, the pure-bred beef cattle
inventories remain very low: between 450 and 500 thousand
heads, according to different estimates.

The Russian beef sector has shown some signs of recovery in


recent years. Farmers tend to feed their cattle better and slaughter
them at higher slaughter weights. The average yield of cattle in
the Russian Federation increased from 168 kilograms per head in
2005 to 190 kilograms in 2011: a 13 percent increase as indicated
in Table  8.

22
Russian Federation - Meat sector review

Table 8: Cattle inventories, slaughter, yields and beef and veal


production in the Russian Federation, 2005-2011

Change
2005 2006 2007 2008 2009 2010 2011 2011 vs.
2005

Cattle inventories
as of 1 Jan, mln 23.0 21.5 21.5 21.5 21.0 20.7 20.0 -13%
head

Cattle slaughter, 10.7 9.6 9.5 9.6 9.4 9.3 8.6 -20%
mln head

Yield, kg/head 168 177 178 184 185 185 190 13%

Beef and veal


production, mln 1.8 1.7 1.7 1.8 1.7 1.7 1.6 -9%
tonnes

Source: FAO Stat based on official Russian statistics.

Summary of main risks and opportunities in the meat


industry
Table 9 summarizes the industry’s main risks, opportunities and
risk mitigation options. The types of risks are divided into the
following broad categories: production and infrastructure, animal
disease and epizootic situation, investment-related and policy.

Table 9: Main risks, opportunities and risk mitigation options


in the Russian meat sector
Type
Mitigation and
of Risk description Possible consequences
opportunities
risk

• additional costs for project’s • vertical integration with


• high volatility in feed prices startup development feed production

• poor quality of purchased • decreasing margin and lack • feed price risk hedging for
Production/Infrastructure

feeds of working capital outsourced grain/feed

• lack of experience and • investment in staff training


knowledge of key staff and • low quality/food safety of and education, outsourcing
(nutrition, vet services, the final product of key services to result in
management, etc.) better production indicators

• poor infrastructure
(electricity outages, road • low competitiveness and
transportation blocked in loss of market share
winter, etc.) • location in areas with well-
• inability to improve feed developed infrastructure
• lack of effective food safety conversion and other
control/monitoring system efficiency indicators

23
Type
Mitigation and
of Risk description Possible consequences
opportunities
risk
• investment in veterinary
• risk of flocks/heard
• African swine fever services and biosecurity
depopulation measures
• work with local
communities to create
• avian influenza • loss of investment buffer zones around
production facilities
Epizootic

• trade disruptions and bans

• significantly delayed
• other diseases payback period • disease
• significant additional
expenditures on eradication
leading to bankruptcy

• long payback periods, • investment planning


especially in cattle/beef • limited expansion capacity at market rather than
production subsidized interest rates
Investment and financial

• cancellation or reduction
of current interest rate • reduced profitability,
subsidies due to policy increased costs
changes
• legally binding
• increase of credit interest • reduced or negative margins commitments from
and higher risks of loan
rates government/local
defaults
authorities and banking
• inability to purchase inputs sector
and feed in a timely manner
• lack of operating capital due (reduces production
to financial sector crisis. volumes and cash flow
income to critical levels)

• reduced availability of public • investment planning


funding due to lower budget • higher interest rates and assuming stiffer import
revenues or public focus lack of state co-financing competition and minimum
shifting to other priorities tariff protection
• lack of operating and
• the Russian Federation’s investment capital as • investment planning
accession to the WTO and financial institutions shift without price support
decreased import tariff focus away from agriculture/ payments
Policy

protection meat sector


• the need to restrict overall
domestic support in line • reduced sales and incomes
with WTO commitments • plan investment
considering the latest
• changes in standards and environmental, animal
regulations (environmental, • slow growth, extended production and advanced
waste treatment, food payback or bankruptcy food safety systems
safety, animal welfare)

Source: Author/LMC International, based on calculations and estimates.

24
Russian Federation - Meat sector review

Chapter 3 - Detailed review of the meat


sector

Meat production structure: increasing the role of


commercial farms
There are three main types of farms that raise livestock and poultry
in the Russian Federation: agricultural enterprises (commercial
farms), individual (peasant) farms and rural households
(smallholders that produce food for own consumption and often
have extra non-farm income). The recent growth in livestock and
poultry inventories has been accompanied by the changing roles
of different farm types. The role of commercial meat producers
has increased considerably owing to their better access to state
financing, economy of scale, growing industry consolidation, the
decreasing role of traditional meat markets and the increasing role
of modern retail chains. The latter demands steady meat supplies,
high quantities, uniform quality and food safety standards. Most of
the support programmes described later in this report require that
farms be registered as official businesses to receive state support
or qualify for an interest rate subsidy on credit.

Rural households decreased their inventories of all kinds of poultry


(chickens, turkey, ducks, geese, etc.) from 113 million head in
2005 to 97 million head in 2010 (down 15 percent), and agricultural
enterprises increased their poultry numbers from 241 million head
in 2005 to 348 million during the same period (up 44 percent).
Correspondingly, the share of agricultural enterprises in poultry
inventories increased from 68 percent in 2005 to 77 percent
in 2010 while the share of rural households decreased from
32 percent in 2005 to 21 percent in 2010 (see Figure 12).

Alongside economic reasons, social and demographic factors –


such as an ageing rural population and migration of young people
to urban areas – cause this decrease of livestock and poultry
production by rural households. Gender does not play a significant
role in the development of the meat sector in the Russian
Federation and was not reviewed in this report.

The individual (peasant) farms have maintained 1 percent of poultry


inventories in 2005-2010 (see Figure 12). The outgrowing farming
schemes involving individual farmers contracted by meat processors

25
to raise chickens are not popular in the Russian Federation because
individual farmers are not considered to be reliable suppliers. This
may explain their low share in total poultry inventories.

Figure 12: Structure of poultry inventories by type of farm,


2005-2010
100

31% 28% 25% 23% 21%


32%
80
1% 1% 1%
1% 1% 1%
60
percent

40
68% 68% 71% 74% 76% 77%

20

0
2005 2006 2007 2008 2009 2010

Agricultural enterprise Individual (peasant) farm Rural households


(smallholder)

Source: FSSS of Russian Federation.

While poultry production structure varies considerably by


region, each subsector has its peculiarities. Raising chickens in
rural households is popular in all rural territories of the Russian
Federation as hens are mostly used to supply eggs for in-house
consumption. However, in southern regions (Rostov, Krasnodar
and Stavropol and North Caucasian Republics) backyard
commercial broiler farms supply a considerable volume of broilers,
turkeys, ducks and geese to the local meat markets. This is
explained by availability of feed wheat, corn, sunflower and other
feeds at affordable prices, favorable climate and a tradition of
raising backyard poultry. Similar backyard production is registered
in the Republics of Tatarstan and Bashkortostan. The regional
production structure is described later in this report.

Similar trends were observed in the structure of pig inventories


in 2005-2010: agricultural enterprises increased pig inventories
from 7 million to 11 million heads (up 48 percent) while rural
households decreased, from 6 million to 5.6 million heads (down
5.5 percent). Therefore, rural households’ share of total pig
inventories decreased by 9 percent from 2005 until 2010 (see
Figure 13). Individual farms also played a more important role in

26
Russian Federation - Meat sector review

pork production than in poultry as they accounted for 4 percent of


all pig inventories.

Figure 13: Structure of pig inventories by type of farm,


2005-2010

100

80
43% 43% 41% 38% 34% 33%

60 4% 5%
percent

4% 5% 5% 5%

40
62% 63%
53% 53% 57%
52%
20

0
2005 2006 2007 2008 2009 2010
Agricultural enterprise Individual (peasant) farm Rural households
(smallholder)

Source: FSSS of Russian Federation.

The cattle inventories held by both major types of farms continued


to decline. Agricultural enterprises decreased cattle numbers from
11 million in 2005 to 9.3 million heads in 2010 (down 16 percent).
Rural households also continued cattle slaughter although at a
slower pace: from 9.6 million heads in 2005 to 9.2 million in 2010
(down 4 percent).

An emerging growth of individual farmers as producers is the main


difference in cattle inventories and their structure as compared
with poultry and swine. The cattle inventories held by the individual
farmers increased from 0.9 million heads in 2005 to 1.5 million
in 2010 according to official Russian statistics (up 58 percent).
Correspondingly, the share of individual farmers in total cattle
production increased from 4 percent in 2005 to 7 percent in 2010
(see Figure 14).

27
Figure 14: Structure of cattle inventories by type of farm,
2005-2010

100

80
51% 49% 48% 48% 46% 46%

60
percent

4% 5% 6% 6% 7% 7%
40

51% 49% 48% 47% 46% 46%


20

0
2005 2006 2007 2008 2009 2010

Agricultural enterprise Individual (peasant) farm Rural household


(smallholder)

Source: FSSS of Russian Federation.

As already mentioned, raising and slaughtering cattle is closely


linked with dairy herd replacements (Box 2). Cattle inventories
diminished as milk yields and production increased and farmers
reduced cow numbers. In 2010, an average milk yield per cow in
the Russian Federation was about 3 800 kg per year, or 18 percent
more than in 2005. The increase in cow milk productivity occurred
despite the decrease of cattle inventories from 9.6 million cows in
2005 to 8.3 million in 2010 (down 13 percent).

Box 2: Beef cattle production perspectives

According to the state scientific institution All-Russia Scientific Research Institute Of


Meat Cattle Breeding, only about 5 percent of local beef comes from beef cattle or
cross-breeds (more information on cattle breeds in the Russian Federation is provided in
the Annex 2 of this report).

The Ministry of Agriculture of the Russian Federation identified two areas of


improvement in its "Development of Beef Cattle in Russia 2009-2012" programme: (i)
intensification of the use of cattle feedlots to increase daily weight gains and slaughter
weights and decrease cattle age at slaughter to below 24 months; and (ii) increase in
cattle inventories.

With regards to the beef market, high quality beef has become available only recently
when the country started importing beef from the USA, Brazil, Australia, the EU and
Argentina. Beef production will likely continue to develop as a niche market limited to
the demand of high-income consumers in big cities.

28
Russian Federation - Meat sector review

Meat supply
In 2010, the Russian meat market (calculated in raw meat
equivalent as domestic production, added to by meat imports and
subtracted from by exports) increased by 22 percent as compared
with 2005 (see Table 10).

Table 10: Meat market, thousand tonnes


Change
Meat type 2005 2006 2007 2008 2009 2010 2010 vs.
2005

Poultry 2 706 2 906 3 219 3 438 3 541 3 512 +30%

Pork 2 154 2 361 2 615 2 864 2 836 2 970 +38%

Beef 2 484 2 456 2 488 2 643 2 502 2 463 -0.8%

Other kinds of
161 171 183 189 193 194 +20.5%
meat**

Total 7 505 7 894 8 505 9 134 9 072 9 139 +22%

Source: FSSS of Russian Federation, Meat Union of Russia and Meatinfo.


* Calculated as production + imports - exports = consumption.
** Lamb and goat meat.

Within this trend, the poultry meat and pork subsectors


experienced the highest growth rate of 30 and 38 percent
respectively. Changes in the beef supply were insignificant
(down 0.8 percent).

The major changes in the structure of the Russian meat market


occurred because of the expansion of poultry production and
reduction of beef supply (see Figure 15).

29
Figure 15: Recent developments in the meat market structure,
2005-2010

2% 2% 2% 2% 2% 2%
100
90
37% 38% 38% 39% 38%
36%
80
70
60
31% 33%
percent

30% 31% 31%


50 29%

40
30
29% 28% 27%
20 33% 31% 29% 29%

10

0
2005 2006 2007 2008 2009 2010
Veal & beef Pork Poultry Other types of meat

Source: FSSS of Russian Federation, Meat Union of Russia and Meatinfo.

In 2010, the meat market value in the Russian Federation increased


by 75 percent as compared with 2005, reaching about RUR 930
billion (in current prices). The pork market was a growth leader
expanding at a 94 percent by value because of demand and price
increases. Poultry and beef market turnovers grew at an equal
pace of about 65 percent (see Table 11).

Table 11: Meat market value, million RUR, excl. value added
tax (VAT), 2005-2010
Change
Meat type 2005 2006 2007 2008 2009 2010 2010 vs.
2005

Poultry 150.7 148.9 181.8 216.7 252.7 248.9 +65%

Pork 177.4 197.8 206.4 294.3 324.8 343.6 +94%

Beef 191.3 216.6 221.9 272.6 287.6 314.0 +64%

Other kinds
11.1 15.3 16.4 20.1 24.6 22.1 +99%
of meat

Total 530.4 578.5 626.6 803.8 889.8 928.6 +75%

Source: FSSS of Russian Federation, Meat Union of Russia and Meatinfo.


Note: Calculations based on slaughter weight and producers’ prices.

30
Russian Federation - Meat sector review

While poultry is an absolute leader on the Russian meat market


for volume, it held 27 percent share by value in 2010. Pork held
38 percent of the total meat market in 2010 and was followed by
beef at 33.8 percent (see Figure 16 and Figure 17).

Figure 16: Meat market structure, 2010, in value


2.1%

Poultry
27.0%
Pork

Beef
38%
Other types of meat

33%

Source: FSSS of Russian Federation, Meat Union of Russia and Meatinfo.

Figure 17: Meat market structure, 2010, in volume

2.1%

27.0%
26% Poultry

Pork

Beef

Other types of meat

38%

Source: FSSS of Russian Federation, Meat Union of Russia and Meatinfo.

31
Meat consumption
According to FAO Stat, per capita meat consumption in the
Russian Federation started declining in the 1990s. It bottomed out
in 2000 when about 40 kg of all kinds of meat were consumed per
person as compared with more than 60 kg consumed in the early
1990s. Since 2000, meat consumption has increasingly reflected
higher consumer incomes and overall economic growth driven
by high oil and gas prices (see Figure 18). In 2005, the Russian
Federation became a high-income country according to the
World Bank. Meat consumption and sales increased at a pace of
12 percent p.a. on average during 2005-2010.

Figure 18: Per capita meat consumption and GNI in the


Russian Federation, 1992-2009

60 20 000

current international dollars


15 000

40

10 000
kg

20
5 000

0 0
1992 1994 1996 1998 2000 2002 2004 2006 2008

Meat consumption per capita PPP GNI per capita


(left axis) (right axis)

Source: FAO Stat and World Bank Data.

In 2010, Russian consumers ate about 9.1 million tonnes of meat


each year. This figure corresponds to about 64 kilograms per capita
as compared with 52 kg per capita in 2005. Figure 19 describes
the estimated per capita consumption of the main types of meat.

32
Russian Federation - Meat sector review

Figure 19: Per capita meat and meat products consumption in


the Russian Federation, calculated in fresh meat equivalent,
2005-2010

70.0
1.3 1.4 1.4
60.0 1.3
1.2
1.1 18.6 17.6 17.3
50.0 17.5
17.2
17.4
40.0
kg/year

20.2 20.0 20.9


30.0 18.4
16.6
15.1
20.0

24.2 25.0 24.7


10.0 18.9 20.4 22.7

0.0
2005 2006 2007 2008 2009 2010
Poultry Pork Beef Other types of meat

Source: FSSS of Russian Federation, Meat Union of Russia and Meatinfo.

According to official statistics, the share of other kinds of meat


– such as lamb, mutton and rabbit – in overall meat consumption
was not important.

Although meat consumption has increased considerably, it still


has not reached the so-called “rational norm of consumption” (in
Russian, рациональная норма потребления) of 75 kg per capita
per year7 established by the Ministry of Health of the Russian
Federation.

Compared with other countries (see Figure 6), the growth potential
for meat consumption in the Russian Federation is significant.
The growing urban population in the Russian Federation’s cities
provided a big boost to the development of the retail market in the
country; the growth of meat sales was one of the results of this
change. Consumer preferences have also revealed the following
main trends:

7 Order No. 593-n of 2 August 2010. “On approval of recommendations on rational


norms of food products consumption corresponding to existing requirements
of health nutrition.”

33
• consumers look for value-added cuts rather than whole birds;
• consumers tend to prefer chilled meat rather than frozen;
• b
eef is no longer a meat for everyday consumption, unlike in
Soviet times;
• chicken meat has taken the place of beef in everyday diets;
• a s the poultry meat market becomes saturated, pork
consumption grows (including pork that is further processed
into sausages, smoked meat, meat delicacies, etc. with a
longer shelf-life);
• c onsumers’ increasing awareness of food safety issues (see
Box 5 on food safety).

Seasonality of consumption
Each type of meat has its own seasonality of consumption,
and the demand for meat derives from the final meat products
consumption. Table 12 provides a summary of the main seasonal
consumption patterns in the Russian Federation.

Table 12: Seasonal meat consumption patterns


Type of meat Product Season
Poultry Whole chickens Year-round + holidays
Poultry Chicken cuts Year-round + summer
Poultry Turkey Year-round, New Year’s Eve
Autumn-winter-spring
Pork Bone-in
(except during Lent)
Pork Half-carcass Year-round
Pork Boneless Year-round + holidays
Pork Neck (collar) Summer
Beef Year-round (less in summer)
Sausages,
Further processed Year-round
franks, hams
Further processed Delicacies Weekends and holidays

Source: Piter Consult, ROMIR and GFK research companies.

The seasonality of consumption also affects imports. The peak of


meat demand falls in October, November and December. It coincides
with the slaughter season for cattle and pigs in rural households
and the upcoming New Year and Christmas festivities. Purchasing
volumes consequently decline in January. The lowest consumption
levels for all types of meat is registered during Great Lent, which

34
Russian Federation - Meat sector review

usually takes place in late February – early April, and late summer –
early autumn (August and September) when the domestic market is
abundant with less expensive fruits and vegetables.

Household disposable income and consumption patterns


The share of expenses on meat and meat products in the overall
purchase basket decreased from 10.7 percent in 2006 to 9.6 percent
in 2010 according to official statistics. However, compared to overall
food consumption, which saw a decrease in expenditures from
43 percent in 2006 to 38 percent in 2010, meat share in consumer
expenditures declined at a slower pace (see Table 13).

Table 13: Consumer expenditures in the Russian Federation,


2006-2010, percent (current prices)

Name of groups 2006 2007 2008 2009 2010

All goods and services 100.00 100.00 100.00 100.00 100.00

Food products 42.71 40.21 39.11 37.70 37.97

- incl. meat products 10.71 10.28 9.81 9.59 9.64

Non-food products 33.74 35.13 35.99 37.37 36.25

Services 23.55 24.66 24.90 24.93 25.78

Source: FSSS of Russian Federation.

On average, Russians spend about 8.1 percent of their total


income on meat and meat products (see Table 14).

Table 14: Share of expenses on meat and meat products in


household incomes, 2010

Incl. in Incl. in
All
Index Units urban rural
households
areas areas
Aggregate income
RUR/
per member of the 12 688 14 357 10 129
month
household

Expenses for meat and RUR/


1 034 1 094 869
meat products month

Share of expenses for


meat and meat products percent 8.1 7.6 8.6
in aggregate income

Source: Author/LMC International, based on calculations and estimates.

35
A significant share of food products consumed by households
(vegetables, fruits, preserved and canned products, meat, dairy,
eggs, etc.) often comes from their own production, especially in
the case of households located in rural areas.

According to the official strategy of meat sector development,


the consumption of meat and meat products is expected to
reach 71.2 kg per capita by 2015 and 75.28 kg by 2020. Poultry is
expected to lead the market with 38 percent on volumes, followed
by pork (36 percent) and beef (23 percent), while other meat
types will hold a marginal 3 percent. It should be noted, that this
official forecast is based on recent domestic consumption trends,
anticipated production growth and import substitution goals
set by the Russian Federation. Its ultimate goal is to reach the
“rational meat consumption norm” of 72 kg of meat per person
per year. It is natural that these official forecasts exceed the mid-
term forecasts presented earlier in this report as the latter also
consider global macroeconomic development indicators that affect
production, consumption and prices in the major producing and
consuming countries.

Geography of poultry and livestock inventories


Meat production in the Russian Federation is mostly concentrated
in the southwest and, to a certain extent, central parts of the
country. Readers interested in more information on production
structure, processing, investment and issues of the meat value
chain in this important meat-producing region may also refer to
the chapter on the meat food chain in southern Russian Federation
in the FAO-EBRD Analysis of the Agribusiness Sector in southern
Russian Federation9.

The highest concentrations of poultry inventories are in Central


(29 percent), Volga (20.2 percent) and Southern (13.1 percent)
Federal Districts (see Figure 20). The specific regions with the
highest poultry stocks are Belgorod (10.1 percent), Rostov
(5.4 percent) and Leningrad (5.1 percent).

8 78.6 kg according to the Russian Meat Union.


9 http://www.fao.org/investment/tci-publications/publications-detail/en/c/165747/.

36
Russian Federation - Meat sector review

Figure 20: Share of Federal Districts in poultry inventories

Far Eastern

Siberian
2% Central
21%
29%
Ural
9%

20% 9%
Volga N. Western

6% 13%

N. Caucasian Southern

Source: FSSS of Russian Federation.

As pork production is mostly dependent on the availability of


feed grains and protein meals, raising pigs is popular in the
southwestern part of the Russian Federation (see Figure 21).

Figure 21: Geographical distribution of pig inventories in the


Russian Federation, 2011

thd Heads
0-4 90.1-160 300.1-500
40.1-90 160.1-300 over-500.1

Source: FSSS of Russian Federation.

The highest concentrations of pork inventories are in the Central


(34.6 percent), Volga (21.4 percent) and Siberian (17.6 percent)

37
Federal Districts (see Figure 22). The regions with the highest pork
stocks are Belgorod, Krasnodar and Tatarstan.

Figure 22: Share of Federal Districts in pig inventories


Far Eastern

Siberian 2%
Central
18 %
35 %

Ural 7%

4%
21 %
N. Western
Volga
11 %
2%
Southern
N. Caucasian

Source: FSSS of Russian Federation.

For many years, Belgorod Region has been the Russian


Federation’s leader in development of industrial pork and poultry
production. This is mostly owing to a favourable investment
climate established in the region, which has attracted big projects
and large agricultural holdings, in addition to the fertile soil and
favourable climate.

Livestock farming is mostly concentrated in the southwestern


part of the country. The largest cattle inventories are in the Volga
(30 percent), Siberian (21 percent) and Central (14 percent)
Federal Districts. Cattle farming is less popular in the Far Eastern
(2 percent), Northwestern (4 percent) and Ural (6 percent) Federal
Districts (see Figure 23 and Figure 24).

38
Russian Federation - Meat sector review

Figure 23: Geographical distribution of cattle inventories, 2011

thd heads
0-100 200.1-300 500.1-900
100.1-200 300.1-500 over 900

Source: FSSS of Russian Federation.

Figure 24: Share of Federal Districts in cattle inventories


N. Western
Central
4%
Siberian 14%
21%
Far Eastern
2%

11% N. Caucasian
Ural 6%

12%
Southern

30%

Volga

Source: FSSS of Russian Federation.

Within the Russian federal districts, the leading regions in terms


of cattle numbers are Bashkortostan (6.3 percent), Tatarstan
(5.4 percent), Dagestan (4.5 percent) and Altai Territory (4.5 percent).
Bashkortostan and Tatarstan primarily raise dairy cattle, while
Dagestan raises cattle for beef. The majority of Dagestan’s cattle
is concentrated in rural households; only 11.6 percent of cattle in

39
the region is in agricultural enterprises. The majority of cattle in
specialized beef farms is concentrated in the Southern (42 percent),
Siberian (18 percent) and Ural Federal Districts (12 percent)10.

Detailed information on poultry, swine and cattle inventories by


each region and type of farm is provided in Annex 1.

Primary production efficiency


Poultry production performance indicators considerably
increased in 2005-2010 thanks to improved feeding and technical
modernization. In 2000, the average daily gain of broilers was 32 g.
In 2010, it increased to 47 g. The feed conversion also improved
from 2.70 kg to 1.85 kg of feed to produce 1 kilogram of broiler.
The leading companies can achieve a feed conversation ratio of
1.78-1.76 kg, and the best farms manage to decrease it to 1.68 kg.

Despite certain improvements in live production performance,


Russian poultry production is still far from being competitive with
the major poultry producers, such as the USA, Brazil, Argentina
and Thailand, without import measures (see Table 15).

Table 15: Broiler feed, live costs and processing wages


compared to other countries

Processing
Cost live
Broiler feed wage (cost of
broiler
USD/tonne labour)
USD/kg
USD/kg

USA 240 0.77 2 500

Brazil 260 0.71 400

Argentina 240 0.69 440

EU 390 0.92 3 000

Russian Federation 380 0.91 440

China 410 0.96 220

Thailand 340 0.86 250

India 300 0.85 100

Source: Rabobank, 2009.

10 Report of Ministry of Agriculture “On implementation of the program of meat


cattle breeding,” 2010 data.

40
Russian Federation - Meat sector review

Further improvements made by the Russian Federation – especially


in the areas of reducing costs of hatching eggs, improving yields
and feed conversion efficiency – are evident in a detailed cost
analysis provided in Table 16.

Table 16: Broiler production cost comparison in the Russian


Federation and two other countries

Russian Federation
Cost of item (in RUR) USA Bulgaria
Company A Company B

Hatching egg 5.0 5.8 8.34 7.8

Hatch, percent 84.1 80 82.5 79.4

Cost of hatching egg per final chick 5.95 7.25 10.11 9.82

Cost of day-old chick (DOC) and delivery 1.65 2.2 2.34 1.72

TOTAL cost of DOC 7.60 9.45 12.45 11.54

Livability, percent 95.6 94 93 93.1

Cost of final chicken, per head 7.94 10.05 13.39 11.96

Feed cost, per 1 kg 7.92 10.20 10.56 9.92

Chicken weight to slaughter, kg 2.68 2.03 2.00 1.92

Feed conversion 1.98 1.82 1.94 1.99

TOTAL cost of feed and rearing 42.03 37.68 40.97 37.90

Cost of rearing DOC into broiler 13.30 15.20 11.60 8.07

TOTAL cost of live chicken (per head) 63.27 62.94 65.96 58.37

Cost of chicken (per 1 kg slaughter weight) 23.61 31.00 32.98 30.40

Slaughter/processing/packaging (per 1 kg) 27.90 17.40 22.35 17.30

TOTAL cost of processed chicken 91.17 80.34 88.31 75.67

Yield, percent 78.7 75 80 73.3

Meat per head 2.11 1.52 1.60 1.41

Cost of 1 kilogram of meat 43.20 52.77 55.19 53.77

Source: Data from two leading Russian broiler producers, 2010.

41
The performance indicators of the Russian poultry industry leaders
are close to the national industry average because they have a
considerable share of big industrial broiler producers in overall
poultry production. The share of inefficient farms is low and does
not have much influence on the average (see Table 17).

Table 17: Key broiler production performance indicators in the


Russian poultry industry, 2010

Indicator Company 1 Company 2 Russian Federation


average
Cycles (turnovers),
7.4 7.8 7.2
per year
Chicks hatch,
75.9 81.5 80.2
percent

Livability, percent 92.8 93.4 93.1

Average grow-out
37.5 39.5 41
period, days
Meat yield,
percent of live 74.4 80.7 73.3
weight
Feed conversion
adjusted
1.85 1.86 1.87
to 2 000 g of live
weight
Average daily
53.3 54.2 47
gain, g

Source: Confidential data from two companies and state programme “Development
of poultry farming in the Russian Federation for 2010-2012 and till 2018-2020”.

It is anticipated by Russian industry players that by 2020 a broiler


will gain more than 56 grams per day, feed conversion will stabilize
at 1.82 kg and mortality will decrease to no more than 5 percent of
chicks entering production. The grow-out period will greatly depend
on the specific marketing strategies of individual companies.

Along with genetics, there is significant potential for improvement


in feeding and nutrition. Almost all Russian chicken farms lack
expertise, but those who understand the value of a properly
balanced feed diet have outsourced this service to the specialized
experts/consultants.

It is also expected that the Russian poultry industry will continue


to consolidate and experience a series of mergers and acquisitions

42
Russian Federation - Meat sector review

that will increase its vertical integration and improve its capacity to
acquire modern cost-saving production technologies through new
investment and management. Please refer to a separate section
in this report on industry concentration issues (Chapter 5) and
comparisons with other countries.

In 2005-2010 the growth of key pork performance indicators of


agricultural enterprises was considerable (see Table 18). Inefficient
producers went bankrupt or were acquired by more successful
competitors. A recent massive investment in new pork production
facilities has improved basic production indicators because of
improved genetics, feeding, vaccination and herd management
technologies.

Table 18: Key pork performance indicators of agricultural


enterprises, 2005-2010

Indicator 2005 2006 2007 2008 2009 2010

Average live weight


107 121 121 139 160 159
of pigs, kg per head
Average daily weight
310 328 335 385 414 439
gain of pigs, g
Source: FSSS of Russian Federation.

Considering the geographical vastness of the Russian Federation


and the various types of pig farms and their sizes, it is natural that
performance indicators vary depending on the type of farm (see
Table 19).

43
Table 19: Comparison of performance indicators of domestic
and foreign pig growing enterprises

Least Most Rusagro Europe,


Cherki- Mira-
Indicator Units efficient efficient (Belgorodsky North
zovo torg
farms farms Bacon) America

Piglets per
sow per heads 18 25 19 22.36 25.9 27
year

Meat
produced
kg 1 400 2 100 2 090 n/a n/a 2 190
per sow
per year

Feed kg/kg
5.6 3 2.95 2.94 2.78 2.76
conversion gain

Total length
of grow- days 200 168 177 n/a n/a 160
out period

Yield percent 69 75 n/a 72 n/a 79

Source: National Union of Swine Breeders and data from companies in table
(average).

Even the most advanced domestic producers in the Russian


Federation do not reach the typical production indicators achieved
by European and American producers. This will probably change
with time as companies invest in staff education, professional
training, veterinary services, top genetics and quality of feed.

In recent years, cattle production also featured certain increases


in key performance indicators, such as daily live weight gain;
however, these increases were lower than those of raising pigs.

44
Russian Federation - Meat sector review

Table 20: Key performance indicators of cattle meat production


in agricultural enterprises, 2005-2010

Indicator 2005 2006 2007 2008 2009 2010

Meat production per


93 100 102 109 114 112
one head of cattle, kg
Average daily gain on
414 437 445 478 503 501
feed, g

Source: FSSS of Russian Federation.

Within agricultural enterprises, live weight of cattle at the time of


slaughter grew by 20.4 percent, and the average daily gain on feed
increased by 21 percent as well.

Indicators of weight gain may considerably vary from one region


to another. However, considering that there are no leading
beef producers, it was not possible to compare the leading and
less efficient farms in the cattle sector. The significant regional
differences in production efficiency indicators in raising cattle are
listed in Table 21.

Table 21: Average, daily gain of calves of beef breeds in


selected regions, grams

Under 8 Older than 8


Region Total
months months

Orenburg Region 555 327 419

Chelyabinsk Region 705 519 575

Republic of Kalmykia 611 207 375

Source: All-Russia Research Institute for Beef Cattle Breeding of the Russian Academy
of Agricultural Sciences.

It is expected that with increased government support to the


meat sector and the introduction of new genetics and production
technologies, productivity indicators will improve. However, it is
not certain to what extent the public support in this sector will
improve its competitiveness with imports.

45
Profitability of meat production: costs and margins
Information on private companies’ profitability is usually difficult
to obtain. However, some companies disclose their financial
statements and economic performance data in corporate annual
reports. Table 22 provides a summary of available information on
profitability of meat production by leading Russian companies in
2010.

Table 22: Meat sector profitability

Company Broiler production Swine production Cattle production

EBITDA* margin in 2010, percent

Miratorg - 45.16 -
Cherkizovo
21.2 40.6 -
Group
Rusagro 18** 42 -

Eurodon - - -

Average sector 15 25*** -17****

Source: Companies’ data and the Report of the Minister of Agriculture to the
Presidium of the State Council on discussion and adoption of the Strategy of meat
livestock till 2020, given on 13.07.2010.
* EBITDA is an indication of earnings before interest expense, taxes,
depreciation and amortization. EBITDA margin is EBITDA divided by total
revenue.
** Turkey operation.
*** According to the Russian Pork Producers Union, the average pig production
profitability in 2011 was 17 percent with more effective producers receiving 25
percent returns.
**** Including state subsidies. The negative profitability would have been 23 percent
per year without state support.

Profitability of meat production varies considerably depending on


the region. According to the 2010 national report “On the progress
and results of the implementation of the State programme of
agricultural development and regulation of markets for agricultural
products, raw materials and food for 2008-2012”, the profitability of
poultry production exceeded 20 percent in the Republic of Komi,
Tatarstan, Amur, Kurgan, Kursk, Lipetsk, Moscow, Omsk, Penza,
Tver and Tomsk Regions.

Pork production was the most profitable (over 30 percent margin


per year) in Belgorod, Volgograd, Irkutsk, Kaliningrad, Leningrad,
Lipetsk, Orel, Omsk, Penza, Tambov, Tomsk and Chelyabinsk

46
Russian Federation - Meat sector review

Regions and the Republics of Mari El and Tuva. The only two
regions with profitable cattle production were Kalmykia and
Karachaevo-Cherkessia. Beef production in all the other regions of
the Russian Federation was unprofitable. Annex 5 provides more
information on meat production profitability in various regions of
the Russian Federation.

The compound feed prices directly affect meat production


profitability. Figures 25 to 30 compare average prices for meat
products with the prices of animal feeds in poultry, pork and beef
production.According to available data, the ratio of feed-to-poultry-
meat price increased from 13 percent in 2005 to almost 18 percent
in 2010 with a peak (21.7 percent) registered during price increases
in 2008 (see Figure 25). These percentages indicate a decreasing
operating profitability of poultry meat production with time.

Figure 25: Comparison of average poultry meat prices (live


weight) with poultry feed prices, 2005-2010
60 000 50
54 230 52 966
45
50 000 40
43 350
RUR/tonne (excl. VAT)

45 075 35
40 000
40 813 39 822 30
percent

30 000 25
17.1 20
21.7 17.7
20 000
16.1 15
14.2
12.9 10
10 000
9 770 9 257 9 362 5
6 960
5 276 5 639
0 0
2005 2006 2007 2008 2009 2010

Poultry (left axis)


Combined feed for poultry (left axis)
Comparison of feed price to product price (right axis)

Source: FSSS of Russian Federation.

However, when comparing monthly averages of meat and feed


prices (with January 2005 fixed at 100 percent), it becomes
apparent that feed prices tend to be more volatile and outpace
increases in poultry meat prices. Feed prices registered a nearly
200 percent increase from January 2005 to January 2011 while
poultry meat prices increased by about 150 percent (see Figure 26).

47
Figure 26: Monthly indices of average prices for poultry (live
weight) and feed for poultry, 2005-2010

250
225
200

175
percent

150
125
100
75
50
Jan 2005

May 2005

Sep 2005
Jan 2006
May 2006
Sep 2006
Jan 2007

May 2007
Sep 2007

Jan 2008
May 2008

Sep 2008
Jan 2009
May 2009

Sep 2009
Jan 2010

May 2010
Sep 2010
Poultry meat Combined feed for
poultry

Source: FSSS of Russian Federation.


Note: January 2005 =100 percent.

Similarly to decreased poultry producers’ margins, the ratio of


feed-to-pork price increased from 9 percent in 2005 to 14 percent
in 2010 with a peak registered in 2008 (see Figure 27).

Figure 27: Comparison of average pork prices (live weight)


with pig feed prices, 2005-2010

80 000 50
69 263 69 748 45
70 000
60 988 40
RUR/tonne (excl. VAT)

60 000
50 420 51 821 35
49 051
50 000 30
percent

40 000 25

30 000 20
16.4
14.1 14.3 15
11.6
20 000 9.1 9.6
10
10 000 5 850 8 248 7 094 7 231
4 574 4 825 5
0 0
2005 2006 2007 2008 2009 2010
Pigs (left axis)
Comparison of feed price to product price (right axis)
Combined feed for pigs (left axis)

Source: FSSS of Russian Federation.

48
Russian Federation - Meat sector review

Comparisons of the changes in monthly price indices (with January


2005 prices fixed at 100 percent) show trends very similar to
the decreasing poultry margins: feed prices registered a nearly
200 percent increase from January 2005 to January 2011, while
pork prices increased by about 150 percent (see Figure 28).

Figure 28: Monthly indices of average prices for pork (live


weight) and feed for pigs, 2005-2010

250

225
RUR/tonne (excl. VAT)

200

175

150

125

100

75

50
Jan 2005
May 2005
Sep 2005
Jan 2006
May 2006
Sep 2006
Jan 2007
May 2007
Sep 2007
Jan 2008
May 2008
Sep 2008
Jan 2009
May 2009
Sep 2009
Jan 2010
May 2010
Sep 2010

Pig meat Combined feed for pigs

Source: FSSS of Russian Federation.

49
Table 23: Cost of producing 1 tonne of pork in live weight,
thousand RUR (excl. VAT)
Index Value Percent of total

Production cost, including 61.6 90

Cost of piglets 31.7 46

Feed 22.5 33

Electricity, water 0.4 1

Gas 0.8 1

Veterinary/medicine 0.2 0
Fuel 0.6 1
Labour (salaries and taxes) 5.4 8

Other costs (maintenance, overhead) 7 10

Total cost 68.6 100

Revenues from sales 76.3

Margin, 1 000 RUR/tonne 7.7 10

Source: Data from a pig farm in the Northwestern Federal District, 2010.

The ratio of cattle feed to beef prices increased from 11 percent in


2005 to 19 percent in 2010 as indicated in Figure 29.

The cost of feed may be higher or lower depending on feed price,


producer location, access to transportation infrastructure and the
market. Considering other costs, a pig farmer in the Northwestern
Federal District of Russian Federation could expect the following
costs and returns per 1 tonne of pork. Pig producers may actually
operate on a fairly thin margin (see Table 23) and, therefore, be
very sensitive to changes in feed and other costs.

50
Russian Federation - Meat sector review

Figure 29: Comparison of average prices for beef (live weight)


and cattle feed, 2005-2010

60 000 50
54 371
55 951 45
50 000
40
RUR/tonne (excl. VAT)

41 762
39 235 45 641 35
40 000
34 003 30

percent
30 000 25
20.8
17.4 18.7 20
20 000 14.6
15
10.6 10.8
10
10 000
3 669 4 963 5
3 606
7 074 5 912 6 366
0 0
2005 2006 2007 2008 2009 2010
Cattle Combined feed for cattle Comparison of feed price
(left axis) (left axis) to product price (right axis)

Source: FSSS of Russian Federation.

Monthly indices of beef and feed prices (as compared with


January 2005) indicate that the increase in beef price outpaced
that of the feed price in January 2005-May 2007 and then again
in December 2008-September 2010. However, this did not result
in farmers rebuilding their cattle herd because of the overall low
profitability of raising cattle.

Figure 30: Average beef price indices in live weight and feed
for beef, 2005-2010
250
225
200
175
percent

150
125
100
75
50
Jan 2005
May 2005
Sep 2005
Jan 2006
May 2006
Sep 2006
Jan 2007
May 2007
Sep 2007
Jan 2008
May 2008
Sep 2008
Jan 2009
May 2009
Sep 2009
Jan 2010
May 2010
Sep 2010

Beef Conbined feed for cattle

Source: FSSS of Russian Federation.

51
Table 24 illustrates some production costs in beef cattle. It is
difficult to assess overall profitability of beef cattle as there is not
much evidence yet in the country. The table below does not reflect
the significant costs in acquiring the start-up Hereford cattle and
the long payback period on such an investment.

Table 24: Illustrative cost of producing one tonne of Hereford


cattle in live weight, thousand RUR (excl. VAT)

Item Index Value


1 Production cost, including 56
1.1 Labour (salaries and taxes) 17.4
1.3 Compound feed 30.1
1.4 Hay 4.6
1.5 Haylage 1.9
1.6 Corn silage 1.2
Other costs (maintenance, fuel, etc.) 13.5
2 Total cost (excluding beef calves) 69.5
3 Revenues from sales 90.9
Source: Farm data from Ural Federal District, 2010.

Common production technologies


Russian meat producers have been able to improve their production
efficiency and quality of products and reduce production costs in
recent years. However, most of them still need substantial capital
investment and skilled professional labour and management. Meat
production in the Russian Federation is still largely based on the
Soviet-style concept of production formerly known as kolkhoz (or a
collective farm) and sovkhoz (or a state farm).

In many cases, especially in poultry and pork production,


production facilities are concentrated in one company, with
very little specialization between farms, which outsources feed
production and services.

Dairy farms are the main producers of beef. A number of farms


have small feedlots that are used both for dairy cattle feeding and
combined meat-and-milk calf breeding.

A detailed description of most typical production technologies and


their main considerations, such as housing or grazing technology,

52
Russian Federation - Meat sector review

feeding, manure utilization, slaughter, processing, chilling and


other production technology aspects is available in Annex 3.

Feed availability and production


Because feed costs may reach 40-50 percent of the total
livestock and poultry production costs, availability of a reliable
and reasonably priced feed supply is an important business
consideration. Barley, feed wheat, sunflower seed meal, maize
and soybean meal are the main sources of plant proteins used
in compound feed production for poultry and pigs. The role
of fishmeal and bone meal is less important in Russian feed
production.

Feed supply has largely depended on the weather and grain and
oilseed production conditions in the main agricultural regions.
According to feed consumption, estimated in Figure 31, there has
been a clear upward trend in feed protein consumption.

Figure 31: Estimated consumption of feed protein from main


cereals and oilseed meals, 2001-2012

5 000
405 288 351
4 500 464 252
279 315 439 510
4 000 252 429
108 194 270 452 481
86 423 757 862
3 500 350 322 391
thousand tonnes

293 663 718 1 088


290 306 442 524 1003
3 000 272
2 500 1 353 1 337
1 150
1 084 1 177 1 507 1 287 1 199 1 298 605 1078
2 000
1 500
1000
1 560 1 800 1 788 1 840 1 944 2016 1 920 1 860
500 1 500 1 632 1 692

0
3

05

06

07

10

11

12
/0

/0

/0

/0
/

9/

0/

1/
02

03

04

05

06

07

08

1
20

20

20

20

20

20

20

20

20

20

Barley Wheat Meal, sunflower seed Maize Meal, soybean

Source: Authors’ calculations based on USDA PSD online (www.fas.usda.gov/


psdonline/psdQuery.aspx).
Note: The following protein content was assumed for conversion purposes: 11 percent
for barley; 9 percent for maize; 12 percent for wheat 46 percent for soybean meal and
33 percent for sunflower seed meal.

53
There is also a clear upward trend in compound feeds
production for livestock and poultry feeding. According to the
First Independent Rating Agency (FIRA), the volume of Russian
compound feed production in 2010 totaled 16 million tonnes, which
is 64 percent more than in 2005. Starting in 2005, compound
feed production has been increasing by about 10 percent p.a. on
average (see Figure 32).

Figure 32: Production of compound feed in the Russian


Federation, 2005-2010

18 000
16 155
16 000 14 712
31 750
14 000
12 464
11 390
12 000
thousand tonnes

10 011
10 000

8 000

6 000

4 000

2 000

0
2005 2006 2007 2008 2009 2010

Source: Information-analytical system FIRA PRO.

The Russian Federation’s Ministry of Agriculture believes that


the actual feed production could have been higher if the feeds
produced within the integrated meat production companies (e.g.
compound feeds that are produced and consumed within one
company) were taken into consideration. They accounted for
40 percent of total registered production. Therefore, total feed
production in the Russian Federation was believed to actually total
approximately 28 million tonnes in 2010.

The increase in the compound feed production was first of all


driven by higher demand from the poultry and pork production
sectors. Compound feed for poultry constituted the major
share (57.7 percent) of total compound feed production in 2010.
The feeds for pigs and cattle accounted for 25.8 percent and
13.3 percent respectively (see Figure 33).

54
Russian Federation - Meat sector review

Figure 33: Structure of compound feed production, 2010

26%
Feed produced for poultry

Feed produced for pigs


58%
Feed produced for cattle

Feed produced for other animals

13%

3%

Source: FIRA PRO.

As shown in Figure 31, local compound feed is characterized by a


large content of cereals. While the compound feed in Europe usually
contains no more than 45 percent of grains, the grain content in
the Russian Federation reaches 70 percent. This is mostly owing
to a relatively low share of protein meals (soybean and sunflower
seed meal) available in the Russian Federation. Though there was a
slight increase in domestic soybean meal and cake output, current
soybean meal production levels do not meet the increasing demand
from feed manufacturers, leaving space for meal imports. Soybean
meal is usually imported from Brazil or transported from the
soybean processing facility Sodruzhestvo located in Kaliningrad.

The following major feed-related issues are faced by Russian


livestock producers:

• p
 urchased feeds usually cost 15-30 percent more than the
feeds produced by the mills integrated into poultry production
complexes;
• outsourced feeds have poor traceability;
• o
 utsourced feed supplies are inconsistent and delivery
schedules are not respected;
• i ndependent feed mills do not provide consistent and reliable
quality feed;
• they often use cheap and low quality soybean and fish meal;
• feed can often have mycotoxins.

Among the issues related to the production of cattle (both beef


and dairy), certain issues exist with the forage (hay, silage, etc.)

55
production, including cattle grazing on low-productive natural
pastures; cutting grass beyond the optimum stage negatively
affecting nutritional value of hay and its digestibility); and inefficient
conservation and storage (especially in the case of late silage and
haylage preparation and storage losses).

Box 3: Feed quality issues

Feed quality is one of the main concerns for livestock and poultry producers as it
directly affects animal and poultry productivity and health. Many independent feed
producers, being concerned by feed costs and their margins, often fail to supply quality
feeds to their buyers. Many compound feed producers do not have adequate technical
capacities to assure a uniform quality mix of feed ingredients, premixes and additives.

As a result, lack of trust to external feed suppliers prevails amongst livestock and
poultry producers. Many of them decide to invest in their own feed production
facilities to assure reliable supplies. Many agroholdings have thus become leading feed
producers in their respective regions.

The GOR has recently updated the old Soviet compound feed standards to facilitate
industry development. In July 2011, the Soviet-time state standard GOST 12220-96
("Toasted soybean meal for feeds"), which envisaged that only 45 percent crude protein
soybean could be used in compound feed production, was replaced with a new GOST
R 53799-2010. The new standard allows compound feed producers to utilize six different
protein levels (from 42 percent to 54 percent crude protein) in production of compound
feeds.

The list of specific compound feed standards effective in the Russian Federation is
provided in Annex 4.

Animal health issues


In the Russian Federation, animal health falls under the
responsibility of the Rosselkhoznadzor (Federal Service for
Veterinary and Phytosanitary Surveillance), and Rospotrebnadzor
(Federal Service on Customers’ Rights and Human Well-being)
focuses on overall food safety issues for all food products.

Animal and poultry diseases represent a major threat to potential


investors in the livestock and poultry production due to their
devastating potential. Therefore, we decided to cover some of
these issues as they affect sector development.

Recent outbreaks
In the last decade, the Russian Federation’s livestock production
has been challenged by a series of animal disease outbreaks that
have had a high level of production and financial impact, such as:

56
Russian Federation - Meat sector review

• cattle: foot-and-mouth disease (FMD);


• poultry: AI;
• pork: African swine fever (ASF).

Foot-and-mouth disease (FMD). FMD has been historically


endemic in many regions of the Russian Federation, though in the
last 20-30 years outbreaks were very sporadic and were controlled
by quick responses from veterinary authorities. In 2010-2012, there
were at least 15 outbreaks of FMD in Trans-Siberia, Primorsky Krai
and Irkustk Oblast that affected thousands of cattle, pigs, goats
and sheep. According to genetic analysis, these recent cases of
FMD were related to the FMD outbreaks in China, Mongolia and
Eastern Kazakhstan in 2010-2011. Elimination of border controls
between Kazakhstan and the Russian Federation – both in the
Customs Union – makes cross border veterinary inspection and
control more difficult.

Avian influenza. This disease was registered in the Russian


Federation in 1978. It occurred again in 2005-2006 and affected a
few Russian regions as shown in Figures 34 and 35.

Figure 34: AI outbreaks in the Russian Federation, 2005

62 affected sites in 10 regions of Russia


Died - 26844, destroyed 609250 birds
One affected commercial layers farm in
Kurgan region
In Kalmykskaya Republic and Astrakhan region
(colored in yellow) restriction measures were
implemented in villages located close to migratory
stations of waterfowl to prevent the spread of the
virus to poultry

Source: All-Russia Scientific Research Institute of Animal Protection.

57
Figure 35: AI outbreaks in the Russian Federation, 2006

Total:
93 affected sites in
16 territories
of Russia
Total losses in
poultry have not
exceeded 1.400.000
birds
As of 1 August
1 site in Tomskaya
oblast was still
under quarantine

No new cases
since 5 July

Source: All-Russia Scientific Research Institute of Animal Protection.

The Russian veterinary services, the federal government and


local authorities took unprecedented measures to prevent further
expansion of AI outbreaks, including:

• strict quarantine regime introduced in affected areas;


• backyard flocks were preventively culled;
• the state compensated financial losses to the population;
• s everal vaccines were developed and applied to selected flocks
(over 150 million doses);
• a national monitoring programme for pathological material of
wild birds was implemented.

There have been no outbreaks in commercial or backyard flocks


in the Russian Federation since early 2007, and several positive
cases of low-pathogenic AI antibodies were revealed as a result of
monitoring migrating birds.

African swine fever. ASF started spreading throughout the


Russian Federation in August 2008, from Krasnodar Region and
North Ossetia; supposedly it came from Georgia. According to
estimates of Rosselhoznadzor, ASF was registered in 24 regions
of the Russian Federation. It affected 254 settlements and
37 production facilities.

58
Russian Federation - Meat sector review

About 440 000 pigs were slaughtered in order to control the


outbreak. According to various estimates, pork farms lost about
10 percent of production because of this pandemic.

Figure 36: Map of AFS outbreaks in the Russian Federation

ASF OUTBREAKS
(2 MARCH 2012)

Source: All-Russia Scientific Research Institute of Animal Protection (VNIIZZH).

The North Caucasus Federal District and South Federal District are
considered to be an endemic (unfavourable) zone for ASF, and the
disease can easily spread from a single infected animal outside the
endemic zone.

In early 2012, the veterinary authorities reinforced controls (see


Figure 36.). As of 1 March 2012, rural households in the Krasnodar
Region were prohibited to raise more than three pigs for finishing.
Implementation of the new rules is likely to be difficult; however,
the local authorities continue to promise to assist pork farmers in
developing alternative livestock production activities.

ASF is considered the main threat to the Russian Federation’s


livestock sector as farmers and local authorities often do
not declare outbreaks to veterinary authorities immediately,
biosecurity on rural household farms and some industrial farms is
not observed and animals enter into contact with wildlife and the
geographical vastness complicates animal quarantine provisions.

59
Chapter 4 - Meat processing

Recent trends in meat processing


There have been notable shifts in the structure of the Russian
meat market, including shrinking beef consumption in favor of
poultry meat; progressive exit of rural households from the market;
and an increased supply of fresh and chilled meat replacing frozen
products.

Formally registered meat and processed meat products in


the Russian Federation doubled from 2005 to 2010, reaching
3.9 million tonnes of fresh meat and by-products (see Table 25).
Though there was outstanding growth in the pork and poultry
sector of 137 percent and 139 percent respectively in 2005-2010,
beef production registered a 23 percent decrease.

Table 25: Industrial production of main meat products in the


Russian Federation, 2005-2010, thousand tonnes
Change
Product type 2005 2006 2007 2008 2009 2010 2010 vs.
2005
Fresh meat and
1 857 2 185 2 561 2 899 3 441 3 888 109%
by-products:
-Beef 327 303 284 278 252 251 -23%

-Pork 337 405 502 502 666 800 137%


-Poultry
meat and by- 1 141 1 424 1 721 2 067 2 426 2 729 139%
products
-Other types of
13 13 12 11 13 16 23%
meat

-By-products 39 39 42 41 84 92 136%

Sausages and
2 014 2 198 2 411 2 454 2 246 2 388 19%
cooked meats
Further
processed 987 1 093 1 254 1 451 1 503 1 614 64%
meat products
Standard cans,
549 523 521 580 690 651 19%
million*
Source: FSSS of Russian Federation, Meat Union of Russia and Meatinfo.
* Net weight of one standard can is 350 g.

60
Russian Federation - Meat sector review

Production of precooked meat products increased by 64 percent


during the period of 2005-2010 (see Table 25) to reflect an
urbanizing population, higher incomes in the cities, new lifestyles
and expansion of retail, hotel, restaurant and catering services
(HORECA) that demand more value-added products in convenient
packaging.

The appetite of Russian consumers for sausages has always been


high and continues to grow (19 percent from 2010 to 2005). It is
worth noting that sausages take the fourth place in consumers’
food basket after dairy, vegetables and fruits and bakery products.

The most popular sausage products according to the biggest


Russian meat processing company, Cherkizovo, include:

• bologna sausages (Doktorskaya) – 38 percent;


• franks sausages (sosiski) – 27 percent;
• smoked sausages – 18 percent;
• other categories – 12 percent.

After overcoming the economic recession of 2008-2009, Russian


consumers started buying more sausages and meat products,
thus stimulating production. As Russian consumers switched
to more expensive sausage products, the share of smoked
sausage production increased, and the share of bolognas and
franks declined. As a result, the whole sausage segment grew by
18 percent reaching 2.4 million tonnes in 2010. However, locally
produced products in this segment have started losing ground
to foreign competitors as the quality of Russian sausages has
decreased. With weak technical regulations and enforcement
(as compared with the European regulations that measure
animal protein) and aggravated by the financial crisis, many meat
processors started adding less meat to the recipes in order to cut
down on raw material costs.

The meat-canning segment is traditionally important in the Russian


Federation as the government maintains intervention stocks
of beef and pork. Today the canned meat sector faces certain
challenges as fresh, chilled (and frozen) meat become available
as well as value-added meat products. We still note some growth
in this segment featuring 18.6 percent increase from 549 million
standard cans in 2005 to 651 million in 2010. However, in the pre-
crisis years (2006- 2010) there was a slight decline in canned meat
production.

61
Since the early 2000s, halal meat has been rapidly gaining
importance in the Russian Federation. Today, there are over
2.3 million Muslims in the country. The International Centre under
the Russia Muftis Council certifies about half of halal meat. Halal
production is concentrated not only in Moscow but also in the
south of the Russian Federation, in the North Caucasus and
Volga Regions. This new category in the meat sector has grown
considerably in recent years; by the end of 2010 there were 57
halal-certified meat-processing facilities across the country, and
the share of halal products in the poultry subsector is about
6.5 percent.

Food safety issues


Meat consumption will be increasingly affected by consumer
awareness of food safety and quality issues as competition
increases in the domestic market. It is expected that this
increasing awareness will lead towards increased food safety
standards of the major retail chains and food service companies
in the Russian Federation. An increase in standards will inevitably
require livestock and poultry producers and meat processors to
invest in both introduction of the traceability systems and modern
food safety control programmes.

Box 4 illustrates some food safety issues by using the case of


salmonella prevalence in the poultry meat sold in retail in the
Russian Federation.

62
Russian Federation - Meat sector review

Box 4: Meat safety and quality: the need for continuous improvement

The Russian Federation introduced new standards (GOSTs or GOSTs-R) for chicken
meat, turkey, pork and beef in 2007-2011 to update the standards that were developed
in the 1970s-1980s to regulate both the quality and the food safety aspects of meat and
meat products in the Soviet Union. The list of the new meat standards is provided in
Annex 4: Applicable State Standards in the Russian Federation.

The major Russian meat producers started introducing modern quality and safety
standards in the early 2000s. Some companies implemented the ISO 9001/02 systems,
Good Manufacturing Practices, ISO 22000, ISO 14000 and the hazard analysis at critical
control points (HACCP). In the Russian Federation, HACCP received the status of a
National Standard in 2003, though the Russian version appears to be much shorter than
the standards approved in the USA and the EU.

As of early 2012, about 30 percent of the Russian slaughterhouses and the prime and
secondary meat processing facilities had HACCP systems in place that conformed
with the Russian regulations, though only a handful of them were certified by an
international HACCP certification body. This is mostly due to lack of understanding
of the HACCP system, professional consultants, and financial resources required for
HACCP implementation and consistent effort from management.

Currently, specific food safety indicators are regulated by the Sanitary Norms and Rules
(SANPIN), developed and approved by the Ministry of Health of the Russian Federation.
Adherence to SANPIN is controlled by the Federal Service for Surveillance in the Area of
Consumer Rights Protection (RosPotrebNadzor) and Federal Service of Agricultural and
Phytosanitary Surveillance (RisSelkhozNadzor). Russian sanitary regulations, especially
requirements for antibiotics and feed additives, are often criticized by the country’s
trading partners as not being based on scientific evidence and risk assessment.

Certain compliance issues exist domestically as not all meat producers meet national
food safety regulations and norms. This is especially true for the bacteriologic and
maximum residue levels. In 2011, research* on salmonella prevalence on chicken meat
in the Russian Federation – conducted in three regions: Moscow Oblast, Leningrad
Oblast and Krasnodar Krai (with a total of 698 samples) – indicated that salmonella
prevalence was 31.5 percent on whole birds. This indicator typically ranges around
4-16 percent in the USA and the EU. The same research suggested that strategies, such
as good agriculture and management practices, should be enhanced to improve food
safety of chicken meat in the Russian Federation.

* Alali WQ, Gaydashov R, Petrova E, et al. Prevalence of Salmonella on retail chicken


meat in Russian Federation. J Food Prot. 2012 Aug;75(8):1469-73.

63
Marketing channels
According to the Federal State Statistics Service (FSSS),
most domestically produced meat is marketed to processing
companies (63.3 percent) and wholesale traders (21.8 percent).
About 6.8 percent of meat production is purchased by the State,
4.1 percent is sold through retail and another 3.3 percent is
channeled through HORECA. Barter and supplies that pass via
consumer cooperatives are negligible (see Table 26).

Table 26: Marketing channels of food products, 2010

Marketing channel Thousand tonnes Percent

Processors 3 613.7 63.3


Wholesalers 1 247.0 21.8
Organizations making purchases for
390.1 6.8
state needs
Retail stores, branded stores, street
232.9 4.1
kiosks
HORECA 190.1 3.3
Barter (exchange operations) 33.3 0.6

Consumer cooperatives 4.9 0.1


Total 5 712.1 100.0

Source: FSSS of Russian Federation.

Meat holds an anchor position in the retail food market. In 2010,


about 68 percent of meat and meat products were sold through
retail stores. In 2010, retail turnover of meat and meat products in
the Russian Federation reached RUR 1 264 billion (about USD 39
billion), and this trend is expected to grow by 30-35 percent in the
upcoming years thanks to new openings (see Table 27).

64
Russian Federation - Meat sector review

Table 27: Retail sales by sector, 2006-2010, million USD


Change Change
Channel format 2006 2007 2008 2009 2010
2010/09 2010/06

Store retail 195 285 250 341 308 116 248 457 292 575 17.8% 49.8%

Grocery retailers 106 825 139 808 176 415 155 811 188 760 21.1% 76.7%

Food/drink/tobacco
3 555.9 4 422.4 5 052.7 4 355.8 5 162.9 18.5% 45.2%
specialized stores

Hypermarkets 6 509.9 10 559.9 15 709 14 315.4 18 066 26.2% 177.5%

Small grocery retailers: 37 562.8 47 955.6 59 211.2 52 987 62 969.5 18.8% 67.6%

- Convenience stores 3 051.1 4 694.1 6 260.5 6 136.3 7 331 19.5% 140.3%

- Forecourt retailers 319.3 374.9 420.8 331.4 400.3 20.8% 25.4%

- Small independent
34 192.4 42 886.6 52 529.9 46 519.4 55 238.1 18.7% 61.6%
grocers

Supermarkets 38 275.8 50 954.8 64 886.3 57 269.6 71 703 25.2% 87.3%

Other grocery retailers 20 920.4 25 915.2 31 555.7 26 882.6 30 858.9 14.8% 47.5%

Source: FSSS of Russian Federation.

Large retail chains (like X5-Retail Group, Magnit, Seventh


Continent, Dixie, Auchan and German Metro AG) have been
shaping the meat market by setting rules for suppliers. Local
producers are not always ready to address the requirements
regarding quality standards, in particular traceability, packaging
and high marketing budgets. Retail chain expansion has also
entailed the fast development of a distribution infrastructure. If not
economically efficient, small and medium retail stores leave the
market. Markups in Auchan go from 0 to 17 percent, while street
kiosks and small shops take up to 30-35 percent.

Besides the traditional retail stores (supermarkets, hypermarkets,


grocery stores and convenience stores), frozen meat is also
marketed through open markets (small wholesale), fresh meat
through farmers’ markets and processed meat products (sausages,
franks, hams, delicacies) through branded company stores.

Marketing channels differ significantly across the country: in the


big cities the retail share is higher and the share of markets,
non-chain stores, small stores and kiosks is lower than in smaller

65
towns and rural settlements. On average, modern retail trade
sells 30 percent of all meat and meat products. In Moscow, this
indicator is about 50 percent, and in Saint Petersburg it is about
80 percent.

Meat processing efficiency: costs and returns in the


meat processing sector
As a rule, major meat processing factories not only provide full
processing of raw materials (from slaughter to packaged meat
products) but also have a clear tendency for increased production
capacities. This is largely due to the tightening environmental
regulations that require meat processing facilities to build efficient
sewage treatment plants. According to VNIIMP (All-Russia
Meat Processing Research Institute), the share of a wastewater
treatment facility in total meat processing factory investment costs
may be as follows:

• 7 percent for a new 100 tonne/shift meat processing facility;


• 10 percent for a 30 tonne/shift establishment;
• 3
0 percent for a small slaughterhouse with a daily production
capacity of 2 tonnes/shift.

High-capacity meat processing facilities (over 100 tonnes/shift)


provide higher meat yields and may increase processors’ margins
by adding value to slaughter by-products, such as the production
of meat and bone meal from animal carcasses after the meat is
removed. Experts estimate the average payback period of the
meat processing industry to be 4-7 years. The typical costs of a
meat processing plant are provided in Table 28.

66
Russian Federation - Meat sector review

Table 28: Cost breakdown of producing one tonne of boneless


meat products
RUR thousand
Item Index Percent
(excl. VAT)
1 Production costs, including 166.6 85
1.1 Raw meat 143.2 73
1.2 Other ingredients 15.4 8
1.3 Core production staff wages 6.2 3
1.4 Other 1.9 1
2 Overheads, maintenances, etc. 30.5 15
3 (1+2) Total cost 197.1 100
4 Revenues from sales 212.2 -
5 (4-3) Margin per tonne 15.1 8
Source: Data from a meat processing plant in Northwestern Federal District (capacity
of ten thousand tonnes of meat per year) as of 2011.

The profitability of meat production is also largely determined


by the size of specific consumer groups and their products
preferences. For example, the production of hard smoked
sausages and delicacy meats can be much more profitable than
the production of cooked sausages, frankfurters and wieners.
However, the share of the former in total sales usually does not
exceed 3-5 percent, depending on the region or city.

67
Chapter 5 - Meat market concentration

The top five meat producers


Among the meat subsectors, poultry plays a leading role in terms
of concentrated production. The top five companies control
36.6 percent of the Russian industrial poultry output (see Table 29
and Figure 37).

Table 29: Top five producers of poultry meat in the Russian


Federation, 2010

Poultry
production, Poultry Meat
slaughter production market
Ranking Company
weight, share, share,
thousand percent percent
tonnes

JSC
1 355.2 14.1 10.1
Prioscoliye

Cherkizovo
2 194.1 7.7 5.5
Group

Agroholding
3 BEZRK- 148.8 5.9 4.2
Belgrankorm

4 Prodo Group 146.4 5.8 4.2

JSC Belaya
5 78.0 3.1 2.2
Ptitza

Total 922.5 36.6 26.2

Source: Russian Poultry Union.

68
Russian Federation - Meat sector review

Figure 37: Share of the top five producers in total commercial


poultry meat production, 2010

63%

Top five producers

Other producers

37%

Source: Russian Poultry Union and companies’ data.

The biggest Russian turkey producers are Evrodon, Krasnobor,


Sibirskaya Guberniya, M. Gaufuri and Egoriyevskaya Farms.

The detailed profiles of the leading producers of poultry meat can


be found in Annex 7.

Raising pigs has a lower level of production concentration than


poultry. In 2010, the top five producers generated an estimated
29 percent of the total pork output (see Table 30 and Figure 38).

Table 30: Top five producers of pork, 2010


Pork production, Pork Meat
slaughter production market
Ranking Company
weight, share, share,
thousand tonnes percent percent
1 APH Miratorg 137.6 8.4 4.6
GK Agro-
2 100 6.1 3.4
Belogorie
Cherkizovo
3 87.6 5.4 2.9
Group
PRODO
4 77.43 4.8 2.6
Group
5 GK RUSAGRO 61.9 3.8 2.1

Total 464.53 28.5 15.6

Source: National Union of Pig Growers and companies’ data.

69
Figure 38: Share of the top five producers in total commercial
pork production, 2010
71%

Top five producers

Other producers

29%

Source: National Union of Pig Growers and companies’ data.

Detailed profiles of the leading pork producers are given in


Annex 7.

In contrast with poultry and pork, beef production has very low
concentrations of production in the Russian Federation. The
five leading producers supply only 3.3 percent of the total beef
production volume (see Table 31 and Figure 39). This can be
explained by the fact that beef production requires large areas
of agricultural land for feed production that constrain the size of
livestock farms.

Table 31: Top five producers of beef, 2010


Cattle production, Cattle
Meat market
Ranking Company slaughter weight, production
share, percent
thousand tonnes share, percent
AKGUP
1 5 0.9 0.2
(Promyshlenny)
JSC
2 4-5 0.8 0.2
(Agrocomplex)
OAO “KRASNY
3 4 0.7 0.2
VOSTOK AGRO”
OAO (Agrofirma
4 3 0.5 0.1
Mtsenskaya)
OAO
5 2-2.5 0.4 0.1
“Belorechenskoe”
Total 18-19.5 3.3 0.8
Source: Companies’ data.

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Russian Federation - Meat sector review

Figure 39: Share of the top five beef producers in commercial


beef production, 2010

97%

Top five producers

Other producers
3%

Sources: Companies’ data and authors’ calculations.

The largest beef livestock farms (with over 3 million head) are
Limited Liability Company (LLC) Warsaw in Chelyabinsk Region;
Open Joint-Stock Company (OJSC), PKZ Zimovnikovsky in Rostov
Region; SPK Ergeninsky in the Republic of Kalmykia; JSC, Plant
Breeding named after Arashi Chapchaev in the Republic of
Kalmykia; LLC, Center of Genetics, Angus, in Kaluga Region; SPK
Fedoseevskiy in Rostov Region; and JSC PP, Progress in Rostov
Region.

Sales of beef from meat cattle are currently very low. The biggest
producer generating revenues in this segment is All Beef in the
Lipetsk Region.

Leading meat brands


Branding is traditionally more developed in the processed meat
product segment of the market: sausage products, delicacies
and ready-to-cook and ready-to-eat processed products like meat
dumplings, meat ravioli, meatballs, nuggets and patties. Chilled
and frozen meats are also sold under trademarks; some are sold
under the private labels of supermarkets. In the wholesale trade,
especially when products are sold on a live weight basis or as half
carcasses, the name of the slaughter enterprise is often referred
to as a brand.

71
The leading brands of poultry meat (sales, in value) are:

• b
rands of GC Prioskolye: Prioskolye, Picnics Prioskolya, Al Safa
and Coco Pulet11;
• b
rands of the Cherkizovo Group: Petelinka, Kurinoe tsarstvo,
Mosselprom, Vasilevka and Domashnyaya kurochka;
• brands of BEZRK-Belgrankorm: Yasnye zori and Kurinyj korol12;
• brands of the Prodo Group: Troekurovo and RoKoKo.

Leading brands of pork (sales, in value) are:

• Miratorg13;
• A gro-Belogorie Group of Companies: Dal’nie Dali and Agro-
Belogorie;
• Cherkizovo Group.

Leading brands of beef (sales, in value) are:

• Klin Meat Plant (owned by the Prodo Group);


• M
eat and poultry plant Penzensky (belongs to Cherkizovo
Group);
• Ulyanovsk meat farm (owned by Cherkizovo Group).

A list of the leading meat brands is available in Annex 6.

The top five meat processors


The Russian meat processing sector is characterized by rather low
consolidation due to vast distances, consumers’ preferences for
local and regional producers and trademarks, lack of processors’
capacity to market and manage federal brands and different
conditions of production assets.
The leading meat processors are concentrated in the main pork
and poultry producing regions, such as Belgorod Oblast, Moscow
Oblast, Leningrad Oblast, Krasnodar Krai, Voronezh Oblast,
Tatarstan and Lipetsk Oblast (see Figure 40).

11 This manufacturers meat processing sector also has brands like Fly de Lunch (food
made of poultry meat: burgers, kebab, fillets, etc.), Slavnaya marka (sausages and
cooked products), and chicken specialties.
12 Brand Rural Traditions was designed for the sausage segment.
13 Included in the meat processing sector of this manufacturer is the brand Gur
Mama (nagetsy chicken, burgers, steaks, fillets and chicken pieces).

72
Russian Federation - Meat sector review

Figure 40: Number of meat processing plants*, 2009

70

60

50

40
percent

30

20

10

0
Vo Ce So Ca N U N Fa
lg nt ut uc or ra or rE
a er h as th ls th as
us W t
es
t

Source: FSSS of Russian Federation.


*Minimum plant capacity is 20 tonnes of finished product/day.

The following main trends of slaughterhouses and meat


processing facilities have been observed:

• c attle and swine slaughterhouses and the main processing


facilities are close to meat production areas;
• p
oultry slaughter and processing are concentrated around
poultry farms throughout the Russian Federation;
• f urther meat and poultry processing and value-addition are
concentrated around big cities.

The main meat processing facilities are located in Moscow


(17.2 percent) and in the Moscow Oblast Region (8.5 percent).
Regional concentration of meat processing facilities is low; 43
percent of all processing facilities in 2009 were concentrated in
the regions that have less than 2 percent of the total distribution
(see Table 32).

73
Table 32: Leading meat processing regions, 2009, percent

Russian Federation 100

Moscow 17.2

Moscow Oblast Region 8.5

Krasnodar Territory 4.1

Vladimir Region 3.8

Saratov Region 3.8

Pskov Region 2.8

Republic of Bashkortostan 2.7

Leningrad Region 2.5

Tyumen Region 2.4

Chelyabinsk Region 2.4

Novosibirsk Region 2.4

Sverdlovsk Region 2.2

Rostov Region 2.1

Others (regions that have less than 2%) 43.1


Source: FSSS of Russian Federation.

The Ostankisnky meat processing factory and Cherkozivo Group


were the two largest meat processors in 2010. Only two more
companies produced above 100 000 tonnes of meat products each
in 2010 (see Table 33).

74
Russian Federation - Meat sector review

Table 33: Top five meat processors, 2010


Processed meat Processed Meat
production, meat market
N Producer
thousand production share,
tonnes share, percent percent

Ostankinsky
1 151.0 3.6 3.5
myasokombinat

2 Cherkizovo Group 142.0* 3.4 3.3

3 ABI PRODUCT 117.4 2.8 2.8

4 PRODO Group 105.7 2.5 2.5

JSC Mikoyanovsky
5 79.1 1.9 1.9
myasokombinat

Source: Meat Union of Russia and companies’ data.


*The company claimed its processing capacity increased to 190 000 tonnes before 2012.

The market of processed meat products is not concentrated as


the five major players have 14 percent of the total market share by
volume (see Figure 41).

Figure 41: Share of the top five producers in the total


industrial production of processed meat products
14%

Top five

Others

86%

Source: Meat Union of the Russian Federation and companies’ data.

The leading brands of processed products


In contrast with the milk processing industry, in which international
companies like Danone, Unimilk and Wimm-Bill-Dann (the latter
purchased by PepsiCo) dominate the market, there are no main

75
foreign meat market players in the Russian Federation, with an
exception of the Atria Group, which owns KampoMos and Pit-
Product brands. The information on the top brands in the Russian
meat market and their estimated value is provided in Table 34.

More information on specific meat brands and their short profiles


can be found in Annex 6.

Table 34: Top three brands in the meat processing industry

Sales volume Brand cost Share of consumer


N
(billion RUR) (million USD) preference, percent

OstaNkino (22.5), Mikoyan (86), Mikoyan (24.1),


1 Ostankinsky Mikoyanovsky Mikoyanovsky
myasokombinat myasokombinat* myasokombinat

Dymov (14.1),
Cherkizovsky (12.9), Cherkizovsky (77),
2 Dymov sausage
Cherkizovo Group** Cherkizovo Group
production***

Tsaritsyno (10.5), OstaNkino (49), OstaNkino (12.6),


3 GK Tsaritsyno OAO Ostankinsky Ostankinsky
myasokombinat myasokombinat

Source: Forbes, 2010, Rubrand 2011 and “Favorite brands of Russians” 2011.
* This producer has one more brand: Okhotniy ryad that produces fine-food where
food is handmade using long-standing technologies.
** Fine food has the labels Pyat zvezd and Imperiya vkusa. Economy-class sausage
production has the label Myasnaya guberniya.
*** Fine food labels are Vysokaya kukhnya, Piccolini and Dymov N°1, and the
economy class label is Shchedrino.

Sector consolidation trends


This sections covers the most significant mergers and acquisitions
in the meat sector of the Russian Federation in 2010-2011. Please
refer to a separate section in this report on recent investment
trends in the meat industry by each subsector.

76
Russian Federation - Meat sector review

Meat production
In 2011, the Cherkizovo Group bought 100 percent of the assets
of the Mosselprom agricultural holding. The Mosselprom business
was valued at USD 252.9 million. Due to this deal, Cherkizovo
hopes to increase its market share of domestic producers of
poultry meat. The Cherkizovo Group also acquired the LLC poultry
farm Zarechnaya, located in the Penza Region. The total value of
the transaction amounted to USD 5.2 million.

The Agroholding Komos-Group (Udmurtia) purchased 100 percent


of the shares of Mendeleyev Poultry Farm from the administration
of Perm Region for RUR 76 million. JSC Mendeleev Poultry Farm
produces and markets hatching eggs, DOCs and commercial eggs.
In 2009, the poultry farm produced 130 million eggs.

In May 2010, the largest agro-industrial holding in the Tomsk


Region, JSC Siberian Agricultural Group, bought the Tomsk
Poultry Farm belonging to JSC Sibirskaya guberniya (included
in the Krasnoyarsk agricultural holding ALPI) for RUR 1.5 billion.
Production of broiler meat will increase 1.5 times, up to 30 000
tonnes per year.

In June 2011, JSC Agrocomplex bought the Tbiliskaya Poultry Farm


for RUR 60.5 million. JSC Poultry Breeding Tbilisi is located in the
village Lovlinskaya in the Tbilisi District (Krasnodar Territory). The
company produces and sells eggs and produces meat and crops.
It is also involved in egg incubation and the breeding and sale of
day-old chicks.

In 2011, the JSC GAP Resource acquired JSC Stavropol Broiler for
USD 120 million (estimated) from Interros Group. The production
capacity of the complex is estimated at 45 000 tonnes of broiler
meat per year.

Further growth in the poultry industry will be determined by local


demand and the level of consolidation in the market. According
to Rabobank, the potential for further consolidation in the Russian
poultry industry is significant as compared with the industry’s
potential for growth (see Figure 42). It is assumed that in countries
where domestic market growth potential is low and industry
concentration is high companies will start looking for export
opportunities.

77
Figure 42: Poultry industry production growth and
consolidation rates in selected countries, 2010-2020

China

Thailand

Russian
Federation

Brazil

US

EU

60 50 40 30 20 10 0 10 20 30 40 50 60
percent
Consolidation rate Production growth

Source: Crossroads for Growth: the International Poultry Sector Towards 2020,
Rabobank, 201114.

In the fourth quarter of 2010, the Cherkizovo Group bought from


the NAPCO Group 100 percent of the Penza Grain Company and
the Lipetskmyaso company shares (pig-breeding farms located in
Lipetsk and Penza Districts) for USD 100 million.

JSC Siberian Agricultural Group acquired from LLC Group Sinara a


75 percent stake in JSC Meat concern Kamensk-Ural (Micom). The
same group acquired 100 percent of the pig complex Polevskoye
shares for the purpose of building a vertically integrated agricultural
holding company, LLC Pig Complex Ural in the Urals.

In January 2012, LLC Russian Dairy Company (RUSMOLKO)


and the company Olam International signed an agreement on
a strategic partnership. The main result of their joint efforts will
be investing USD 800 million in the Russian Federation’s dairy
industry over eight years. RUSMOLKO, which, having a sufficiently
large population of cattle, may be one of the largest producers of
beef in the future.

14 https://www.rabobankamerica.com/content/documents/Rabobank_Crossroads_
for_Growth_September2011.pdf.

78
Russian Federation - Meat sector review

Meat processing
The Cherkizovo Group bought the meat processing plant
Otechestvenny Product in the Kaliningrad Region for
USD 4.1 million. The group also absorbed the debt of the acquired
company (USD 1.7 million). The group plans to focus on delicacy
products such as smoked meat, hams, salamis and cooked
sausage products. The plant has high potential owing to its location
in the free economic zone with certain customs preferences.

EGO-Holding gained control (51 percent of shares) of Kornshtadt


meat processing plant (KMPP) for USD 15 million. The business
plans to return KMPP to the first place in the market in the coming
years.

JSC Siberian Agricultural Group acquired 75 percent of the stakes


in JSC Meat concern Kamensk-Ural (Micom) from LLC Group
Sinara in order to vertically integrate it into the agricultural holding
LLC Pig Farm Ural.

The rise of agroholdings


The Russian meat sector is formed by a multitude of companies, the
majority of which are vertically integrated holdings. These holdings
are often parts of larger financial groups that also do business in
other sectors of the economy. The major Russian agroholdings
involved in meat production produce feed grains to make their own
compound feed, raise livestock and poultry, have slaughter and meat
processing facilities and engage in meat marketing.

In 2011, there were more than 250 agroholdings in the Russian


Federation that farmed on 15.5 million hectares of arable
land (there are 113 million hectares in the country). About 40
agroholdings farm on more than 100 000 hectares each15.
The biggest agroholdings operating in the meat sector are Mirtorg
Agroholding, Cherkizovo Group and BEZRK-Belgrankorm.

Miratorg Agroholding
The company began operating in the mid-1990s as a meat
importer. By 2000, it had established a joint venture with Sandia, a
Brazilian company, in meat processing in the Russian Federation.

15 D.Rylko, Director of IKAR “Russian New Agricultural Operators (Agroholdings):


Emergence, Performance, and Impact on the Domestic and World Agriculture and
Agribusiness (https://moel.uni-hohenheim.de/fileadmin/einrichtungen/moel/
Downloads/Rylko_Russian_Agroholdings_Oct_2011.pdf).

79
Following the introduction of the TRQs on meat imports in mid-
2000, the company engaged in domestic pork production. The
company farms about 150 000 hectares16 .

Along with its subsidiaries, the holding is engaged in the


production of grain and compound feed for animals; pork
production; livestock slaughtering and meat processing; production
of ready-to-cook food; and transportation. The company’s products
include cutlets, dumplings, chilled and frozen fish and seafood,
frozen vegetables, lasagna, pizzas, poultry, salami and spring rolls.
It also operates a network of cold storage facilities, as well as
distributes food products to retail chains, processing plants and
the food service sector. The company is based in Moscow with
offices in Saint Petersburg, Kaliningrad, Belgorod, Yekaterinburg
and Rostov-on-Don. Miratorg Agribusiness Holding operates as a
subsidiary of Agromir Limited.

Cherkizovo Group
The Cherkizovo Group is a leading Russian, vertically integrated,
agroholding company with operations spread across the full
production cycle from feed production and breeding to meat
processing and distribution. The holding company was formed in
2005 through a merger of the Cherkizovsky and the Michailovsky
agro-industrial groups.

Cherkizovo Group is a publicly listed company quoted on the


London Stock Exchange (LSE: CHE17 and RTS/MICEX). It is the
largest meat manufacturer in the Russian Federation and one of
the top three companies serving the Russian Federation’s poultry,
pork and meat processing markets.

The company is also the country’s largest producer of fodder. The


group includes:

16 Ibid.
17 http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/
summary/company-summary.html?fourWayKey=US68371H2094USUSDIOBE.

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Russian Federation - Meat sector review

• s even full-cycle poultry production facilities, with a total


capacity of 400 000 tonnes in live weight p.a.;
• 1
4 modern pork production facilities with a total capacity of
180 000 tonnes in live weight p.a.;
• s ix meat processing plants with a total capacity of
190 000 tonnes p.a.;
• six fodder plants with a total capacity of 1.4 million tonnes p.a.;
• g
rain storage facilities with a total storage capacity exceeding
500 000 tonnes;
• a land bank exceeding 100 000 hectares.

In 2012, Cherkizovo’s consolidated revenue exceeded


USD 1.5 billion, and its net profit amounted to USD 225 million.
Within the last five years alone, Cherkizovo has invested more than
USD 1 billion into the development of the Russian Federation’s
agriculture sector.

BEZRK-Belgrankorm
This agroholding is comprised of 18 production units of different
specializations and integrated around feedstuff production since
1987. This integration lowers the production costs of poultry
and pork. Since 1998, when its meat production business line
was launched, BEZRK-Belgrankorm has been developing fast to
become one of the biggest broiler meat producers in the Russian
Federation, employing over 1 000 people. The company produces
high quality compound granular and expanded fodder, as well as
pork, broiler meat and eggs, milk, processed meat products and
pre-prepared foods.

Short profiles of major meat producers in the Russian Federation


are provided in Annex 7.

Key financial indicators of agroholdings and their


benchmarks compared with world producers
Despite a relatively low level of industry consolidation and
various issues faced by Russian meat producers, the key financial
indicators largely compare favorably with those of the global meat
producers and, to a certain extent, look even more favorable in the
future (see Table 35).

81
82
Table 35: Key financial indicators of world meat producers, 2011-2013
EPS P/E EBITDA EV/EBITDA
Net Net Debt/
EV
2011 2012 2013 2012 2013 2012 2013 2012 2013 Debt LTM EBITDA

Tyson Foods, USA 1.89 2.02 2.31 8.9 7.8 7 998 1 833 1 996 4.4 4.0 1 466 0.8

Pilgrim’s Pride 2.13 0.65 0.91 10.6 7.5 3 198 453 539 7.1 5.9 1 432 -8.6

Sanderson Farms, USA -5.47 2.96 4.91 17.3 10.4 1 432 170 235 8.4 6.1 274 -3.0

Brasil Foods, Brazil 1.82 2.14 2.48 15.9 13.7 18 970 1 923 2 272 9.9 8.4 2 808 1.8

Marfrig, Brazil -1.56 0.29 0.40 38.5 28.0 6 827 1.003 1 164 6.8 5.9 4 618 4.8

CP Foods, Thailand 2.38 2.75 3.16 13.5 11.7 10 868 1.045 1 210 10.4 9.0 1 462 2.3

DaChan Food, China 0.19 N/A N/A N/A N/A 231 N/A N/A N/A N/A -139 -0.5

LDC, France 7.05 7.17 7.93 12.0 10.8 992 226 225 4.4 4.4 7 0.0

Cherkizovo, Russia 3.44 2.95 3.12 4.4 4.2 1 499 319 351 4.7 4.3 718 3.0

MHP, Ukraine 2.28 2.31 2.69 5.8 5.0 2 302 426 491 5.4 4.7 802 2.0

Source: Bloomberg, 2012 as reported by Rabobank*.


* Rabobank Poultry Quarterly: Outlook for Global and Regional Markets, April 2012 http://www.rabobank.de/uploads/media/Rabobank_Poultry2012_01.pdf.
Russian Federation - Meat sector review

Recent investments in the meat sector


The Russian meat sector has been recently experiencing an
investment boom thanks to growing demand and state support
programmes. According to our estimates, based on available
information on the ongoing and planned investments in 2009-2014,
it is clear that poultry production has been a leading subsector,
attracting about 44 percent of all investments in the meat sector
(see Table 36). Investments in the poultry sector were mainly
focused on rehabilitation and construction of new plants and
facilities.

Information on poultry investment projects, investors, regions,


declared investment value, anticipated production capacity and
starting year are provided in Annex 8.

Considering the ongoing boom in domestic broiler meat


production, as well as the fact that poultry production facilities
are usually located close to main consumption centers, we built
an investment model to assess profitability of a potential start up
broiler meat production in Far East Russia. Box 5 contains the main
findings of our analysis, and Annex 9 contains information on the
main variables and assumptions and describes their sensitivity to
changes in key variables.

83
Box 5: Investment in broiler meat production in the Russian Federation: low
profitability with high sensitivity to risks

The potential investment considered in this analysis was located in the Far East Russia.
It envisaged construction of a large-scale broiler meat production with a capacity to
produce up to 7.6 million broilers per year. The total investment needs for this project
were assessed at RUR 1.1 billion.

The results of this model showed that with a nine year discounted payback period and a
10 percent p.a. discount rate in Russian roubles (RUR), this investment promises to be
marginally profitable with the following main financial results: positive net present value
(NPV) of RUR 0.5 billion; internal rate of return (IRR) of 15 percent (as compared with
the discount rate of 10 percent used in the calculations).

Although these results show potential profitability, this investment was very sensitive
to changes in the key variables. For instance, the feed costs, which are the major cost
to poultry producers, can be highly volatile in recent years. In our investment model, a
10 percent increase in compound feeds prices from the levels anticipated in the model
(RUR 12.48 per one kilogram of compound feed) changed investment profitability to be
negative.

From this perspective, investment in broiler meat production can be a rather risky
business in the Russian Federation, especially, considering long payback period and
other risks, such as poultry diseases. However, the same is true for broiler meat
producers in other countries as they also face the same constraints and tend to operate
on low margins.

Improved feed conversion rates, on the other hand, would help increase returns on
investment in broiler meat production in the Russian Federation. For instance, the feed
conversion rate assumed in our model was 1.92 kilogram of compound feed per 1 kg
of broiler weight. If the feed conversion rate would be reduced to 1.75 kilogram of feed
– the result already achieved by some companies in Russian Federation – this start up
investment would show the following profitability results: NPV of RUR 0.8 billion; IRR of
18 percent; discounted payback period of 8 years.

Pork and beef were the second and third subsectors, attracting
USD 2.4 billion and USD 1.1 billion of investments respectively
(33 percent and 15 percent of the total of meat sector
investments) according to our estimates (see Table 36).

Construction of new livestock complexes has been a major objective


for national and regional governments. More information on specific
investment projects in this subsector can be found in Annex 10.
According to the Ministry of Agriculture, in 2009-2010 beef cattle
inventories increased by 409 100 heads as Russian farmers built
and modernized 168 facilities for beef cattle production. These
new production sites run over 60 000 heads of cattle. The leaders
in this new subsector were the Republic of Kalmykia, Altay Kray,

84
Russian Federation - Meat sector review

Republic of Bashkortostan and Bryansk Region. Farmers invested


in construction of new barns as well as purchase of beef cattle.

Annex 11 contains short descriptions of the recent investment


projects in the beef sector.

It should be also noted that the recent global economic recession


has forced some agricultural companies to review their ambitious
business expansion plans and put some meat projects on hold. For
instance, the Russian Farms Group postponed the construction
of a RUR 3.5 billion dairy farm in Lipetsk Region; Miratorg
suspended its cattle meat project in Bryanks Region; the Rubezh
Group cancelled the planned expansion of the Myasnye delikatesy
meat processing plant in Saint Petersburg; and Optifood Group
postponed its poultry project in the Rostov Region.

Meat processing
The meat-processing sector was estimated to attract about
USD 537 million in investments, based on the information provided
in Table 37. It should be noted that the information on investments
provided in this table was gathered through open information
sources. Considering the low levels of concentration in the meat
processing industry, it is likely that these estimates of investments
are somewhat underestimated.

85
Table 37: Recent investments in meat processing facilities

Name and brief project Implementing Region Investment, Starting Project at


description company million year full
(holding) USD capacity

166.7 (total
Slaughter and processing Republic
Prodcontract for vertically 3rd quarter
1 plant for beef cattle of 2010
Group integrated 2012
operation Kalmykia
complex)

New meat processing


plant in Gorelovo with a
daily capacity of 90 tonnes Leningrad
2 Atria Group 93.3 2010
of hot dogs, sausages and Region
cooked sausages under
the brand Pit-product.

Construction of a
slaughterhouse for cattle
in Ramonsky District with
a capacity of processing
and cutting 30 heads
of cattle per hour (hph),
expandable to 50 hph.
The project involves Voronezh
3 Zarechnoe 10 (estimate) 2011 2012
creation of the genetic Region
center of Aberdeen
Angus and Hereford and
feedlots for 20 thousand
animals. The total project
cost is RUR 6 billion
(USD 200 million).

Slaughter and prime


processing plant with a
capacity of 22.5 tonnes of LLC GC Agro- Belgorod
4 117 2009 2009
chilled pork meat per day. Belogor’e Region
The company targets the
retail market of Russia.

Commissioning of
slaughter and primary
Belgorod 150-200
5 processing of pork with AIH Miratorg 2009
Region estimate
full capacity of 2 million
heads.

Source: Author/LMC International, based on calculations and estimates.

86
Russian Federation - Meat sector review

Chapter 6 - Meat trade

Imports and exports of meat and meat products


Imports
Imports of meat and edible meat offal decreased from 3.3 million
tonnes in 2007 to 2.4 million tonnes in 2012, or by 27 percent. This
was largely because of a drastic 64 percent decrease in poultry
meat imports. Prior to 2010, poultry meat was the main kind of
meat imported into the Russian Federation. It is now third after
pork and beef. Imports of edible meat offal for further processing
have been quite stable at about 300 000 tonnes per year (see
Figure 43).

The most notable increase was in chilled beef imports, which


responded to growing consumer demand for quality beef cuts.
Imports of chilled beef almost doubled from 21 000 tonnes in
2007 to 41 000 tonnes in 2012 (see Figure 43). Pork imports,
despite a short drop in 2009-2011, increased again in 2012. In 2012,
the Russian Federation imported 7 percent more pork than in
2007. This was largely due to increased imports in July-December
2012 due to lower import tariff protection following the Russian
Federation’s accession to the WTO.

87
Figure 43: Imports of meat and meat products, 2007-2012
3 500 20
21
321
3 000 307
267 12
247
298 20
2 500 41
292 36
256
thousand tonnes

273
2 000 1 218 266 291
1 287 289
948 280
1 500 650 470
404
791
1 000 713 585
624 606 567

500
791 657
672 636 641 720
0
2007 2008 2009 2010 2011 2012

0201 Beef 0207 Poultry (fresh and frozen)


0206 Edible meat offal 0202 Beef (frozen)
0209 Pig/ Poultry fat 0203 Pork (fresh and frozen)

Source: Russian Customs Committee as reported by the Global Trade Atlas.

In value terms, the Russian meat import bill increased from USD 5
billion in 2007 to 7 billion in 2012 (up 38 percent), largely due to
increases in beef import volumes and prices. Beef is the most
important meat in the structure of meat imports. The structure of
meat imports into the Russian Federation in 2012 is provided in
Figure 44.

88
Russian Federation - Meat sector review

Figure 44: Structure of the value and quantity of imported


meat products, 2012
1 0
396
90 219
460
737
80 474
707
70 27
41
60 273
percent

2 407
50 289
40
470
30
20
2 583
10 585

0
Value, Quantity,
million USD thousand tonnes
Beef (frozen) Edible meat offal
Pork (fresh and frozen) Beef (chilled)
Poultry (fresh and frozen) Other kinds of meat
Pig/poultry fat

Source: Russian Customs Committee as reported by the Global Trade Atlas.

The declining trend in poultry imports is due not only to the


reduced quota but also to the restrictions on chlorine content in
meat, which the Russian Federation implemented following the EU
on 1 January 2010. This regulation has effectively restricted imports
from the USA.

There is a pronounced seasonality of meat imports due to the


Russian Federation’s specific consumption patterns: high demand
before the seasonal festivities and low demand during Lent. Import
tariff-rate quota is another factor affecting distribution of imports
throughout the year. Usually the government starts issuing import
licenses for 25 percent of the annual quota volume in mid-January;
therefore, the import shipments arrive in February-March. May and
June see high sales because of summer picnics and barbeques.
And the last months of the year register the biggest imports
as importers rush to use their quotas and build the stocks for
December-February sales.

89
Figure 45: Major importers of meat to the Russian Federation,
2010-2012, average
Beef

16%

Brazil
7% Paraguay
44% Uruguay

7% United States of America

Australia

Others
12%

14%

Pork

17%
23%

Canada

Brazil
24% Germany

United States of America


11%
Denmark

Others
10%

15%

Poultry

6% 2%

5%

United States of America

Brazil
32% 55% Ukraine

France

Argentina

Source: Russian Customs Committee as reported by the Global Trade Atlas.

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Russian Federation - Meat sector review

Annex 12 contains detailed official Russian trade statistics for all


main meat producers by value, quantity of imports and exports,
average product values, main suppliers and monthly trade series.
As can be seen from Figure 45, major exporters of meat to
the Russian Federation are the USA (poultry, pork, beef), Brazil
(poultry, pork, beef), the EU (live pigs, pork, mechanically
separated poultry, beef), Canada (pork, by-products), Australia,
Uruguay and Paraguay (all beef).

The bulk of imported poultry (over 85 percent) goes into retail


and is mainly sold on open markets and in small stores in rural
areas. About 10 percent is further processed, and the rest is
marketed through retail as further processed products. Almost
all imported beef and pork is frozen (beef at 98 percent, pork at
99.5 percent), and most of it (over 80 percent) goes for further
processing. Importers enjoy steady demand for these products
from processors thanks to a consistent quality and lower prices
compared to similar domestic products.

Exports
The Russian Federation doesn’t export any meat except for poultry.
These exports have grown, if on a small scale, in the category
of chicken by-products (feet) that is largely requested by South-
East Asia (mostly Hong Kong). The Russian Federation has also
traditionally supplied its neighbors in the Commonwealth of
Independent States (CIS); however, the quantities of meat exports
to those countries are marginal (see Figure 46).

Figure 46: Meat exports from the Russian Federation,


2007-2012

25

20
thousand tonnes

15

10

0
2007 2008 2009 2010 2011 2012

0207 Poultry meat 0210 Meat & Ed Other meat products


Offal Salted, Dried
Etc. & Flour & Meal

Source: Russian Customs Committee as reported by the Global Trade Atlas.

91
Russian meat is higher priced than the meat from its competitors.
Some minor shipments of meat for ship crews, military bases and
offshore, state-owned production facilities also get recorded in the
official exports statistics.

The National Livestock Development Strategy until 2020 sets the


goal for exporting 400 000 tonnes of poultry and 200 000 tonnes
of pork by 2020. However, it is doubtful these export targets
will be met as domestic meat prices remain well above other
suppliers. Since there is still some room for domestic beef and
pork market growth, these should probably be the primary areas
for addressing domestic competitiveness issues.

However, the Russian Federation still may increase exports of


poultry meat to Central Asia, Caucasus (Armenia and Azerbaijan)
and niche markets in Asia. But the Russian producers will need
to tackle constraints for poultry exports, which include (i) high
production costs, (ii) improved microbiological contamination
indicators (see Box 4 on salmonella prevalence), (iii) absence of
veterinary agreements with the majority of target countries, and
(iv) development of a traceability system.

Exports and imports of processed meat products


The value of further processed meat products imported into the
Russian Federation (salami, ham, sausage and other products
falling under the codes 1601 and 1602 of the Harmonized System
[HS]) increased as compared with 2010, while the Russian
Federation’s exports of the same products to the traditional
markets in the former Soviet Union decreased (see Table 38).
The Russian Federation imports mostly pork-based sausages and
different kinds of hams from the EU.

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Russian Federation - Meat sector review

Table 38: Imports and exports of processed meat products,


2010-2012

Percent
Commodity Million USD
change
(HS Code)
Description Main
and trade
flow 2012/
2010 2011 2012
2011
Spain,
Prepared or
Germany,
1602, Import preserved meat, 119 197 172 44
France,
meat offal
Hungary
Lithuania,
1601, Import Sausages, similar
Spain, Latvia, 27 54 69 157
product meat, etc.
U.S.

Prepared or Turkmenistan,
1602, Export
preserved meat, Azerbaijan, 14 15 15 2
meat offal Georgia

Azerbaijan,
1601, Export Sausages, similar
Armenia, 36 10 10 -73
product meat, etc.
Georgia

Source: Customs Committee of Russia as reported by the Global Trade Atlas.

Impact of bilateral agreements: the Russian Federation


and the Customs Union
Russian bilateral trade agreements with Ukraine and Russian
customs union with Belarus and Kazakhstan have a great impact
on the country’s meat market. The impact can be clearly seen from
the increased imports of poultry meat from Ukraine under the free-
trade agreement; these imports are not constrained by the Russian
meat import TRQ or import duties, shown in Table 53 in Annex 12.

Trade with Belarus and Kazakhstan is rarely seen now in the


official customs statistics. In 2010, pork and beef exports from
Belarus to the Russian Federation increased by 37 and 28 percent
respectively compared to 2005, according to the data reported by
Belarus to UN Comtrade. Poultry trade from the Union partners
boomed with some 38 000 tonnes sold, almost quadrupling in
2010, as a result of Belarus’s expansion towards the Russian
market (see Figure 47).

93
Figure 47: Belarus’s export quantities and average free on
board (FOB) prices of poultry meat to the Russian Federation,
1998-2010

45 000 2.50

40 000

35 000 2.00

30 000

25 000 1.50

USD/kg
tonnes

20 000

15 000 1.00

10 000

5 000 0.50

0
1998 2000 2002 2004 2006 2008 2010

Export quantity Avg price

Source: UN Comtrade.

As can be seen from Figures 48 and 49, within the Customs


Union, Belarus is the biggest supplier of meat to the Russian
Federation, accounting for 94 percent of exports to the Russian
Federation, which absorbs over 99 percent of Belarus’s total meat
exports. Belarus ships mainly beef (64 percent of its meat exports
to the Russian Federation in 2010, on volume), pork (19 percent)
and poultry meat (another 19 percent). Belarus’s meat is price-
competitive thanks to domestic price and trade control measures
and because all exports are conducted through the state trading
companies.

It is not clear to what extent Belarusian exports of meat will


be influenced by the Russian Federation’s WTO accession and
the improved market access for other suppliers. The Belarusian
producers and exporters are generally believed to be supported
by the state. As Belarus, the Russian Federation and Kazakhstan
create the Single Economic Space, they will have to coordinate
domestic support policies as well. This issue has already been
brought up and is believed to be the main reason behind Belarus’s
occasionally “voluntary” restrictions on exports to the Russian
Federation.

94
Russian Federation - Meat sector review

Figure 48: Russian imports of pork from the Customs Union


and Ukraine, 1995-2011

70

60

50
thousand tonnes

40

30

20

10

0
1995 1997 1999 2001 2003 2005 2007 2009 2011

Kazakhstan Belarus Ukraine

Source: UN Comtrade.

The availability of beef for suppliers to the Russian Federation from


Ukraine and Kazakhstan is low. Therefore, Belarus will likely remain
the only sizable beef supplier with which the Russian Federation
has a free-trade agreement (see Figure 49).

Figure 49: Russian imports of beef from the Customs Union


and Ukraine, 1995-2011
250

200
thousand tonnes

150

100

50

0
1995 1997 1999 2001 2003 2005 2007 2009 2011

Kazakhstan Belarus Ukraine

Source: UN Comtrade.

95
Chapter 7 - Meat prices

Poultry, pork and cattle prices in 2005-2010 were on a rise in the


Russian Federation. The average annual growth of prices for cattle
and poultry18 in live weight was as follows (see also Figure 50):

• poultry: 30 percent;
• swine: 38 percent;
• cattle: 64.5 percent.

Prices for cattle grew much faster than prices for pigs, which is
explained by the gradual reduction of livestock inventories for
slaughter.

Figure 50: Annual average poultry, pork and cattle live weight
prices, 2005-2010

75 000

69 263.4 69 748.3
70 000

65 000
60 988.3
RUR/tonne (excl. VAT)

60 000
55 950.5
54 371.4
55 000
51 821.0
50 420.4 49 050.6 54 229.5 52 966.3
50 000
45 641.0
45 000 43349.7
40 813.4 39 821.9 45 074.8
40 000
41 762.2
39 235.4
35 000
34 003.1
30 000
2005 2006 2007 2008 2009 2010
Poultry and other farming birds Swine Cattle

Source: FSSS of Russian Federation.

18 For all fatness classes.

96
Russian Federation - Meat sector review

The prices for cattle in live weight and slaughter weight are closely
correlated considering typical slaughter yields from the live weight
basis (0.75 for poultry, 0.6 for pork and 0.45 for beef).

Prices for cattle differ greatly depending on the region and


category of meat. For instance, the average price for first category
hogs in live weight as of December 2010 in the Central Federal
District was 72.1 RUR/kg (excl. VAT) as compared with 134.4 RUR/
kg (excl. VAT) in the Far Eastern Federal District.

The average annual prices for meat and meat products also had a
clear upward tendency, reflecting increasing incomes and producer
and consumer prices in the Russian Federation19. In 2005-2010,
annual meat prices increased as follows:

• 5.5 percent for poultry meat;


• 8 percent for pork;
• 13 percent for beef;
• 4.4 percent for edible subproducts (livers, etc);
• 14.5 percent for cooked sausage products;
• 13 percent for further processed meat products;
• 9 percent for canned meat products.

The trend of increasing prices of meat products is shown in


Figure 51.

19 As per FSSS of Russian Federation, the average inflation level amounted to 10.5
percent for 2005-2006.

97
Figure 51: Prices for raw and processed meat products, annual
average, 2005-2010

141 128.7
14 000
127 502.1

12 000
115 673.7
RUR/tonne (excl. VAT)

10 000

82 345.1 84 363.5
81 896.5
8 000
77 008.9 71 333.1
70 865.3
58 371.7
6 000
55 683.6
51 283.0
38 662.4
4 000

27 081.5
2 000
2005 2006 2007 2008 2009 2010

Sausage and cooked meat Poultry


Pork Semi-prepared foods from meat pork
Beef Meat cans (thousand pcs)
Animal slaughter sub-products

Source: FSSS of Russian Federation.

The increase of prices for sausage products is closely correlated


with the trend of higher consumption of more expensive sausage
products as a result of growing incomes. Canned meat has
traditionally been a low-end segment as it is made of the less
valuable parts of animal carcasses like the trimmings. Therefore,
the price increase of canned meats is less pronounced compared
with that of precooked meat and sausage products.

In general, the price dynamics are consistent with the inflation rate
or they slightly exceed it, with the exception of poultry and edible
by-products. The average annual price increase for such products
remains below the average inflation rate due to a relatively higher
supply.

98
Russian Federation - Meat sector review

Chapter 8 - Policy

Agricultural policy goals


The agricultural policy of the Russian Federation is an integral
part of the state’s socio-economic policy 20. The policy is aimed at
sustainable development of agriculture and rural areas. The main
objectives of the agrarian policy are:

• increasing competitiveness of Russian agriculture and


agricultural producers and improving quality of food products;
• ensuring the sustainable development of rural areas and
employment and improving living standards in rural areas;
• preservation and reproduction of natural resources used in
agricultural production;
• creation of a well-functioning market for agricultural products,
raw materials and food and increasing profitability of
agricultural producers;
• creation of a favourable investment climate and increasing
investment in agriculture; and
• maintaining price parity between agricultural products and
industrial inputs used in agriculture.

The agricultural support system in the Russian Federation has


been driven by a progressive orientation of policies towards
import substitution and achievements of self-sufficiency. In order
to implement national agricultural policy goals, the government
has developed sector and subsector development programmes,
such as the State Programme for the Development of Agriculture
and Markets of Agricultural Products, Raw Materials and Food for
2008-201221 or 2013-202022. The livestock and poultry sectors are
integral parts of these agricultural development programmes.

The agricultural policy objectives have been pursued at relatively


high costs to Russian taxpayers and consumers as the majority of
support is provided through market price, variable input use and

20 The Federal Law on Agricultural Development: http://base.consultant.ru/cons/cgi/


online.cgi?req=doc;base=LAW;n=126592 in Russian.
21 http://www.mcx.ru/documents/document/v7_show/1348.145.htm in Russian.
22 http://www.mcx.ru/navigation/docfeeder/show/342.htm in Russian.

99
fixed capital formation in agriculture (investment subsidies and
interest rates)23, which are amongst the most distorting measures.

According to the OECD data the PSE – which measures the annual
monetary transfers from consumers and taxpayers to farmers
arising from policy measures that support agriculture (regardless
of their nature, objective and impact) – amounted to around half of
a trillion RUR, on average 22 percent from RUR 2.1 trillion of the
total value of agricultural production in the Russian Federation in
2008-2010. Within the PSE, transfers to producers of poultry and
livestock totaled about RUR 227 billion per year on average (2008-
2010), which comprises 44 percent of all transfers to all farmers
measured by OECD24 through the PSE.

Livestock and poultry in the context of agricultural


support polices and measures
The indicators of the MPS are key to assessing support levels
enjoyed by producers. In 2008-2010, about 65 percent of all
transfers to Russian farmers were because domestic agricultural
prices were higher than comparable world reference prices at a
farm-gate level.

The specific composition of the MPS for key agricultural


commodities in 2008-2010 is illustrated in Figure 52. The negative
price support of wheat, maize, sunflower seed and other grains
indicates that producers of these commodities are “taxes” in the
Russian Federation because of their low domestic prices. Because
domestic prices for beef, pork and poultry meat are much higher
as compared with international reference prices, poultry and
livestock farmers receive significant transfers from consumers
(who have to pay more for domestic products).

Beef and veal, pork and poultry meat account for 9 percent,
20 percent and 15 percent (44 percent in total) of all transfers
measured by the PSE. Therefore, the meat sector is the most

23 Please refer to OECD Producer Support Estimate Manual (http://www.oecd.org/


tad/agricultural-policies/psemanual.htm) for specific definitions and classifications
of support programmes.
24 OECD PSE Database for the Russian Federation Producer and Consumer
Support Estimates database http://www.oecd.org/agriculture/agricultural-policies/
producerandconsumersupportestimatesdatabase.htm#country.

100
Russian Federation - Meat sector review

significant beneficiary of the state support policy in the Russian


Federation’s agriculture sector.

Figure 52: Market price support of specific products in the


Russian Federation, 2008-2010, average annual

120 25
98 102
100
20
80 75
67
60
RUR billion

15

percent
44
40
10
s
in

20
er
ra

12
w

8
g

lo
at

ze

er

nf
he

0
ai

th

Su
M

0
W

5
r

es
gs
t
ilk
ga

iti er
al

ea
ea

es
to
ve

od th
Eg
M
Su

-11
gm

-20

ta

m O
d

-16
try

Po
Pi
an

ul

-24 -27
ef

Po

m
Be

-40 0
co
MPS (left axis) Share in total PSE all transfers (right axis)

Source: Authors’ presentation based on the OECD PSE Database.

The government support policies have placed importance on


stimulating growth of livestock production through border
protection measures (both tariff and non-tariff) to support domestic
prices and investments in fixed capital and new farms (via interest-
rate subsidies and grants). Livestock producers also benefit from
domestic grain prices that are lower than international ones.

Competitiveness with imports


The MPS indicators reflect the gap between domestic and
international import parity prices; therefore, they act as indicators
of domestic products’ competitiveness with imported products of
comparable quality under the conditions of no import protection (like
import duties, sanitary and phytosanitary measures [SPS], etc.).

The improvement of the domestic industry’s competitiveness is


one of the major goals of the Russian Federation’s agricultural
policy. In order to illustrate trends in competitiveness of domestic
products, we calculated the MPS per 1 tonne of poultry, pork and
beef using information provided by the OECD (see Figure 53).

101
Improving competitiveness between domestic products and
imports means reducing the gap between domestic and import
parity prices to zero (MPS =0). However, it is evident from Figure
53 that the gap between domestic and international prices only
increased, from USD 470-900 per 1 tonne for various meats in
2001 to USD 900-1 200 in 2010. In fact, domestic beef was more
competitive with imports than poultry and pork was, as beef had
a lower MPS. It is clear that the protectionists’ policies have not
improved competitiveness of the domestic industry so far.

Figure 53: Market price support for meat in the Russian


Federation, 2001-2010

2 500

2 000
USD/tonne

1 500

1 000

500

0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Poultry Pork Beef and veal

Source: Author’s calculations based on the OECD PSE Database.

Specific budgetary support programmes


At the end of 2011, the Russian Federation implemented the
following major federal programmes for the development of
livestock production and meat processing:

102
Russian Federation - Meat sector review

• S
tate Programme for the Development of Agriculture and
Markets of Agricultural Products, Raw Materials and Food for
2008-2012;
• s ector-targeted programme: Development of pork in the
Russian Federation for 2010-2012;
• s ector-targeted programme: Development of beef cattle in the
Russian Federation 2009-2012;
• sector-targeted programme: Development of the poultry
industry in the Russian Federation for 2010-2012 and the period
up to 2018-2020;
• s ector-targeted programme: Development of the primary
processing of livestock in 2010-2012.

Government support measures contribute to the development of


the livestock industry by subsidizing interest rates on short-term
investment credits and supporting livestock breeding and various
regional programmes. State subsidies for livestock production
from the federal budget amounted to RUR 22.8 billion in 2011
and another RUR 27 billion for the dairy sector, which is closely
linked to the beef market. More than 3 000 projects were already
accomplished in the meat and dairy industries under these
programmes.

Subsidized loans and interest rate subsidies


Following the State policy of reconstruction and development of
the Russian Federation’s agricultural complex infrastructure, OJSC
Russian Agricultural Bank and OJSC Sberbank of Russia began
to provide long-term (up to ten years) loans for investments in
agricultural projects, including livestock farming. Interest payments
on loans may be deferred for up to 36 months.

In 2010, compensation of interest rates to agricultural producers


was administered by the Resolution of the Russian Federation
Government of 4 February 2009 N90. Agricultural producers were
entitled to reimbursement of interest on investment loans and
loans to replenish working capital; reimbursements were received
in Russian banks in the form of subsidies from the budget. This
resolution covered loans for construction, reconstruction and
modernization of cattle-breeding complexes and farms, livestock
and feed production facilities, slaughterhouses and cold stores.

In 2010, the Federal budget compensated RUR 62.8 billion in


interest rates, of which RUR 45.1 billion were subsidies on
investment loans and RUR 17.7 billion were short-term credits.

103
In 2010, the Government of the Russian Federation continued
implementing the package of anticrisis measures in the agricultural
sector:

• c ompensation from the federal budget on investments and


short-term loans remained at 80 percent of the refinancing rate
of the Russian Central Bank, and compensations from regional
budgets remained at up to 20 percent;
• c ompensation of the 100 percent refinancing rate of the
Central Bank was guaranteed to agricultural producers engaged
in the production of cattle meat and milk and for short-term
and investment loans aimed at construction, reconstruction
and modernization of livestock complexes and farms, cattle
receiving points and/or primary processing of farm animals and
milk;
• s ubsidies on loans for refinancing previously made investments
were kept in full.

The Interagency Commission for the coordination of crediting


issues of the agro-industrial complex held 13 meetings and
selected 748 subsidized investment projects with the total amount
of credit of RUR 197.3 billion in 2010 (see Table 39), a 40 percent
increase as compared with the RUR 112.7 billion that were
approved in 2009.

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Russian Federation - Meat sector review

Table 39: List of investment projects in agriculture selected for


subsidies, 2010

Subsidies
Loans from the
Number of
Description amount, federal
projects
billion RUR budget,
billion RUR

Construction,
reconstruction and
modernization of livestock 492 154.81 2.36
facilities, including poultry
farms (with breeder farms)

Construction,
reconstruction and
modernization of facilities 105 25.99 0.34
for primary processing and
grain storage

Construction,
reconstruction and
modernization of facilities 43 7.75 0.18
for primary processing of
meat and milk

Construction,
reconstruction and
29 4.52 0.13
modernization of sugar
mills

Other 79 4.23 0.07

Total 748 197.3 3.08

Source: National report “On the progress and results of implementation in 2010
of the State programme of agricultural development and regulation of markets for
agricultural products, raw materials and food in 2008-2012”.

The Ministry of Agriculture, together with the administrations of


the Russian regions, selected 57 new investment projects in 2010
for beef cattle breeding with the total amount of requested loans
valued at RUR 31.4 billion (USD 1.05 billion):

105
• V
 neshEconombank signed loan agreements for at least one
investment project – Bryansk Meat Company – for RUR 20.4
billion (USD 680 million);
• O
AO Rosselkhosbank signed loan agreements for 35
investment projects totaling RUR 4.53 billion (USD 151 million);
• S
berbank of Russia signed loan agreements for 14 investment
projects totaling RUR 596 million (USD 20 million).

Along with the strict requirements of the value of the collateral


and turnover, the borrowers are facing other difficulties such
as bureaucratic barriers and the requirement of extensive
documentation to obtain a loan.

Subsidized leasing
The government of the Russian Federation established the state
company OJSC RosAgroLeasing in 2001 to provide domestic
agricultural producers with modern agricultural technology, high-
tech equipment and highly productive breeding cattle. The new
national system of agrarian financial leasing started functioning in
2002. RosAgroLeasing offers its clients the following services:

• extended loan repayment period of up to 10-15 years vs. 7-8


years of maximum bank loans;
• opportunity to purchase modern equipment with minimal down
payment (up to 7 percent vs. 20-30 percent for bank credit);
• flexible scheduling of lease payments considering seasonal
fluctuations or other peculiarities of a lessee’s business activity.

Direct subsidies to support the production and breeding of


livestock
Besides subsidizing interests rates, the government provides
support from regional and federal budgets to agricultural
producers by means of direct subsidies to develop pedigree
livestock breeding (for purchased breeding stock, maintenance of
breeding livestock, etc.). Table 40 provides an example of specific
programmes in the Voronezh Region of the Russian Federation.

106
Russian Federation - Meat sector review

Table 40: Types and rates of subsidy for beef cattle in the
Voronezh Region

Item Trade line Size (subsidiary rate) Base

1 From the federal budget

Development of beef cattle


1.1
production
For purchase of pedigree cattle about 12 thousand
1.1.1
of specialized beef breeds RUR/head

For establishing rearing farms


of beef purebred and cross-bred 21 RUR/kg of the live Ministry of Agriculture Order
1.1.2 of 6 October 2008 N494
cattle to the live weight of 450 weight
kg within two years

For maintenance of breeding


3 000 RUR/head per
1.1.3 stock at farms with Cow-Calf
year
system

Reimbursement of interest rates 80 percent of the CBR Russian Government Decree


1.2
for loans refinancing rate from 4 February 2009 N 90

2 From the regional budgets

Development of beef cattle


2.1
production
For the purchase of pedigree 65 RUR/kg of the live
2.1.1
cattle of specialized beef breeds weight
bull semen at
For purchases of genetic a 50 RUR/dose
2.1.2 Sector-targeted programme:
material and embryos at
6 000 RUR/pcs. Development of beef cattle
in the Voronezh Region for
For acquiring equipment for feed
2012-2013
preparation and distribution, 20 percent of cost
2.1.3
generators for autonomous (VAT excluded)
power supply, electric fences

For the increase of breeding


2.1.4 stock at farms with Cow-Calf 4 000 RUR/head/year
system

Russian Federation
Government Decree from
Reimbursement of interest rates 20 percent of CBR 4 February 2009 N 90 (in
2.2
for loans refinancing rate the Russian Federation
Government Decree edition
from 31.12.2009 N 1198)

Source: Ministry of Agriculture Order of 6 October 2008 N494; Russian Government


Decree from 4 February 2009 N 90; Sector-targeted programme: Development of
beef cattle in the Voronezh Region for 2012-2013; Russian Federation Government
Decree from 4 February 2009 N 90 (in the Russian Federation Government Decree
edition from 31.12.2009 N 1198).

107
Under the programme Development of Beef Cattle in Russia
2009-2012, the State co-financed 22 regional programmes in 2009-
2010 and allocated RUR 6.67 billion (USD 222 million), including
RUR 4.59 billion (USD 153 million) from the federal budget and
RUR 2.1 billion (USD 7 million) from the regional budgets. Most of
the federal budget has been allocated to regions with traditional
beef cattle breeding: Republic of Kalmykia (RUR 910 million),
Krasnodar Kray (RUR 427 million), Republic of Bashkortostan
(RUR 426 million) and Saratov Oblast (RUR 374 million.

Subsidized feed
Some domestic poultry producers find it difficult to maintain
profitable operations at the times of high grain and feed prices.
They indicate that higher grain prices translate into an increase
in production costs of about RUR 10 per kilogram of meat. In
December 2010, Russian poultry producers appealed to the
Russian Government (GOR) requesting subsidies for domestic
poultry producers to be included in the 2011 budget. The funds
were to be used to reimburse the poultry industry for feed costs
in the first half of the year at the amount of about RUR 5 per
kilogram of poultry meat (in live weight). The industry claimed that
without direct subsidies the prices of poultry meat would increase,
customers would decrease poultry consumption, poultry farms
would reduce production and some of them might go bankrupt by
the summer of 2011.

To address the issue of higher feed prices, the GOR sold grain
from the state intervention fund. Interventions started in February
2011 and resulted in a price decrease from the initial level of
RUR 8 800 per tonne of barley to approximately RUR 6 150 per
tonne. As an additional measure of support, the GOR also lowered
the freight rates for the transportation of grain and soybeans.

In 2011, the GOR also responded to the requests of the National


Union of Swine Breeders and the Russian Poultry Union to provide
RUR 9 billion to the pork and poultry industries in order to offset the
losses caused by high feed prices as a result of the drought in 2010.

Trade measures
Tariff-rate quota
In 2003, the Russian Federation introduced a restrictive quota
to control imports of beef, pork and poultry. The annual quota
for poultry was set at 1.05 million tonnes, and the TRQs for beef

108
Russian Federation - Meat sector review

and pork at around 0.45 million tonnes. The restrictive quota on


poultry was then converted in 2006 to a TRQ. In January 2009, the
TRQs for pork and poultry were lowered further, and the out-of-
quota tariffs were raised, from 60 to 75 percent and from 80 to 95
percent, respectively.

Figure 54: Volume of tariff quotas for meat commodity groups,


2004-2010

1 400
1 211.6 1 252
1 200 1 171.2
1 130.8
1 050 1 050
1 000
thousand tonnes

800 780

600 493.5 502.2


467.4 476.1 484.8 560
450
400 457.5 468.3 473.9 473.5
447.5 462.78
200

0
2004 2005 2006 2007 2008 2009 2010

Cattle meat, fresh, chilled or frozen (commodity item 0201-0202 of the Russian FEACN)
Pork meat, fresh, chilled or frozen
Poultry meat and giblets, fresh, chilled or frozen (commodity item 0105)

Source: Meatinfo.

The introduction of the quota system was a protective measure


to limit imports and allow for production growth of the domestic
meat industry. Import limitations have helped local producers
gain domestic market shares and increase their margins. A good
example of this is that the biggest importers of meat turned into
major investors in the Russian meat sector: Miratorg, Agroimport,
Optifood, White Frigate, Rubezh and Global Trading, among others.

However, the introduction of quotas seems to have had some


negative effects on the domestic meat market and its production:

• market distortion and a negative impact on competitiveness;


• l ack of competition with higher quality imported meat products
did not stimulate quality enhancement programmes;
• l imited supply caused higher prices and reduced affordability of
meat products for Russian consumers with low incomes.

109
Table 41 describes the volume of tariff-rate quotas for 2012
established by the Decree of the Government of the Russian
Federation of 29 December 2011, number 1194, On distribution of
tariff quotas for beef, pork and poultry meat in 2012.

Table 41: Volume of tariff-rate quotas, 2012

Quota
volume, In quota Above
Product name
thousand tariff quota tariff
tonnes

Fresh or frozen bovine meat (CU HS code


1 30
0201) - total
15% 50%
Including: but not less but not less
than 0.2 EUR than 1.0 EUR
European Union 29 per kilo per kilo

Other countries 1
Frozen bovine meat (CU HS code 0202)
2 530
– total
Including:

European Union 60 15% 50%


but not less but not less
than 0.2 EUR than 0.2 EUR
United States 60 per kilo per kilo
Costa Rica 3

Other countries 407

Fresh, chilled or frozen pork (CU HS code


3 15% 75%
0203) – all countries
but not less but not less
than 0.25 than 1.5 EUR
Pork trimming (CU HS codes 0203 29 550 EUR per kilo per kilo
4 400
2 and 0203 29 900 2)* – all countries

Frozen bone-in chicken halves or quarters,


(CU HS code 0207 14 200 1) frozen bone-
5 in chicken legs and their cuts (CU HS code 250
0207 14 600 1) – all countries
Frozen boneless chicken meat (CU HS 25% 80%
6 code 0207 14 100 1) – total, including: 70 but not less but not less
than 0.2 EUR than 0.7 EUR
European Union 56 per kilo per kilo
Other countries 14

7 Frozen boneless turkey meat (CU HS code 10


0207 27 100 1) – all countries

Source: Custom Union Commission, 2011.


* Pork trimming can be imported using both pork trimming quotas and frozen pork
meat quotas.

110
Russian Federation - Meat sector review

Comparison of protection of poultry, pork and beef


producers between the Russian Federation and other
countries
The levels of domestic market protection (through a variety of
policy measures, including SPS measures) can be described by
the Producer Nominal Protection Coefficient (NPC). As measured
by the OECD, protection of poultry, pork and beef farmers in the
Russian Federation from import competition in 1995-2010 was
often higher than in other meat producing countries (see Figure 55,
Figure 56, Figure 57). This was largely a result of the protectionist
import-substitution policies.

The level of protection of Russian poultry producers in recent years


was comparable to that in the EU and Ukraine; however, it was far
above protection of poultry producers in the USA, Brazil and China
(see Figure 55).

Figure 55: Poultry: NPC in selected countries, 1995-2010

2.5

1.5

0.5

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Russian Brazil Ukraine China USA EU


Federation

Source: OECD.

Pork producers have enjoyed the highest levels of protection


among all types of meat. In 2010, Russian pork producers received
pork prices at the farm-gate level that were two times higher
than the international import parity prices excluding import tariffs.
Among the countries shown in Figure 56 only Ukraine had a
slightly higher level of protection of domestic producers than that
of the Russian Federation.

111
Figure 56: Pork NPC in selected countries,1995-2010

2.50

2.00

1.50

1.00

0.50

0.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Russian Brazil Ukraine China USA EU


Federation

Source: OECD.

As for beef, it is clearly seen in Figure 57 that while the EU-27


has progressively lowered import protection of its beef producers
since 2001, the level of protection has remained fairly unchanged
in the Russian Federation in 2005-2010. By 2010, the level of
protection of beef producers in the Russian Federation exceeded
that in the EU, USA, Brazil, China and Ukraine.

Figure 57: Beef NPC in selected countries,1995-2010

2.50

2.00

1.50

1.00

0.50

0.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Russian China Brazil Ukraine USA EU


Federation

Source: OECD.

112
Russian Federation - Meat sector review

Comparison of support to poultry, pork and beef


producers between the Russian Federation and other
countries
The levels of support received by producers of specific
commodities can be described by the percentage producer
single commodity transfers (percent SCT), which represents the
commodity transfers to producers from consumers and taxpayers
as a share of gross receipts received by farmers for that specific
commodity. It is also an indicator of the level of support on which
a specific commodity is dependent. As measured by the producer
single commodity transfers (SCT)25, the government support to the
meat sector in the Russian Federation has been particularly high
as indicated in Figure 58, Figure 59 and Figure 60. In 2009-2010,
Russian poultry meat producers received about 40 percent of
poultry meat prices in transfers from producers (who paid higher
prices than they would have paid for comparable quality imported
poultry meat) and taxpayers (who provided funding for government
support programmes). Producers in the USA and Brazil received no
transfers (see Figure 58).

Figure 58: Poultry, percentage SCT in selected countries,


2001-2010
80
60

50

40

30

20

10

0
Russian China Brazil Ukraine USA EU
-10 Federation

2001-02 2005-06 2009-10

Source: OECD.

25 Producer SCT is the monetary value of gross transfers from consumers and tax
payers to agricultural producers measured at the farm gate level and arising from
specific policies linked to the production of a single commodity. The Percentage
Producer Single Commodity Transfers (percent SCT) represents the commodity
SCT transfers as a share of gross receipts for the specific commodity.
It indicates the level of support for a specific commodity that is dependent on the
actual production of that commodity.

113
A similar situation is observed with the transfers to pork producers
in the Russian Federation as compared with other countries. In
2009-2010, only Ukraine provided a higher level of support from
its consumers and taxpayers than the Russian Federation. Since
2001, the EU-27 gradually reduced its support to pork producers
to the levels that only slightly exceed the SCT to pork producers in
the USA (see Figure 59).

Figure 59: Pork, percentage SCT in selected countries,


2001-2010

80

60

50

40

30

20

10

0
Russian China Brazil Ukraine USA EU
-10 Federation

2001-02 2005-06 2009-10

Source: OECD.

Beef producers in the Russian Federation received about


30 percent of the beef price in transfers from consumers and
taxpayers in 2009-2010. Only the EU provided similar levels of
support to its beef farmers in 2009-2010; however, since 2001
there has been a clear tendency for reduced support to beef
farmers in the EU (see Figure 60).

114
Russian Federation - Meat sector review

Figure 60: Beef, percentage SCT in selected countries,


2001-2010

80

70

60

50

40

30

20

10

0
Russian
-10 Federation China Brazil Ukraine USA EU

2001-02 2005-06 2009-10

Source: OECD.

Impact of policies on industry development and risks


Russian Federation’s WTO accession
On 16 December 2011, after 17 years of negotiations, the Russian
Federation signed a WTO accession protocol.
On 22 August 2012, the WTO welcomed the Russian Federation as
its 156th member.

As a part of the accession package, the Russian Federation fixed


the level of its Aggregate Measurement of Support to USD 9 billion
in 2012 and 2013, which was believed to be two times higher than
the level of agricultural support immediately prior to the accession,
USD 4.5 billion per year. However, the Russian Federation will have
to decline to Final Bound Total AMS (Aggregate Measurement of
Support) of USD 4.4 billion by 2018.

Market access
The Russian Federation agreed to reduce the average rate of
import duties on agricultural products from 15.1 percent to 11.2
percent. Its WTO commitments regarding agricultural trade
resulted mainly from bilateral negotiations with the USA, the EU
and members of the Cairns Group of agriculture exporters.

115
According to the WTO26, the Russian Federation agreed to reduce
and bind its tariffs on:

• dairy products: to 14.9 percent from 19.8 percent;


• cereals: to 10.0 percent from 15.1 percent;
• oilseeds, fats, and oils: to 7.1 percent from 9.0 percent.

See Table 42 for imports within tariff-rate quotas of beef, pork (until
2020) and poultry.

Table 42: Comparison of the import duties rates, currently


existing in the WTO

Current tariff rate for in- Tariff rate for in-quota


quota imports percent imports after WTO
Commodity
(no less than .xx Euro accession (no less than
per kg) .xx Euro per kg / flat tariff
option)

Cattle 15 (.50)44 15 (.55-27.5)

Pork 15 (.75) 0 (.65-25)

Poultry 25 (.95) 25 (.80-37.5)

Live pigs 40 5

Source: Agroinvestor according to the Ministry of Economic Development and the


Report of the working group on Russian Federation’s accession to the WTO.

Following WTO accession, the Russian Federation started to


implement its commitments, particularly those regarding meat
import TRQs. For instance, the volumes for 2013’s TRQs were
adjusted to meet the Russian Federation’s WTO commitments as
follows:

• p
rovided additional in-quota market access for fresh and chilled
beef (from 33 330 tonnes in 2012 to 40 000 tonnes in 2013);
• p
rovided additional in-quota market access for poultry (from
341 330 tonnes in 2012 to 364 000 tonnes in 2013).

Country-specific TRQ allocations were made for Russian frozen


beef imports (the EU [60 000 tonnes], the USA [60 000 tonnes],

26 http://www.wto.org/english/thewto_e/minist_e/min11_e/brief_russia_e.htm.

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Russian Federation - Meat sector review

Costa Rica [3 000 tonnes] and other WTO member states [407 000
tonnes]), Russian fresh and chilled beef imports (i.e. the EU
[29 000 tonnes] and other WTO member states [11 000 tonnes])
and Russian frozen de-boned chicken imports (i.e. the EU [80 000
tonnes] and other WTO member states [20 000 tonnes]).

Sanitary measures
Russian restrictions on imports of agricultural products, particularly
meats, have been a sensitive issue in trade relations with the USA,
the EU, Brazil, and other agriculture-exporting countries. As a WTO
member, the Russian Federation will be obligated to adhere to the
provisions of the WTO Sanitary and Phytosanitary Measures (SPS)
Agreement when imposing measures to protect human, animal, or
plant life or health.

The Russian Federation has a practice of using rigid SPS


requirements for imported animal and plant products. The
country has required that imported meats be shipped only from
facilities that are on a Russian government-approved list for
meeting Russian safety requirements. For many exporters, these
requirements have adversely affected exports of meats, especially
poultry, pork, dairy products, grains and oilseeds. Many agriculture-
exporting countries have argued that the Russian Federation’s SPS
requirements do not conform to international standards and are
not based on accepted science as required under the WTO SPS
Agreement.

As a result of bilateral accession negotiations with the USA, the


EU and members of the Cairns Group, as well as with the WTO
Working Party, the Russian Federation has committed to:

• d
eveloping and applying international standards to SPS through
membership in the Codex Alimentarius, the World Organisation
for Animal Health (OIE) and the International Plant Protection
Convention;
• n
egotiating veterinary export certificates that include
requirements different from those of the Customs Union if an

117
exporting country makes a substantiated request to negotiate
such a certificate prior to 1 January 2013;
• r efraining from suspending imports from establishments based
on results of onsite inspections before giving the exporting
country the opportunity to propose corrective measures27.

Implications for agriculture


According to the Ministry of Agriculture, the negotiated terms for
agriculture are among the best compared with other countries,
and their main task is to increase competitiveness of Russian
agriculture using the following negotiated favourable terms:

• T
he level of state support is allowed to increase to USD nine
billion (for two years); that is a more than 50 percent increase
from the planned RUR 170 billion (USD 5.6 billion) in 2012.
• T
he state support shall be better structured by a shifting
between “boxes”. While USD nine billion is the limit for
measures in the “amber” box, there are no limits for state
support within the “green” box, such as house construction,
roads, infrastructure, subsidies for science, education, training,
irrigation and land reclamation.
• S
upport of pork processing will be allocated RUR 6 billion in
subsidies annually within three years as an adjustment to lower
import protection.
• T
he State Programme 2013-2020 drafted by the Ministry
envisages all measures of support allowed by WTO:
infrastructure development programmes, social development
of rural territories, irrigation and land reclamation.

Moreover, together with associations and industries’ unions,


the Ministry of Agriculture is developing a number of mitigation
measures necessary for adapting Russian Federation agriculture to
WTO requirements. In particular:

27 World Trade Organization: Working Party Seals the Deal on Russia’s Membership
Negotiations, 10 November 2011, http://www.wto.org/english/news_e/news11_e/
acc_rus_10nov11_e.htm.

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Russian Federation - Meat sector review

• p
roposals for the extension of tax concessions for agricultural
producers (tax on profit);
• e
xtensions to release agricultural producers from paying VAT on
imported breeding animals, embryos and semen until 2020;
• m
easures to strengthen the functions and powers of the
Ministry and the Federal Veterinary and Phytosanitary
Surveillance Service (VPSS);
• a dditional authority for the Ministry of Agriculture and VPSS
to increase their staff as a result of the need to adapt to the
conditions of the WTO;
• c hanges to the federal law “On Agriculture”, suggested by the
Ministry, to determine the criteria of regions with unfavourable
conditions for agriculture. Support of these regions will be
treated as a “green box” measure, which means that support
to farmers in these regions will not be subject to restrictions.

Possible sector-specific implications


The WTO accession will not significantly affect the Russian poultry
meat producers due to the TRQ and the already significant, current
share of domestic producers of the total poultry meat supply.
Selected poultry products will be subject to 25 percent within the
TRQ and (a fairly high) 80 percent outside the TRQ. Therefore, in
the next decade the Russian poultry market will likely see more
competition between domestic producers, rather than between
imports and Russian products.

For pork, the Russian Federation has agreed to a global TRQ of


400 000 tonnes for fresh, chilled and frozen pork and a separate
TRQ of 30 000 tonnes for pork trimmings. Both TRQs will have
zero in-quota rates. Beginning 1 January 2020, the Russian
Federation will adopt a tariff-only regime for pork with a bound
duty of 25 percent, and it will apply this duty to all imports,
including from countries exporting under its tariff preference
programme. Therefore, pork producers will most likely face the
most serious challenges after WTO accession.

It is not clear if the beef sector will be effectively protected from


import competition by the 530 000 tonnes TRQ with 15 percent
within TRQ tariff and 55 percent outside the TRQ tariff. Future
developments will depend on the domestic demand for within-
quota fresh and chilled beef.

119
Annex 1 - Distribution of poultry, swine
and cattle inventories by region and type
of farm in 2010

Poultry
Table 43: Number and structure of poultry inventories by
region, 2010
All types of Household Individual
Ag enterprise
farms farms farms
Russian
471 013.7 369 709.6 5 522.5 95 781.6
Federation
Central Federal
136 541.6 115 366.1 373.8 20 801.6
District

Belgorod Region 47 646.4 45 294.7 18.9 2 332.8

Bryansk Region 6 609.0 5 142.0 6.9 1 460.1

Vladimir Region 3 622.0 3 290.0 25.4 306.5

Voronezh Region 14 019.1 8 608.2 36.2 5 374.7

Ivanovo Region 2 963.2 2 733.1 2.5 227.5

Kaluga Region 3 238.6 2 790.9 5.3 442.4

Kostroma Region 3 691.8 3 521.9 7.1 162.8

Kursk Region 2 900.0 1 018.5 8.8 1 872.6

Lipetsk Region 9 745.0 8 250.0 8.4 1 486.5

Moscow Region 11 455.7 10 954.2 7.5 494.0

Oryol Region 3 589.9 978.2 7.3 2 604.4

Ryazan Region 5 101.3 4 362.3 4.8 734.2

Smolensk Region 1 566.4 803.8 4.8 757.8

120
Russian Federation - Meat sector review

All types of Household Individual


Ag enterprise
farms farms farms

Tambov Region 5 236.1 3 711.7 22.4 1 502.0

Tver Region 3 137.1 2 767.2 20.8 349.0

Tula Region 3 927.7 3 369.6 16.2 541.9

Yaroslavl Region 8 092.3 7 769.7 170.3 152.2

Northwestern
44 113.7 42 987.4 116.1 1 010.2
Federal District

Republic of Karelia 407.4 378.8 1.8 26.8

Komi Republic 1 855.3 1 832.3 8.3 14.7

Arkhangelsk Region 2 823.8 2 789.8 0.2 33.9

Including Nenets
0.1 0.0 0.0 0.1
Autonomous Area
Arkhangelsk Region
(excl. Nenets 2 823.7 2 789.8 0.2 33.8
Autonomous Area)

Vologda Region 4 332.6 4 191.2 33.8 107.6

Kaliningrad Region 1 595.7 1 284.0 15.7 296.0

Leningrad Region 25 493.4 25 325.2 7.3 160.9

Murmansk Region 721.5 679.4 40.0 2.1

Novgorod Region 5 463.4 5 295.9 4.5 163.0

Pskov Region 1 420.6 1 210.8 4.5 205.3

Southern Federal
61 633.2 34 167.7 734.3 26 731.3
District

Republic of Adygea 3 342.1 2 567.2 96.8 678.0

Republic of
230.5 0.5 21.1 208.9
Kalmykia

Krasnodar Territory 22 831.8 12 680.3 340.5 9 811.0

121
All types of Household Individual
Ag enterprise
farms farms farms

Astrakhan Region 1 551.9 1 314.6 27.1 210.1

Volgograd Region 9 518.8 4 150.8 39.1 5 328.9

Rostov Region 24 158.2 13 454.2 209.6 10 494.4

North Caucasian
27 719.9 13 892.6 1 764.2 12 063.1
Federal District
Republic of
3 012.0 505.2 410.2 2 096.7
Dagestan
Republic of
254.7 0.0 67.6 187.1
Ingushetia
Kabardino-Balkar
3 639.7 925.6 831.7 1 882.4
Republic
Karachaevo-
2 616.6 1 096.7 16.1 1 503.8
Cherkessia Republic
Republic of North
1 692.7 758.3 44.1 890.3
Ossetia-Alania

Chechen Republic 1 008.1 138.3 7.3 862.4

Stavropol Territory 15 496.0 10 468.4 387.2 4 640.4

Volga Federal
94 966.6 73 632.9 1 858.3 19 475.5
District
Republic of
10 370.2 6 649.1 328.7 3 392.4
Bashkortostan

Republic of Mari El 4 388.0 3 991.8 38.6 357.6

Republic of
8 981.0 7 881.7 35.4 1 064.0
Mordovia
Republic of
14 094.6 11 178.5 879.9 2 036.3
Tatarstan

Udmurt Republic 6 447.3 5 177.6 11.9 1 257.9

Chuvash Republic 2 992.0 2 284.3 60.4 647.3

Perm Territory 6 757.0 6 370.9 47.8 338.4

Kirov Region 2 174.1 1 875.6 4.5 293.9

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All types of Household Individual


Ag enterprise
farms farms farms
Nizhny Novgorod
9 039.6 7 840.2 8.3 1 191.1
Region

Orenburg Region 8 064.9 5 436.4 42.6 2 586.0

Penza Region 7 698.0 6 242.6 28.9 1 426.5

Samara Region 3 496.7 2 026.9 13.8 1 456.0

Saratov Region 6 581.7 3 530.2 229.5 2 822.1

Ulyanovsk Region 3 881.5 3 147.2 128.2 606.1

Ural Federal
40 284.0 37 096.7 191.2 2 996.1
District

Kurgan Region 1 667.9 741.9 26.0 900.0

Sverdlovsk Region 12 139.7 11 732.2 96.9 310.6

Tyumen Region 8 293.2 7 697.8 46.5 549.0

Including Khanty-
Mansy Autonomous 173.3 99.8 40.9 32.6
Area-Yugra
Yamalo-Nenets
3.1 0.6 1.7 0.8
Autonomous Area
Tyumen Region
(excl. Khanty-Mansy 8 116.8 7 597.4 3.9 515.6
Autonomous Area-

Chelyabinsk Region 18 183.2 16 924.8 21.8 1 236.5

Siberian Federal
55 054.9 43 651.1 274.5 11 129.2
District

Republic of Altai 83.0 0.0 2.5 80.5

Republic of Buryatia 416.9 239.3 13.0 164.6

Republic of Tyva 23.0 8.3 0.2 14.5

Republic of
1 355.6 1 137.0 3.1 215.5
Khakassia

Altai Territory 11 199.3 7 159.2 3.1 3 990.0

123
All types of Household Individual
Ag enterprise
farms farms farms

Transbaikal Territory 643.6 134.8 50.1 488.5

Krasnoyarsk Region 8 256.2 6 849.4 20.3 1 357.8

Irkutsk Region 7 228.3 6 357.8 49.0 863.7

Kemerovo Region 5 850.0 5 034.0 6.8 752.0

Novosibirsk Region 9 206.2 8 150.2 64.0 1 026.4

Omsk Region 7 233.6 5 165.0 29.6 2 052.1

Tomsk Region 3 559.2 3 416.2 16.5 123.4

Far Eastern
10 699.8 8 915.1 19.6 1 574.6
Federal District
Republic of Sakha
777.3 719.1 210.2 51.9
(Yakutia)

Kamchatka Territory 247.6 200.5 6.3 44.4

Primorsk Territory 4 289.5 3 640.6 2.7 638.7

Khabarovsk Territory 1 844.2 1 686.3 1.8 156.2

Amur Region 2 701.8 2 128.4 112.7 460.7

Magadan Region 96.1 74.9 10.2 11.0

Sakhalin Region 587.5 452.9 6.4 128.2

Jewish
Autonomous 143.3 0.5 59.8 83.0
Region
Chukot
12.4 11.9 0.0 0.4
Autonomous Area

Source: FSSS of Russian Federation.

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Swine
Table 44: Number and structure of swine inventories by region,
2010
All types of Ag enterprise Household Individual
farms farms farms
Russian Federation 17 332.8 11 408.8 656.6 5 267.4
Central Federal
5 993.8 5 163.4 87.8 742.6
District
Belgorod Region 2 704.0 2 641.9 2.2 59.9

Bryansk Region 187.5 115.7 5.0 66.8

Vladimir Region 141.1 122.0 11.6 7.5

Voronezh Region 484.9 291.3 17.3 176.3

Ivanovo Region 15.5 6.5 1.3 7.7

Kaluga Region 64.5 37.5 8.1 18.9

Kostroma Region 46.7 36.6 1.1 9.0

Kursk Region 382.0 320.8 4.0 57.2

Lipetsk Region 411.3 353.8 4.3 53.1

Moscow Region 298.2 280.1 3.7 14.4

Oryol Region 337.3 256.3 3.9 77.0

Ryazan Region 153.5 127.8 1.9 23.9

Smolensk Region 88.5 67.8 1.9 18.8

Tambov Region 289.6 167.8 9.7 112.1

Tver Region 211.0 189.6 4.2 17.2

Tula Region 119.1 94.1 6.0 19.0

Yaroslavl Region 59.0 53.8 1.4 3.7

Northwestern Federal
737.4 639.7 18.8 78.9
District
Republic of Karelia 15.3 9.5 2.1 3.7

Komi Republic 23.7 15.9 3.5 4.2

Arkhangelsk Region 20.1 10.8 1.2 8.1

125
All types of Ag enterprise Household Individual
farms farms farms
Including Nenets
0.0 0.0 0.0 0.0
Autonomous Area
Arkhangelsk Region
(excl. Nenets 20.1 10.8 1.2 8.1
Autonomous Area)
Vologda Region 97.8 78.9 1.6 17.3

Kaliningrad Region 136.3 124.2 1.9 10.2

Leningrad Region 194.3 181.1 3.3 9.9

Murmansk Region 45.3 42.0 1.9 1.4

Novgorod Region 125.5 111.0 2.1 12.4

Pskov Region 79.0 66.2 1.2 11.7


Southern Federal
1 946.7 972.8 74.9 898.9
District
Republic of Adygea 53.9 39.5 1.6 12.8

Republic of Kalmykia 17.4 0.2 3.3 13.9

Krasnodar Territory 864.0 614.8 34.8 214.4

Astrakhan Region 7.2 2.4 1.6 3.2

Volgograd Region 495.2 127.8 9.8 357.6

Rostov Region 509.0 188.0 23.9 297.0


North Caucasian
418.3 204.8 8.3 205.2
Federal District
Republic of Dagestan 1.1 0.2 0.3 0.7

Republic of Ingushetia - - - -
Kabardino-Balkar
56.5 47.1 0.3 9.1
Republic
Karachaevo-Cherkessia
18.7 13.5 2.6 2.6
Republic
Republic of North
28.4 7.8 0.5 20.0
Ossetia-Alania
Chechen Republic - - - -

Stavropol Territory 313.7 136.3 4.6 172.8

126
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All types of Ag enterprise Household Individual


farms farms farms
Volga Federal District 3 714.9 2 166.5 189.1 1 359.3
Republic of
309.5 160.3 25.1 124.0
Bashkortostan
Republic of Mari El 179.9 167.8 1.2 10.9

Republic of Mordovia 311.0 161.8 5.5 143.7

Republic of Tatarstan 622.9 496.7 30.5 95.7

Udmurt Republic 295.8 252.1 3.8 39.9

Chuvash Republic 211.4 122.9 9.4 79.1

Perm Territory 206.3 157.4 7.4 41.4

Kirov Region 181.7 157.7 1.7 22.3


Nizhny Novgorod
143.2 72.8 5.4 65.0
Region
Orenburg Region 260.8 112.1 27.3 121.4

Penza Region 290.9 94.3 22.2 174.4

Samara Region 209.5 111.9 11.5 86.1

Saratov Region 346.6 30.9 33.7 282.0

Ulyanovsk Region 145.3 67.7 4.3 73.4

Ural Federal District 1 162.2 730.4 69.8 361.9

Kurgan Region 130.5 28.3 16.2 86.0

Sverdlovsk Region 270.8 237.8 8.8 24.2

Tyumen Region 374.4 175.6 34.3 164.6


Including Khanty-
Mansy Autonomous 40.5 7.2 29.9 3.3
Area-Yugra
Yamalo-Nenets
2.3 1.3 0.9 0.1
Autonomous Area
Tyumen Region
(excl. Khanty-Mansy 331.7 167.0 3.5 161.1
Autonomous Area-
Chelyabinsk Region 386.4 288.7 10.6 87.1

127
All types of Ag enterprise Household Individual
farms farms farms
Siberian Federal
3 050.6 1 386.6 151.8 1 512.2
District
Republic of Altai 11.3 0.1 0.9 10.3

Republic of Buryatia 74.7 35.0 7.1 32.6

Republic of Tyva 26.2 1.5 1.2 23.6

Republic of Khakassia 60.7 2.1 9.3 49.4

Altai Territory 569.6 96.8 13.7 459.1

Transbaikal Territory 121.0 12.0 14.0 95.0

Krasnoyarsk Region 447.7 177.3 15.4 255.0

Irkutsk Region 221.6 106.7 29.2 85.7

Kemerovo Region 417.6 284.1 16.2 117.4

Novosibirsk Region 373.7 178.3 17.3 178.1

Omsk Region 522.0 327.1 23.1 171.8

Tomsk Region 204.6 165.8 4.5 34.3


Far Eastern Federal
309.1 144.6 56.1 108.4
District
Republic of Sakha
27.4 10.2 9.5 7.7
(Yakutia)
Kamchatka Territory 13.3 8.1 1.5 3.6

Primorsk Territory 91.6 51.4 12.4 27.8

Khabarovsk Territory 62.7 42.2 8.1 12.4

Amur Region 74.0 18.6 11.8 43.5

Magadan Region 2.5 0.7 1.0 0.8

Sakhalin Region 17.4 11.3 1.3 4.8


Jewish Autonomous
19.9 1.8 10.5 7.6
Region
Chukot Autonomous
0.3 0.3 0.0 0.0
Area
Source: FSSS of Russian Federation.

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Cattle
Table 45: Number and structure of cattle inventories by region,
2010
All types of Ag enterprise Household Individual
farms farms farms
Russian Federation 20 069.4 9 155.2 1 656.6 9 257.6
Central Federal
2 843.9 2 023.3 116.6 703.9
District
Belgorod Region 235.3 157.6 13.8 63.9

Bryansk Region 212.7 162.7 15.2 34.8

Vladimir Region 145.2 133.6 2.3 9.3

Voronezh Region 386.2 223.0 15.3 148.0

Ivanovo Region 76.1 57.6 3.5 15.0

Kaluga Region 131.3 114.8 4.3 12.2

Kostroma Region 66.8 51.5 2.2 13.0

Kursk Region 199.5 111.6 9.8 78.0

Lipetsk Region 143.1 88.3 5.8 49.0

Moscow Region 260.2 243.0 3.5 13.7

Oryol Region 135.3 92.8 4.7 37.9

Ryazan Region 177.3 151.1 2.2 24.0

Smolensk Region 141.2 106.1 9.1 26.1

Tambov Region 143.9 29.3 12.2 102.4

Tver Region 157.5 117.3 7.5 32.8

Tula Region 100.9 73.1 3.1 24.7

Yaroslavl Region 131.2 109.9 2.0 19.2


Northwestern Federal
697.1 556.5 29.6 111.0
District
Republic of Karelia 25.7 19.4 1.1 5.1

Komi Republic 37.8 20.3 4.9 12.6

Arkhangelsk Region 54.3 36.3 6.7 11.3

129
All types of Ag enterprise Household Individual
farms farms farms
Including Nenets
1.6 1.5 0.0 0.1
Autonomous Area
Arkhangelsk Region
(excl. Nenets 52.7 34.8 6.7 11.2
Autonomous Area)
Vologda Region 185.7 161.9 7.6 16.2

Kaliningrad Region 61.5 31.9 2.5 27.0

Leningrad Region 179.1 166.1 2.3 10.7

Murmansk Region 7.8 7.1 0.5 0.2

Novgorod Region 43.0 29.3 2.4 11.3

Pskov Region 102.3 84.1 1.7 16.5


Southern Federal
2 447.2 736.0 456.1 1 255.1
District
Republic of Adygea 49.2 5.5 3.5 40.2

Republic of Kalmykia 565.0 102.2 240.6 222.2

Krasnodar Territory 633.1 431.5 34.4 167.2

Astrakhan Region 262.8 15.6 79.5 167.6

Volgograd Region 339.3 51.0 38.8 249.5

Rostov Region 597.9 130.1 59.4 408.4


North Caucasian
2 205.6 328.4 225.3 1 651.9
Federal District
Republic of Dagestan 909.7 105.8 77.2 726.6

Republic of Ingushetia 55.8 1.4 11.1 43.2


Kabardino-Balkar
265.1 41.5 39.6 184.0
Republic
Karachaevo-Cherkessia
235.8 36.4 40.0 159.3
Republic
Republic of North
138.9 20.1 8.7 110.1
Ossetia-Alania
Chechen Republic 221.4 7.8 22.6 190.9

Stavropol Territory 379.0 115.3 26.0 237.6

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Russian Federation - Meat sector review

All types of Ag enterprise Household Individual


farms farms farms
Volga Federal District 6 048.7 3 116.0 375.1 2 557.6
Republic of
1 268.6 484.2 77.6 706.8
Bashkortostan
Republic of Mari El 100.1 50.6 1.5 48.0

Republic of Mordovia 298.9 196.7 15.0 87.3

Republic of Tatarstan 1 092.4 722.6 78.9 290.9

Udmurt Republic 363.4 289.0 13.9 60.4

Chuvash Republic 224.6 67.2 6.9 150.4

Perm Territory 263.1 175.1 7.7 80.4

Kirov Region 259.9 222.3 4.0 33.5


Nizhny Novgorod
315.5 234.1 18.6 62.8
Region
Orenburg Region 655.4 318.1 39.6 297.7

Penza Region 287.7 106.9 14.0 166.8

Samara Region 212.8 89.0 21.8 102.0

Saratov Region 551.3 101.3 63.1 387.0

Ulyanovsk Region 155.0 58.9 12.7 83.5

Ural Federal District 1 084.5 540.6 54.7 489.3

Kurgan Region 199.6 54.9 7.7 137.0

Sverdlovsk Region 255.6 183.3 16.5 55.8

Tyumen Region 268.5 139.4 16.3 112.8


Including Khanty-
Mansy Autonomous 11.8 3.3 5.0 3.5
Area-Yugra
Yamalo-Nenets
1.0 0.9 0.0 0.1
Autonomous Area
Tyumen Region
(excl. Khanty-Mansy 255.6 135.2 11.3 109.2
Autonomous Area-
Chelyabinsk Region 360.8 163.0 14.2 183.7

131
All types of Ag enterprise Household Individual
farms farms farms
Siberian Federal
4 281.5 1 724.2 311.4 2 245.9
District
Republic of Altai 204.0 29.4 56.2 118.3

Republic of Buryatia 399.7 57.4 48.9 293.3

Republic of Tyva 140.5 16.6 9.9 114.0

Republic of Khakassia 168.5 37.8 30.0 100.8

Altai Territory 902.1 462.8 34.9 404.4

Transbaikal Territory 456.2 58.5 45.6 352.0

Krasnoyarsk Region 438.0 238.7 4.0 195.3

Irkutsk Region 279.5 67.8 24.3 187.3

Kemerovo Region 207.4 91.6 14.7 101.1

Novosibirsk Region 548.0 385.7 11.2 151.1

Omsk Region 438.1 227.1 21.8 189.2

Tomsk Region 99.5 50.8 9.8 38.9


Far Eastern Federal
461.0 130.3 87.7 242.9
District
Republic of Sakha
233.6 50.2 63.5 120.0
(Yakutia)
Kamchatka Territory 9.5 5.2 0.9 3.3

Primorsk Territory 59.5 18.3 7.1 34.1

Khabarovsk Territory 27.0 16.4 1.0 9.6

Amur Region 95.1 27.8 6.3 61.0

Magadan Region 3.8 1.2 2.0 0.6

Sakhalin Region 17.9 9.5 2.3 6.1


Jewish Autonomous
14.5 1.8 4.5 8.2
Region
Chukot Autonomous
0.0 0.0 0.0 0.0
Area
Source: FSSS of Russian Federation.

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Annex 2 - Main breeds and crosses

Broilers
Russian poultry production largely uses cross-breed birds.
According to the Russian Poultry Union, the following are the
leading crosses in the Russian Federation’s broiler production:

• R oss 308 (40 percent)


• H ubbard (39 percent)
• Smena 8 (13 percent)
• Others (8 percent)

The genetic potential and performance of these Russian and foreign


broiler meat crosses is similar. One of the major reasons for this
similarity is that domestic crosses are selected based on imported
genetics, which have common breeding lines with western suppliers.

The most popular broiler crosses in the Russian Federation are as


follows:

Figure 61: The most popular broiler breeds


40%

Ross 308
8%
Hubbaurd

13%
Smena 8

Others

39%

Source: Russian Poultry Union.

Pigs
Owing to the absence of a nation-wide animal identification
system in the Russian Federation, pigs and cattle are only
registered and bonitated (tagged) by large commercial growers

133
and feedlot operations. About 15-20 percent of pig stocks in
commercial farms are registered. The same is true for dairy cattle.

In 2010, the Russian pig-breeding sector had 91.100 pigs of 16 breeds


and types that were raised in 66 genetic centers and 131 breeding
farms. These pigs make at least 6 percent of the total population of
sows in all categories of farms and meet the basic industry needs.

The numbers of bonitated sows of meat breeds in breeding farms


by breed are 11 690 heads of Landrace, 4 409 heads of Duroc,
5 724 heads of Yorkshire and -7 651 heads of Large White breed
(with imported genetics).

The leading role among pig breeds in the Russian Federation


is traditionally occupied by the large, white breed animals
(70.27 percent), followed by Landrace (9.8 percent), Yorkshire
(4.32 percent), Duroc (3.36 percent), large white (with imported
genetics) (6.46 percent), middle white (MW-1) (2.87 percent)
and the remaining species hold 2.92 percent. The lowest shares
of breed structure belongs to Livny (0.28 percent), large black
(0.43 percent), Urzhum (0.3 percent) and Breit (0.19 percent).
The most popular pig breeds can be seen in Figure 62.

Figure 62: The most popular pig breeds


70.3%

Large white

Land race

Yorkshire
4.3% Others

15.6%
9.8%

Source: Agricultural Consulting Center and SibAgro.

In recent years, key performance indicators of sows, including first-


litter sows, of all breeds and types of farms were as follows:

• litter: 10.8 heads;
• preweaning number of piglets in 30 days: 9.9 heads;
• preweaning litter weight in 30 days: 76.8 kg;
• one pig weight in 30 days: 7.8 kg, which is comparable with the
international Grade A level.
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Russian Federation - Meat sector review

The reproductive capacity of sows in breeder farms is:

• l itter: 11.2-11.1 heads;
• p reweaning number of piglets in 30 days: 10.1-10.0 heads;
• preweaning litter weight in 30 days: 81-80, 4 kg;
• one pig weight in 30 days: 8.0-7.8 kg.

In terms of reproductive qualities, the main domestic “parent”


pig breed – large white – is almost as good as the world’s best
breeds (Landrace, Yorkshire). However, when looking at fattening
and meat quality, the large white breed of domestic breeding has
lower performance than foreign analogues. In addition, the genetic
features of domestic and imported pig breeds are not fully realized
mainly because of organizational, technological, feeding and price
factors, not because of the breed itself.

Cattle
In 2010, about 3.5 million heads of dairy, dairy-meat and meat cattle
were bonitated in the Russian Federation. Cattle herds consist
of 19 species and 24 types; the black-and-white breed occupies
the dominant position (over 2 million heads or 57.92 percent) and
is mostly used for dairy. The second place is taken by Simmental
(332.3 thousand heads or 9.58 percent), and the third place belongs
to the Kholmogory breed (303.8 thousand heads or 8.76 percent).

A total of 319 thousand heads of meat cattle, including


148.1 thousand cows of 14 breeds and types were bonitated in 50
Russian Federation regions.

The three breeds of cattle listed above represent about 85 percent


of the farmed beef cattle in the Russian Federation. Galloway, Grey
Ukrainian, Charolais and Salers breeds are not very popular, giving a
higher place to Hereford and Kazakh white breeds. The population of
Kalmyk breed cows is also declining (see Table 46 and 47).

Figure 63 and 64 illustrate the breed structure of dairy and beef


cattle in the Russian Federation.

A significant increase in European breeds was registered in 2008-


2010:

• L
imousine: up 56.0 percent
• A berdeen-Angus: up 26.3 percent
• Simmental: up 37.4 percent

135
Figure 63: The most popular cattle breeds for dairy and meat
57.9%

Black and white

Simmental

Kholmogory
9.6%
Others
23,7%

8.8%

Source: Molochnoe i myasnoe skotovodstvo (Meat and Dairy Cattle Breeding Magazine).

Figure 64: The most popular cattle breeds for meat


44,4%

Kalmyk

Hereford

Kazakh white
15%
Others
22,8%

17.8%

Source: VNIIMS RASHN.

At present, 49 genetic centers and 199 breeding farms carry out


the improvement of breeding and productive qualities of beef
cattle. Large international genetic companies, such as International
Genetics Ltd, or Genesus Genetic, have representatives in the
Russian Federation.

Progress has been made recently in beef cattle breeding. Many


years of work have resulted in a reproductive cross-breed of Kalmyk
and Aberdeen-Angus breeds (this project was carried out by the
All-Russia Scientific Research Institute Of Meat Cattle Breeding, in
the Volgograd Region). This new beef cattle breed is called Russian
hornless. It has higher productivity and is well adapted to the steppe
zone (a feature common in Kalmyk cattle), and it has the excellent
beef qualities inherent to the Aberdeen Angus breed (filamentary,
marbled meat). The breed was officially registered in 2007.
136
Russian Federation - Meat sector review

Table 46: Relative number of heads of cattle, dairy and dairy/


meat breeds, percent, 2009-2010
Total Incl. cow
Breed
2009 2010 2010/09 2009 2010 2010/09
Total in
100 100 0 100 100 0
Russian Federation

Black-and-white types: 56.93 57.92 0.99 56.74 57.27 0.53

Irmensky 0.09 0.09 0 0.1 0.11 0.01

Leningradsky 0.16 0.14 -0.02 0.18 0.17 -0.01

Moscovsky - 0.08 - - 0.07 -

Uralsky 0.06 0.09 0.03 0.06 0.09 0.04

Barybinsky 0.16 0.15 -0.01 0.16 0.15 -0.01

Samarsky 0.04 0.03 -0.02 0.05 0.03 -0.02

Krasniyarsky 0.14 0.14 0 0.15 0.15 0

Petrovsky 0.04 0.05 0 0.05 0.05 0

Vologodsky 0.27 0.25 -0.02 0.22 0.22 0

Priobsky 0.24 0.27 0.03 0.23 0.27 0

Netsepinsky 0.06 0.06 0 0.05 0.05 0.04

Simmental 9.78 9.58 --0.2 9.41 9.36 0

Nikolaevsky - 0.09 - - 0.09 -0.05

Kholmogory 9 8.76 0.24 9.04 8.65 -

Tatarstansky 4.29 4.53 0.24 4.09 4.05 -0.39

Pechyosky 0.16 0.18 0.02 0.19 0.21 -0.04

Krasno-Pyeostraya 5.25 5.51 0.26 5.13 5.42 0.02

Voronezhsky 0.27 0.26 -0.01 0.24 0.24 0.29

Yeniseysky 0.42 0.42 0 0.46 0.48 0.01

Karskaya Stepnaya 4.77 4.54 -0.23 4.93 4.74 0.02

137
Total Incl. cow
Breed
2009 2010 2010/09 2009 2010 2010/09

Kubansky 0.05 0.04 0 0.04 0.04 0

Kuliundinsky 0.63 0.69 0.06 0.64 0.69 0.05

Sibirsky 0.33 0.36 0.03 0.34 0.34 0

Holstin Black and White 4.26 4.64 0.38 4.5 5.2 0.7

Aishirsky 2.92 2.8 -0.12 3.23 3.1 -0.13

Novopadozhsky 0.05 0.05 0 0.05 0.05 0

Smena - 0.03 -0.12 - 0.03 -

Yaroslavsky 2.45 2.33 - 2.4 2.29 -0.11

Mikhailovsky 0.05 0.04 -0.01 0.04 0.04 0

Buraya Shvitskaya 1.71 1.59 -0.12 1.77 1.68 -0.09

Smolenskay 0.09 0.11 0.02 0.08 0.11 0.03

Bestuzhevskaya 1.01 0.96 -0.05 0.88 0.86 -0.02

Sychevskaya 0.65 0.58 -0.07 0.67 0.6 -0.07

Vazuzsky - 0.02 - - 0.03 -

Kostromskaya 0.51 0.47 -0.04 0.52 0.48 -0.04

Holstin Red and White 0.43 0.01 -0.42 0.42 0 -0.42

Red Estonskaya 0.1 0.08 -0.02 0.1 0.07 -0.03

Red Gorbatovskaya 0.06 0.06 0 0.07 0.07 0

Istrobenskaya 0.02 0.02 0 0.03 0.02 -0.01

Suksunskaya 0.06 0.06 0 0.08 0.07 -0.01

Jerseyskaya 0.05 0.04 -0.01 0.05 0.04 -0.01

Tagilskaya 0.003 0.003 0 0.005 0.005 0

Source: Molochnoe i myasnoe skotovodstvo (Meat and Dairy Cattle


Breeding Magazine).

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Russian Federation - Meat sector review

Table 47: Number of heads of bonitated meat cattle, 2008-2010


2008 2009 2010

Breed Number of Share, Number Share, Number Share,


heads percent of heads percent of heads percent

All breeds 260 932 100 304 588 100 319 012 100

Kalmyk 121 670 46.63 138 607 45.51 141 570 44.38

Hereford 61 564 23.59 67 630 22.2 72 709 22.79

Incl. Hereford 4 750


- - - - 1.49
Ural type

Kazakh white 5 057 17. 90 55 990 18.38 56 743 17.79

Aberdeen- 19 941
5 657 4.55 18 257 5.99 6.25
Angus

Charolais 2 193 1.94 6 401 2.1 6 812 2.14

Simmental beef 8 751


2 834 2.17 6 771 2.22 2.74
total
Incl. Bredin 6 339
2 218 0.84 4 113 1.35 1.99
type

Limousine 1 172 1.09 4 645 1.53 5 433 1.7

Aubrac 1 093 0.85 2 555 0.84 2 963 0.93

Galloway 987 0.45 1 577 0.52 1 698 0.53

Salers 92 0.42 1 207 0.4 1 392 0.44

Russian 925
- 0.38 849 0.28 0.29
hornless

Ukraine grey - 0.04 99 0.03 75 0.02

Source: VNIIMS RASHN.

139
Annex 3 - Meat production technologies

Table 48: Production technologies used for poultry meat


production

Item Technology Description

• Vertically integrated operations, which include


own feed production, hatching, breeding and
grow-out operations, processing, rendering
and marketing;
• use modern technologies and equipment;
Large modern
• high degree of automation;
operations
• implement food safety measures;
• use local and foreign consultants;
(>50 000 tonnes/y)
• have support from local and federal
governments;
• comprise operations in various regions;
• integrated with pig production in many cases;
• assure quality control.

Large modern
Production operations
1 processes • Vertically integrated in most case;
organization • use modern technologies and equipment;
(>50 000 tonnes/y)
• observe biosecurity measures;
Medium and small
• use local and foreign consultants;
farms of new type
• very often have a high degree of automation;
• assure quality control.
(30 000-50 000
tonnes/y)

• Use old equipment and technologies;


• have weak food safety control;
Small and medium
• do not invest in staff and its training;
farms of old type
• have problems with financing;
• usually have state shares in equity;
Annual capacity less
• produce too many different products;
than 30 000 tonnes
• cannot handle costs due to lack of
knowledge.

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Russian Federation - Meat sector review

Item Technology Description

• Strong food safety control;


• higher quality due to less damage to birds;
Floor housing: birds
• better welfare;
are raised on the
• easier to handle and manage flocks;
floor covered with
• low maintenance equipment;
wood shavings or
• better ventilation and lighting;
straw
• additional cost of shavings or straw to collect
Broiler housing litter.
2
technology
• Higher yields per square meter;
Cage housing: birds • higher food safety risks;
are raised in cages • intensive labour and technology;
built on several levels • high maintenance of climate control;
• higher rates of damaged birds.

• Best for disease prevention;


All-in all-out: houses
• allow better flock management and
are built by zones
performance;
for complete zone
• provide savings on livability and yield;
Grow-out cleaning
• require additional investment in housing.
3 (rearing) technology
planning Continuous cycle: no • No need for additional capital construction;
free time between • prevent full cleaning of production areas;
houses cleaning in • cause disease retransmission;
zones • affect flock performance.

• Low cost of equipment and of production


Old technology:
process;
Feed mash – crushed
• high losses of feed;
grains
• low feed conversion.
Feed type / feed
4
plant • Capacity to produce several feed recipes;
• good feed conversion;
New technology:
• minimal waste of feed throughout production
pelleted heat-treated
chain;
combined feeds
• consistently ensured quality, higher food
safety.

• Good local availability;


Local genetics
• high maintenance;
(both Russian and
• inconsistent performance;
Western breeds)
• tainted with various diseases.
5 Genetics
• Most productive breeds from best genetic
centers;
Foreign genetics
• have good service from breed suppliers;
(supplied from
• risk of non-delivery for various reasons;
abroad)
• higher hatchability and fertility;
• require complicated vaccination programmes.

141
Item Technology Description

• High cost savings on labour, packaging,


Prime processing
energy, equipment, infrastructure and
(slaughter and
marketing;
evisceration)
• no added value.
6 Processing
• Added value on basic product;
Full processing • higher yield;
(including cut-up, • wide product range;
further processing • better marketing prospects;
and packaging) • additional expenses on equipment and staff;
• higher technological risks.

• Higher yields because of retained water;


Water chilling: birds • better product appearance;
are immersed in • shorter chill time;
huge tanks filled • retained water leaks in packaging;
with ice water • higher risk of cross contamination;
• excessive waste of water.
7 Chilling
• No leaks in packaging;
Air/combined: birds
• no cross contamination;
are passed through
• higher energy consumption;
a chilling hall with
• longer chill time;
com-pressed cold air
• risk of improper anti-microbial treatment.

• Minimal cost involved;


Composting outside
• potential benefits from fertilizer sales or use;
the farm and further
• require big lots of land;
use as a fertilizer
• high ecological risk.
8 Litter utilization
Processing for • Capital consuming (expensive);
biofuels, burning, • resolve ecological issues;
etc. • guaranteed long-term sustainability.

Source: Authors’ compilation based on various sources.

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Russian Federation - Meat sector review

Table 49: Production technologies used for pig meat


production

Item Technology Description

• Irrational use of buildings and structures,


lack of their specialization;
• unevenness of production;
• in most cases, single-phase production
technology and seasonal tour farrowing
system;
Small farms of old
• animals are walked out;
type
• predominance of manual labour;
• absence of backup facilities and inability
of holding repair works, which wear out
equipment and engineering systems;
• mechanization of production processes
lead to high production cost per animal.

• Farms are based on modern concepts and


designs;
• depending on capacity, herds are placed
and transferred every 14 or 21 days,
Production processes Small farms of new which doesn’t allow effective utilization
1
organization type of facilities, it leads to downtime of
technological areas;
• low biosecurity: house operators often
maintain 2-3 areas, contaminating them
with pathogens.

• All buildings specialized by production


purposes;
• continuous live production process of
homogeneous groups of animals;
• two- or three-phase technology of
production (farrowing/nursing/grow
Modern production
feeding);
facilities
• animals kept in-house;
• high degree of automation and
mechanization of production processes;
• lower production costs and capital
investments per head;
• high level of biosecurity.

143
Item Technology Description

• Floor in pig house is covered with straw or


wood shavings (litter) to absorb manure;
“Nesting” • need for large amounts of litter, but this
technology gives good compost;
• high costs of labour;
• no resource-saving equipment.
Technology of
2
keeping pigs
• Reduces cost of cleaning by 10-15 times;
• stringent requirements for the
microclimate (temperature, humidity, air
“Nesting”
velocity, etc.);
technology
• need to build dump yards based on
Slotted floor
12-month exposure of manure in each of
technology
the lagoons;
• high level of process automation, energy
use and conservation equipment.

• Use of water wash for dung removal,


Old technology which leads to the formation of a large
Technology of manure amount of manure runoff.
3 removal from houses
with slotted floor
• General use of waterless methods of
manure removal to ensure the reduction
Modern technology
of water consumption for technological
purposes by 1.5-2 times*.

• Feeding waste food product, vegetables,


potatoes;
• high degree of manual labour;
• loss of feed due to souring;
Old technology
• impossibility of accurately delivering feed
to animals;
• requires feeding center, steaming plant
and additional equipment and staff.
Feeding technology
4
and diets
• Pigs at various ages fed with specialized
pelleted feeds;
• reduces the chance of poisoning with
mycotoxins;
Modern technology • reduces waste of feed;
• saves labour;
• significantly increases the weight gain due
to higher conversion, nutrition value and
optimal balance of diets.

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Russian Federation - Meat sector review

Item Technology Description

• Cheaper equipment and easier


maintenance;
• more hygienic;
• less stress for animals during feed
Dry feeding
delivery;
• requires clean water in the water troughs;
• pigs’ manure becomes drier with no
noxious odors.
5 Feeding type
• Easier and more perfect equipment;
• more reliable and durable because of no
rotating parts or belts;
• reduces water consumption and the
Wet feeding
volume of manure;
• rational use of food, water and medicines:
vaccination and treatment of pigs is
simple and accurate.

• Requires more hogs, bigger production


Natural insemination areas and more feed and labour;
• increased production costs.
6 Insemination type
• Effective and quick;
• increases productivity;
• improves quality;
Artificial insemination
• reduced costs;
• maximum use of breeding potential of
hogs and sows.

145
Item Technology Description

• Russian genetics, evaluation methods


and selection of animals are completely
outdated;
• meat quality does not meet the
processors requirements because of high
Russian genetics
fat percentage;
• costly and ineffective because many
Russian breeders are forced to have their
own herd of pedigree pigs for internal
hybridization.
7 Genetics
• Reduces (i) the volume of capital
investments, particularly in construction
Modern high and equipment, (ii) operating costs, (iii)
productive foreign energy and water consumption, (iv) feed
genetics (Denmark, costs, (v) use of veterinary preparations
Great Britain, and (vi) cost of manure disposal;
Canada, USA, • provide higher quality of end products;
Germany) • reduce environmental impact;
• increase overall economic efficiency of live
production operations.

Source: Authors’ compilation based on various sources.


* Now the water flushing technology is being improved: manure effluents are
separated, the liquid part is disinfected down to “processed water” and reused.
However, the problem of high humidity remains unresolved, together with
ventilation difficulty (especially in winter) and high-energy costs. Mechanical
harvesting adds increased labour costs.

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Russian Federation - Meat sector review

Table 50: General technologies of cattle meat production

Item Technology Description

Meat is obtained from culled dairy cows and calves. It


Cattle meat by
is much more costly to grow bull calves than to
culling dairy cattle
dispose of them at early ages.
General
1
principles The animals of meat breeds gain weight faster than
dairy cattle. Beef from meat cattle breeds is tastier
Specialized beef
and has higher yield. Such animals require much
farming
less energy than dairy cattle. Disadvantages: mono-
productivity and relatively low return on investments.

Year-round stall-barn housing extensively uses silage,


hay and straw in winter-time, and green chop of green
forage chain with concentrates in summer time. It is
Stall-barn system
recommended for farms with minimum grazing areas;
therefore, it is more expensive because it requires lots
of prepared fodder.

Stall-barn system in winter, pens in summer (feeding


green chop of green forage chain and silage). This
Housing Pen system system is used when grazing is not far from land with
2
system plentiful grass (e.g. wet meadows along rivers) and if
grazing areas are not sufficient or remote.

In the stall period animals are kept in barns and in the


Grazing-stall system
pasture period, in artificial or natural pastures.

Preferable for farms that have large areas of natural and


improved pastures. Keeping cattle in the wild pastures
Grazing system
for 24 hours a day is the most efficient way to avoid
animal stress.

This is a traditional method for dairy cattle rearing. Its


advantage compared with free-stall housing is that
Traditional farm- individual maintenance of cows provides milk and
animal method extends the productive life of the animals. It is used for
finishing growing in dairy farms, and there is a high
cost of manual labour.
Housing
3
method
Compared with traditional housing, this method can
significantly reduce labour costs and efficiently use
production equipment. This technology is used by
Free-stall method
some dairy farms, and takes the leading place in
meat production. It requires a lot of bedding or big
investments in slotted floors.

147
Item Technology Description

The main advantage of natural grazing is the low cost


Natural grazing
of feed.
Grazing
4
technology
Artificial grazing is the use of annual and perennial
grasses, clover, etc. These pastures provide forage
Artificial grazing in early spring, grow rapidly and are more resistant
to trampling. Artificial grazing has a positive effect on
weight gain, but it is more expensive.

Winter diet of beef cattle generally includes “slightly


Animal feed use
dried,” low-moisture silage with combined feed.
5 Feeding
Conditioning is the most efficient way of processing
Change of animal
wet grain to feed, which provides high-quality forage.
feed for flattened
The technology is effective because it allows cheaper
grains and grain
feed grain forage by eliminating the cost of drying
forage
food and better digestibility.

This method is modern and inexpensive (no need for


bulls or additional labour), has a higher guaranteed
Artificial result when compared with mating and means that
insemination calving occurs uniformly throughout the year. Embryo
implantation is even more productive as it allows
control of the proportion of bulls and cows.
6 Insemination
Natural insemination is less effective and controllable.
Natural insemination It requires keeping breeding bulls, additional space,
feed, labour and other expenses.

Ayshirsky, Holstein, Yaroslavl, Taghil and other low


Dairy cattle
meat quality breeds.

Meat and dairy Simmental, Bestuzhev, Kostroma, Shvitsky and other


7 Genetics cattle breeds. Meat quality is satisfactory.

Aberdeen-Angus, Hereford, Limousine, Charolais,


Special meat cattle
Kazakh Whitehead and other breeds. Meat quality
breeds
is high.

Source: Authors’ compilation based on various sources.

148
Russian Federation - Meat sector review

Annex 4 - Applicable state standards in


the Russian Federation

Feed
Table 51: Applicable state standards for feed

Designation Title

Feeds. Feeds and fodder additives for domestic


GOST R 54954-2012
animals. Terms and definitions.

GOST R 52254-2004 Mixed feeds for fodder cattle. Index nomenclature.

GOST R 52255-2004 Mixed feeds for pigs. Index nomenclature.

GOST R 51899-2002 Granulated mixed feeds. General specifications.

GOST R 51851-2001 Mixed feeds for poultry. Index nomenclature.

GOST 18691-88 Artificially dried grass feeds. Specifications.

GOST 23513-79 Feeds in cakes pellets. Specifications.

GOST 18221-99 Mixed full-ration feeds for poultry. Specifications.

Mixed feeds-concentrates for pigs. General


GOST R 51550-2000
specifications.

Mixed feeds-concentrates for fodder cattle.


GOST 9268-90
Specifications.

Mixed feeds for fur-bearing animals, rabbits and


GOST R 51166-98
nutrias. Specifications.

149
Meat
Table 52: Applicable state standards for meat

Designation Title

Cattle. The criteria for raising and feeding young livestock for
GOST R 50848-96 the production of meat foodstuffs for children. Requirements.
Standard technological process.

Chicken meat (carcasses of chickens, broiler chickens and their


GOST R 52702-2006
parts). Specifications.

GOST R 52703-2006 Chicken meat. Trade descriptions.

GOST R 54366-2011 Chilled meat by-products blocks. Specifications.

GOST 31639-2012 Cooked sausage items of poultry meat. General specifications.

GOST R 53516-2009 Cooked sausage items of poultry meat. General specifications.


GOST 4025-95 Domestic meat mincers. Specifications.

GOST R 54357-2011 Duck meat (carcasses and their parts). Trade descriptions.

GOST R 54376-2011 Duck meat (carcasses and their parts). Specifications.


Equipment for processing meat and poultry farming products.
GOST 12.2.135-95
Safety requirements: precautions, sanitation and ecology.
Food processing machinery. Cutting machines for meat.
GOST R 53476-2009
Specifications.
GOST R 53848-2010 Frozen cooked mussel meat. Specifications.
Frozen in blocks meat and meat by-products for production of
GOST R 52674-2006
babies’ nutritional foods. Specifications.
GOST R 54704-2011 Frozen meat blocks. General specifications.

GOST 4814-57 Frozen meat in blocks. Specifications.

GOST R 54675-2011 Geese meat (carcasses and their parts). Specifications.

GOST 23126-78 Horses for meat for export. Specifications.


Machines and equipment for the production of sausage products
GOST 30146-95
and meat semi-finished products. General specifications.
Machines for mixing minced meat. Main parameters, technical
GOST 28107-89
requirements and test methods.
Meat and meat by-products, frozen in blocks, for production of
GOST 31799-2012
children’s nutritional foods. Technical specifications.
Meat and vegetable preserves from poultry meat for
GOST R 52704-2006
babies’nutrition. Specifications.
Meat cooked sausage products for children’s food. General
GOST R 52479-2005
specifications.

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Russian Federation - Meat sector review

Designation Title

GOST R 52427-2005 Meat industry. Food products. Terms and definitions.

GOST 28532-90 Meat mincers. General specifications.

GOST 31490-2012 Meat poultry mechanical separation. Specifications.

GOST R 52601-2006 Meat. Dressing of beef into cuts. Specifications.

GOST R 54367-2011 Meat. Dressing of lamb and goat into cuts. Specifications.

GOST 31778-2012 Meat. Dressing of pork into cuts. Specifications.

GOST 10.76-74 Meat. Horse flesh for export. Technical requirements.

GOST R 54048-2010 Meat. Pork for children’s nutrition. Specifications.

Mechanically separated chicken meat for children’s food.


GOST R 52418-2005
Specifications.

GOST 3739-89 Packed meat. Specifications.

Poultry meat (carcasses of hens, ducks, geese, turkeys, guinea-


GOST 21784-76
fowls). Technical requirements.
Poultry meat (carcasses of chickens, broiler-chickens and their
GOST R 52306-2005
cut parts) for children’s nutrition. Specifications.
Poultry meat and by-products of semi-prepared foods.
GOST R 54356-2011
Acceptance regulations.

GOST R 54349-2011 Poultry meat and by-products. Acceptance regulations.

GOST R 53163-2008 Poultry meat of mechanical separation. Specifications.

Production equipment for meat and poultry processing industry.


GOST 28693-90
Sanitary requirements.

GOST 18158-72 Production of meat products. Terms and definitions.

GOST R 52428-2005 Products of the meat industry. Classification.

GOST R 54673-2011 Quail meat (carcasses). Specifications.

GOST R 54673-2011 Quail meat (carcasses). Specifications.

GOST 27747-88 Rabbit meat. Specifications.

Raw-smoked and raw-jerked sausage products from poultry


GOST R 54672-2011
meat. General specifications.

151
Designation Title

Sausage cooked goods from poultry meat for children’s nutrition.


GOST R 52818-2007
General specifications.

GOST R 52986-2008 Meat. Dressing of pork into cuts. Specification.

GOST R 54520-2011 Meat. Dressing of veal into cuts. Specifications.

Meat. Horse meat and young horse meat in half-carcasses


GOST 27095-86
and quarters. Specifications.
Sausage products and products of pork, mutton, beef and meat
GOST 9792-73 of other kinds of slaughter animals and poultry. Acceptance rules
and sampling method.
Semi-prepared boneless meat products in pieces for children’s
GOST R 54754-2011
nutrition. Specifications.
Semi-prepared ground meat products, stuffed dumplings,
GOST R 51187-98
comminuted meat for children’s nutrition. General specifications.
Semi-prepared meat and meat-contained products. General
GOST R 52675-2006
specification.
Semi-prepared poultry meat for children’s nutrition. General
GOST 31465-2012
specifications.
Semi-prepared poultry meat for children’s nutrition. General
GOST R 53517-2009
specifications.
Semi-prepared poultry meat and poultry offal. General
GOST R 53008-2008
specifications.

GOST R 53588-2009 Semi-smoked meat sausages. Specifications.

GOST R 53852-2010 Semi-smoked sausages of poultry meat. General specifications.

Symbols of controls of equipment for meat and bird processing


GOST 29123-91
industries. Designations.
Tracks for meat industry. Main parameters, dimensions and
GOST 28534-90
specifications.

GOST 31472-2012 Turkey meat (carcasses and parts). Trade description.

GOST R 53670-2009 Turkey meat (carcasses and their parts). General specifications.

GOST 31472-2012 Turkey meat (carcasses and their parts). General specifications.

GOST R 53670-2009 Turkey meat for children’s nutrition. Specifications.

GOST R 53458-2009 Turkey meat (carcasses and their parts). General specifications.

GOST R 52820-2007 Turkey meat for children’s nutrition. Specifications.

152
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Annex 5 - Profitability of poultry,


pork, and beef production in various
administrative subjects of the Russian
Federation

Tables 53, 54 and 55 show the profitability of poultry, pork and


beef production, including processing, in agricultural organizations
in the administrative subjects of the Russian Federation (without
state subsidies) in 2010.

Poultry
Table 53: Profitability of poultry in the administrative subjects
of the Russian Federation, 2010
Profitability
Number of
(loss), Administrative unit
subjects
percent

Profitability 55

Bashkotostan, Udmurtskaja,
Kabardino-Balkanskaja, Kabardevo-Cherkesskaja, Karelija, Marij El,
Mordovia,Hakasija,
Up to 10 27 Chuvashkaja, Zabajkalsky, Krasnodarsky, Krasnoyarsky, Stavropolsky,
Habarovsky, Belhorodskaya, Volgogradskaya, Belgorod, Volgograd,
Kemerovo, Murmansk, Novgorod, Novgorod, Orenburg, Orel, Samara,
Sverdlovsk, Tula, Ulyanovsk, Chelyabinsk

Adygea, Altai, Perm, Primorsky, Bryansk, Vladimir, Vologda, Voronezh,


10-1-20 17 Irkutsk, Kaliningrad, Kaluga, Leningrad, Novosibirsk, Rostov, Ryazan,
Tyumen, Yaroslavl

Komi, Tatarstan,Amur, Kurgan, Kursk, Lipetsk, Moscow, Omsk, Penza,


Over 20 11
Tver, Tomsk

Loss 21 -

Dagestan, Sakha (Yakutia), the Chechen


Up to 10 8
Arkhangelsk, Kostroma, Pskov, Saratov, Tambov

Kamchatka
10.1-20 5
Astrakhan, Kirov

Buryatia,Smolensk,Khanty-Mansiysk, Chukotka
Over 40 5
Saint Petersburg

153
Pork
Table 54: Profitability of pork in the administrative subjects of
the Russian Federation, 2010

Number
Profitability (loss),
of The subjects
percent
subjects

Profitability 51 -

Buryatia, Kabardino-Balkaria, Karachay-Cherkessia, Chuvash


Kraj: Perm, Primorsky, Khabarovsk
Up to 10 14
Astrakhan, Voronezh, Ivanovo, Kostroma, Kurgan, Murmansk,
Ryazan

Adygea, Bashkortostan, Mordovia, Udmurtia


10.1-20 11 Altai, Kamchatka, Krasnoyarsk and Stavropol
Vologda, Kemerovo, Kursk

Bryansk, Kaluga, Kirov, Moscow, Novgorod, Novosibirsk,


20.1-30 12 Pskov, Sverdlovsk, Tverskaya. Tula, Tyumen
Evrejskaja

Mari El, Tuva


Over 30 14 Belgorod, Volgograd, Irkutsk, Kaliningrad, Leningrad, Lipetsk,
Orel, Omsk, Penza, Tambov, Tomsk, Chelyabinsk

Loss 26 -

Karelia, Komi, North Ossetia, Tatarstan, Khakassia


Transbaikalia, Krasnodar
Up to 20 16
Amur, Arkhangelsk, Vladimir, Nizhny Novgorod, Orenburg,
Rostov, Sakhalin, Ulyanovsk, Yaroslavl

Samara, Smolensk
20.1-40 3
Khanty-Mansiysk

Altai, Dagestan, Kalmykia,Saratov


Over 40 7 Chukotka, Yamal-Nenets
Saint Petersburg

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Russian Federation - Meat sector review

Beef
Table 55: Profitability of beef in the administrative subjects of
the Russian Federation, 2010

Profitability (loss), Number of


The subjects
percent subjects

Profitability 2 Kalmykia, Karachay-Cherkessia

Loss 78 -

Altai, Bashkortostan, Buryatia, Dagestan, Sakha (Yakutia),


Up to 20 14 Udmurt,Altai, Transbaikalia, Krasnoyarsk, Primorsky,Orel,
Kirov, Novosibirsk, Chelyabinsk

Kabardino-Balkaria, Mari El, Mordovia,


Tatarstan,,Chuvashia, Krasnodar, Perm
20.1-30 16
Volgograd, Voronezh, Irkutsk, Kurgan, Omsk, Orenburg,
Penza, Saratov, Ulyanovsk

North Ossetia-Alania, Tuva, Khakassia


Stavropol,Arkhangelsk, Astrakhan, Belgorod, Bryansk,
Vologda, Ivanovo, Kaluga, Kemerovo, Kostroma, Kursk,
30.1-40 27
Nizhny Novgorod, Novgorod, Pskov, Rostov, Ryazan,
Samara, Sverdlovsk, Smolensk, Tambov, Tver, Tomsk, Tula,
Tyumen

Adygea, Ingushetia, Karelia, Komi


Kamchatka, Khabarovsk, Amur, Vladimir, Kaliningrad,
Leningrad, Lipetsk, Magadan,
Over 40 21 Moscow, Murmansk, Sakhalin, Yaroslavl
Khanty-Mansiysk, Chukotka, Yamal-Nenets
Evrejskaja
Saint Petersburg

155
Annex 6 - Leading meat brands

Company: JSC Prioskolye

Name: Prioskolye
Products: chicken carcass, semi-finished products of broiler meat, offal
and frozen products from poultry
Name: Picnic with Prioskolye
Products: semi-finished products of broiler chickens in marinades and
spices and sausages for frying
Name: Al Safa
Products: certified halal products permanently monitored by
representatives of the Council of Muftis of the Russian Federation
Name: Odnazhdy v derevne
Products: top quality chicken
Name: Odnazhdy v derevne
Products: high-quality, ecologically clean chicken meat and products

Company: GROUP CHERKIZOVO

Name: Petelinka
Products: chilled poultry carcasses and cuts; pork, beef and barbecue in
marinade
Name: Kurinoje Tzarstvo
Products: chilled and frozen poultry meat, pork and beef
Name: Mosselprom
Products: ecologically clean chilled and frozen poultry meat and
convenience food
Name: Vasiljevka
Products: chilled poultry in the mid-price segment
Name: Domashnaja Kurochka
Products: eco-products in the premium segment of chilled poultry

Company: BEZRK-Belgrankorm

Name: Yasnyje Zori


Products: leg with the bone and boneless, quarter, hip, thigh, breast,
wings, breast and sub-products

Name: Kurinnyj Korol


Products: original, new recipes of broiler meat

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Russian Federation - Meat sector review

Company: Miratorg

Name: Miratorg
Products: chilled pork meat and semi-finished products

Company: GC Agro-Belogorye

Name: Daljnyje Dali


Products: fresh and semi-finished meat products

Name: Agro-Belogorye
Products: cuts chilled and frozen, vacuum packed

Company: OJSC OMPK

Name: Ostankino
Sub-brands: Slivochnyje, SOSISKA.RU
Products: cooked, smoked and semi-smoked sausages, ham, cutlets,
chilled meat, frozen meat and others

Company: Cherkizovsky

Name: Cherkizovsky
Products: cooked, smoked and semi-smoked sausages, ham, cutlets,
chilled meat, frozen meat and others

Company: Zarizino

Name: Zarizino
Products: cooked, smoked and semi-smoked sausages, ham, cutlets,
chilled meat, frozen meat and others

Company: Mikoyan

Name: Mikoyan
Products: cooked, smoked and semi-smoked sausages, ham, cutlets,
chilled meat, frozen meat, half-finished beef meat products and ground-
meat

Company: Dimov

Name: Dimov
Products: cooked, smoked and semi-smoked sausages, ham, cutlets,
chilled meat, frozen meat and others

157
Annex 7 - Major agroholdings and meat
producers in the Russian Federation

Miratorg Agroholding
www.miratorg.ru

Agricultural and industrial holding Miratorg was founded in 1995 in


the Russian Federation as a trading company. In 2005 it became
the largest importer of meat. Since 2003, with the introduction of
quotas on meat imports, the company developed a new strategy
called “from field to fork.” Currently, Miratorg is the largest
producer of pork in the country.

With over 16 000 clients, Miratorg is present in 15 regions


and provides employment to more than 7 000 people. Vertical
integration allows Miratorg to leverage costs and risks on various
commodity markets, maintain stable margins, minimize raw
materials’ price fluctuations and ensure timely supplies and quality
control at all production stages.

In 2012, the company opened a new processing plant in Kaliningrad,


Concordia, which would process poultry and other meats for
McDonald’s and its own brands. Since 2009, Miratorg also ran
the brand of frozen vegetables named Four Seasons. In 2010, the
company started the construction of green-field broiler complex in
Bryansk Region with an annual capacity of 100 000 tonnes.

As a result of restructuring in 2008-2010 into an agricultural and


industrial holding, Miratorg consolidated 100 percent shares of
its subsidiaries. At the end of 2012, the holding company planned
to consolidate LLC Concordia, LLC Prokhorovsky Feed Mill, LLC
Novoyakovlevsky and LLC Pristensky.

Miratorg is actively developing its own production of fodder and


grain to be able to fully meet the needs of its current and future
operations. Starting in May 2011, the combined capacity of two
feed plants reached 630 000 tonnes a year. In 2012, a third feed
mill with an annual capacity of 360 000 tonnes began to operate.
This mill is equipped with machinery from Brock (USA, elevator)
and Ottevanger (Netherlands, mill).

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Russian Federation - Meat sector review

Production of pork is the core business of Miratorg. Today the


agroholding owns 12 automated pig farms working on Big
Dutchman (Germany) and Roxell (Belgium) equipment. Genetic
material is supplied by PIC (United Kingdom), Hermitage (Ireland)
and Dan Bred (Denmark). In terms of effectiveness, the holding’s
pig farms are producing close to the world’s leading manufacturers
and are far ahead of the Russian average.

A slaughterhouse and a primary pork processing plant in Korocha


(Belgorod Region) were launched in 2008. It is the biggest and most
modern enterprise in the Russian Federation in this sector. The list
of equipment suppliers includes Banss and Multivac (Germany), York
(Denmark), Cryovac (the USA), Mondini (Italy) and Marel (Iceland). In
2011, this complex was approved for exports to the EU.

Food distribution is the final link in the business model of the


holding. In 2010 through its own retail chain, Miratorg sold 338
tonnes of meat, 64 percent of which was its own production.
Thanks to its distribution network, Miratorg markets 600-1 000
tonnes of meat products daily.

In the first half of 2011, sales of Miratorg increased by 18.5 percent


when compared with the sales during the same period of the
previous year. Such growth is backed up by the active development
of the distribution network and an aggressive marketing policy.

Cherkizovo Group
www.cherkizovo-group.ru

Cherkizovo Group is a vertically integrated agribusiness company


with a full production cycle, from feed production to processing
meat products and distribution. The company was established
in 2005 as the result of merger between Agro-Industrial Holding
Cherkizovsky (involved in meat production and processing) and
Agro-Industrial Holding Mikhaylovsky (poultry production).

159
The company’s activities comprise:

• s even full-cycle poultry production facilities, with a total


capacity of 400 000 tonnes live weight p.a.;
• f ourteen modern pork production facilities with a total capacity
of 180 000 tonnes live weight p.a.;
• s ix meat processing plants with a total capacity of
190 000 tonnes p.a.;
• six fodder plants with a total capacity of 1.4 million tonnes p.a.;
• g
rain storage facilities with a total storage capacity exceeding
500 000 tonnes; and
• a land bank exceeding 100 000 hectares.

In 2011, Cherkizovo:

• a cquired 100 percent of Mosselprom, whose operations


include poultry, pork, feed production and grain businesses;
• s tarted construction of the Elets agro-industrial complex
in the Lipetsk Region, with an annual meat capacity of
400 000 tonnes (poultry and pork) due in 2014;
• r enovated the Otechestvenniy Product meat processing plant,
which increased its capacity to 400 tonnes per month;
• o
pened a poultry breeding facility, Komarovka, at its Penza
cluster. The facility consists of 34 birdhouses, which have a
combined capacity of almost 1.1 million broilers. And a second
line at the poultry breeding facility at its Bryansk cluster
consists of 26 birdhouses, which have a combined capacity of
almost 880 000 broilers;
• l aunched the largest hatchery in the Russian Federation at its
Penza cluster, capable of 105 million eggs per year;
• l aunched a large hatchery at its Bryansk cluster capable of
producing 43 million eggs per year. After a second line is

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Russian Federation - Meat sector review

launched, the total annual capacity of the hatchery will be


66 million eggs;
• s tarted production at its greenfield pork farms in Tambov,
Voronezh and Lipetsk by launching three breeding facilities;
• o
pened a new poultry slaughter plant with an hourly capacity of
8 000 heads at its Penza cluster.

BEZRK - Belgrankorm
www.jasnzori.ru

Agroholding BEZRK-Belgrankorm was established in 1998 as


a feed mill factory. Over the past decade, the company has
expanded and diversified, and now has a strong focus on modern
equipment and innovative technologies.

Belgrankorm’s integrated poultry operations comprise four


hatcheries, 11 broiler-growing farms and three slaughterhouses
– all overseen by a specialized poultry management department.
A closed production cycle delivers its products to the domestic
market, through the Yasnye Zori and Selskie traditsii brands.

Its main assets are concentrated in the Belgorod Region. For nine
months in 2010 BEZRK-Belgrankorm produced 132.9 thousand
tonnes of poultry meat, 18.3 thousand tonnes of pork,
16.7 thousand tonnes of milk and 369 tonnes of feed.

The company sales reached RUR 14.7 billion in first three quarters


of 2010.

The main shareholder is Alexander Orlov. Since spring 2008,


13.23 percent of BEZRK-Belgrankorm is owned by the International
Finance Corporation.

Belaya Ptica CJSC


www.belaya-ptica.ru

CJSC Belaya Ptica is an active participant of the national project


“Development of agriculture” in which the company has already
invested RUR 4 429 million. The holding’s enterprises operate
along the full production chain. A closed-loop system and quality
control at every stage of production, from food processing to
distribution, ensures a consistently high quality product.

161
The holding operates in Belgorod Region. In 2010, it consisted
of 16 companies: a grain production company; a feed production
plant with a capacity of up to 240 000 tonnes per year; three
eggs reproducers with a capacity of about 59 million eggs per
year; a hatchery, which supplies 69 million chicks per year; eight
poultry farms for raising broiler chickens, with a total production
of 100 thousand tonnes per year of live poultry; and integrated
slaughtering and processing systems of poultry with a capacity of
10.5 thousand heads per hour.

The company’s turnover in 2010 amounted to RUR 5.6 billion,


which is about 8 percent higher than the previous year. In 2010,
the production of animal feed increased to 210 thousand tonnes
per year, hatching eggs to 57 million units per year, day-old chick to
51 million units a year, live poultry to 104 thousand tonnes per year
and meat products to 82 thousand tonnes per year. Investments
in production in 2009 amounted to RUR 4 429 million. In 2010 no
investments were made.

In 2011, the production of animal feed increased to 224 thousand


tonnes a year, hatching eggs to 59 million units a year, day-old chick
to 53 million animals a year, live poultry to 108 thousand tonnes per
year and meat products to 88 thousand tonnes per year.

SC Agro-Belogorye LLC
www.agrobel.ru

LLC SC Agro-Belogorye was established in July 2007. The group


is composed of 30 companies that include nine pig farms, which
have a capacity of 70 thousand tonnes of pigs for slaughter in live
weight per year; six grain production companies; two animal feed
plants; an enterprise for the production of milk; some supporting
companies such as trading houses; and transport enterprises.

The holding operates in the Belgorod Region. In 2010 it had


revenues of RUR 20.1 billion (according to Forbes). The group
employs about 5 000 people. In 2010, it produced about
100 000 tonnes of live weight meat. In 2011, the group sold
105.6 thousand tonnes of pigs for slaughter. Totals in 2011 were
5.5 percent higher than 2010. The total capacity of the group’s feed
mills is of 282 000 tonnes of feed per year.

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Russian Federation - Meat sector review

Rusagro Group of Companies


www.rusagrogroup.ru

The Rusagro Group of Companies is an agricultural holding


working in two main areas: sugar and agriculture. The company
is positioned among the top three leaders of the Russian sugar
market. Rusagro’s first company was created in 1995. After 2000,
the company began developing new markets: grain, oilseed
and others. In November 2004, Rusagro decided to expand the
business and create large pig farms in the southeastern part of the
Belgorod Region.

Today Rusagro owns seven sugar plants in the Tambov and


Belgorod Regions; a fat plant in Yekaterinburg; a pig farm called
OAO Belgorod Bacon; grain elevators; eight regional sales
subsidiaries; and the management company. The company mainly
operates in the Moscow Region.

Production efficiency is achieved through the use of their own


feed supply. In 2010 income from pig meat sales was RUR 4.57
billion. In 2009, the companies belonging to the group produced
900 thousand tonnes of sugar, 33 thousand tonnes of margarine,
53 thousand tonnes of mayonnaise and more than 35 thousand
tonnes of meat. The agroholding produces 13 percent of the sugar
in the Russian Federation (as per end of 2009).

Prioskolye CJSC
www.prioskol.ru

The company was founded in 2003. CJSC Prioskolye includes


poultry farms, processing and feed production plants and trading
houses. The revenues of the holding in 2009 amounted to RUR 15.5
billion. In 2010 they were RUR 18.9 billion (according to Forbes).

CJSC Prioskolye has 16 poultry farms with an overall capacity


of 300 thousand tonnes of poultry meat in live weight per year
and eight poultry farms with a capacity of 12 thousand tonnes
of poultry per year that are being introduced. At the end of 2010
Prioskolye had 25-27 percent of the chicken market in the Siberian
and Far Eastern Federal Districts. In the Novooskolsky area, the
company has a plant for the production of animal protein feed with
a capacity of 16 thousand tonnes per year; it is the only one in the
Russian Federation capable of working in a continuous cycle. The
company also owns an industrial waste processing plant.

163
PRODO Group
www.prodo.ru

PRODO Group was founded in 2004. PRODO Management Ltd is


the management company of all the holding’s enterprises. Another
company was created, PRODO commerce LLC, to interact with
suppliers, local distributors and retailers.

PRODO Group unites more than 20 manufacturing facilities located


throughout 11 regions of the Russian Federation. It employs
over 22 000 people. The portfolio of PRODO Group includes
the brands Troyekurova, BonBekon, Daria, Rococo and Dobryj
Produkt. In 2010, the group produced 146.4 thousand tonnes of
poultry meat in carcass weight, 77.4 thousand tonnes of pork and
116.3 thousand tonnes of processed meat.

AKGUP Promyshlennyj
The company was founded in November 1993 in Altayskij Kray and
is among the country’s largest commercial cattle producers. In 2008,
the company received the status of a breeding farm; it reproduces
Simmental breeds. In January 2010, the number of cattle on
the farm was more than 10 thousand heads. In 2010, AKGUP
Promyshlennyj sold 5 228 tonnes of meat, and the average weight
per head was 483 kg. Ninety-seven percent of its cattle were sold as
luxury quality. In 2010, the number of employees was 476 people.

Agrocomplex JSC
This company was founded in 1993. Today the company has more
than 30 structures, including ten farms, ten poultry farms, feed
mills, milling plant, shops, two oil-mills, two dairies and two meat-
processing plants. Powerful auxiliary structures include railway
craft, service station, biological laboratories and two elevators.
Associates of the company are located in Vyselkovsky, Pavlovsk,
Korenovskii, Ust-Labinsk, Slavic and Starominsky areas of
Krasnodar Krai, Krasnodar.

Today, Agricultural Complex is one of the most famous and


successful agricultural enterprises in southern Russia. The
company is involved in agriculture, animal husbandry and
processing of agricultural products. The company annually
produces about 4.5 thousand tonnes of meat in live weight of
cattle. In 2012, the net income of the company amounted to
RUR 1 685 178 thousand.

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AgroHolding Krasnyj Vostok


www.krvostok.ru

Agricultural holding Krasnyj Vostok was established in 2003 on the


basis of 68 agricultural enterprises in six districts of the Republic
of Tatarstan. The company is involved in the industrial production
of high-quality milk, breeding of highly productive cattle, crop
production and the processing and storage of grain.

During the last seven years the company invested RUR 25 billion


in its agricultural activity. The revenues in 2010 amounted
to RUR 2 203 325 thousand, and its net income was
RUR 2 624 thousand. The company, according to the rating of
the Russian Academy of Agricultural Sciences, is recognized as a
leader of milk production in the Russian Federation. Today the total
population of breeding stock of the company is 88 000 animals,
including 28 000 milk cows. Every day, the company produces
350 tonnes of milk. Each year, the company produces about
280 000 tonnes of grains with an average yield of 43 centners per
ha. At the end of 2010, the company employed 1 105 people.

OJSC Agrofirma Mtsensk


www.agrofm.narod.ru

OJSC Agrofirma Mtsensk was created in December 1998.


Mtsensk owns cattle-breeding complexes with 3 600 cattle places.
The company’s two main business directions are the production of
crops and livestock. The company also has machine, technological
and grain processing stations with a trading network.

At the beginning of 2011, the company had 4 919 heads of


cattle, including 455 dairy cows. In 2010, the sales of beef (in
live weight) amounted to 2 878 tonnes. The average daily gain
of cattle was 1 079 g. In 2011, the total number of livestock
increased to 5 147 heads. The meat produced in live weight was
2.4 thousand tonnes. Production of grains and legumes in 2010
was 40 097 tonnes with an average yield of 3.9 tonnes/ha.

Agricultural Company Belorechenskie


www.belor.ru

Belorechenskoe was founded in 1967. It was a small poultry farm


with an average annual population of 64 thousand hens and

165
4 910 thousand eggs. The company has 139 employees.
Since 1967, the enterprise has undergone many structural and
institutional reforms. In February 1993, the company converted
to the agricultural joint stock company Belorechenskoe. Now it
produces eggs, egg powder and pasteurized eggs. The company
has breeding farms and hatcheries and is actively involved in crop
production (corn, potatoes, onions, carrots, beets, cabbages,
mushrooms, berries, forage crops, seedlings), livestock products
manufacturing (milk, cattle meat), dairy production and marketing
of sausages and meat products. Also, the company manages
waste with Californian worms, effectively uses environmentally
friendly fertilizers or vermicompost, and practices experimental
engineering.

Belorechenskoe has 2.4 million birds and produces 545.4 million


chicken eggs and 12 million quail eggs yearly. The company’s cattle
herd has 11 300 heads, including 5 150 dairy cows that produce
28 000 tonnes of milk and milk products. The company produces
3 000 tonnes of meat products and sausages and 3.500 tonnes of
chicken and beef meat. In addition, the company produces
25 000 tonnes of vegetables and potatoes.

OJSC Ostankino Meat Processing Plant (OMPK)


www.ompk.ru

OJSC OMPK is the leading manufacturer of processed meat and


convenience foods in central Russia. The company was founded in
1954. It owns 17 trading houses, 26 stores in Moscow and one of
the most modern pig farms in the country.
OJSC OMPK operates in Moscow and Regions of Central Russia
(Lipetsk, Voronezh, Ryazan, Belgorod, Yaroslavl, Nizhny Novgorod,
Smolensk, Tver, Ivanovo, Bryansk, Kursk). The company’s
processing facilities can process 500 tonnes of products per day of
more than 100 varieties of processed meat. All production facilities
are equipped with the latest German and Austrian equipment.

At the end of 2011, Ostankino Meat Processing Plant had


maintained its leading position among the manufacturers
of sausage and meat products. Sales in 2011 amounted to
156 000 tonnes. In 2010 the company produced slightly less,
151 000 tonnes. The number of employees is 3 310 people. In 2012
the company registered a net profit of RUR 485 036 thousand.

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Russian Federation - Meat sector review

ABI PRODUCT
www.abigroup.ru

The company was founded in 1995. ABI PRODUCT produces


about 280 kinds of sausages, deli meats, frozen foods and ready
meals. The company’s portfolio includes the brands Starodvorskie
kolbasy, Zarechenskie kolbasy, Medvezhje Ushko, Blagolepnyje
and Tsaredvore. Products are manufactured in the following meat
processing plants (among some others): Starodvorskie has a
designed capacity of 175 tonnes per day; Pokom has a designed
capacity of 190 tonnes per day; and Mjasnaja galereja has a
designed capacity of 150 tonnes per day.

ABI PRODUCT sells its products through independent distributors


and retailers in 43 regions of Russian Federation. The company
also provides direct distribution of its products through its regional
logistics centers in Vladimir, Moscow, Kaliningrad, Krasnodar,
Ivanovo, Kostroma and Yaroslavl. ABI PRODUCT employs over
4 000 people. In 2010, the company registered a net income of
RUR 138 898 thousand.

JSC Mikoyan Meat Processing Plant


www.mikoyan.ru

Mikoyan Meat is the oldest meat processing enterprise in the


country. The company was mentioned for the first time in 1798.
In 1998, Mikoyan became part of the agricultural holding Exima.
The product range includes more than 700 names. The company
operates in Moscow and the Moscow Region, Saint Petersburg,
Rostov, Samara, Perm, Chelyabinsk and Novosibirsk. In 2010,
the share of the Mikoyan Meat Processing Plant in Moscow
and the Moscow Region was about 15 percent in real terms.
In 2010, JSC Mikoyan Meat Processing Plant produced around
79 000 tonnes of meat production and registered a net profit of
RUR 147 518 thousand.

167
Annex 8 - Recent investments in the
poultry sector

Implementing Investment, Project


Name and brief project Starting
company Region million at full
description year
(holding) USD capacity

Industrial turkey complex


for 240 000 tonnes of live
weight per year (stage 1:
90 thousand tonnes). Stage LLC Rostov
1 800 2010 2012-13
1includes hatchery and Evrodon Region
processing facilities, feed
mill with grain storage and
manure disposal system.

Livestock production
systems for poultry meat
(poultry slaughter and
processing plant, hatchery,
feed, 128 breeders,
Cherkizovo Lipetsk
2 336 chicken houses, 600 2011 2019
Group Region
rendering plant, residential
housing). Project capacity:
230 thousand tonnes/year.
Complex start-up is planned
for 2013.

Broiler complex in
Tatischevsk District of
Saratov Region (broiler RE-EM-FORM
Saratov
3 houses, hatchery, feed mill, s.r.o. (Czech 357 2010 -
Region
slaughter and processing Republic)
plant, cold store). Capacity:
31.5 thousand tonnes/year.

Broiler complex with


annual capacity of 100 000
tonnes. The complex was
CJSC
built on the premises of
Izhavinskaya
Inzhavinskaya Poultry Farm Tambov
4 Poultry Farm 283 2010 2012
and will comprise broiler Region
(as a part of
houses in six rearing zones,
Prioskol’e)
processing plant, grain
elevator, rendering plant,
cold stores.

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Implementing Investment, Project


Name and brief project Starting
company Region million at full
description year
(holding) USD capacity

Additional poultry farms


with capacity of 50 000 190 -
tonnes of poultry per year.
Uralbroiler Chelyab-
5 Group of insk -
Modernization of poultry Companies Region
farms in the Argayashsky
Area to increase the volume 46.7 2010
of poultry meat production
by 21 tonnes/year.

Additional broiler housing


in Novgorod Region with Novgoro-d
6 Belgrankorm 166 2010 -
a total capacity of 22.500 Region
tonnes/year.

Breeder operation of ten


houses brought the total
LLC Voronezh
7 company’s broiler meat 150 2009 2015
LISKoBroiler Region
output to 80 000 tonnes
in 2012.

Vertically integrated
turkey complex with an
annual capacity of 15 000
tonnes/year, including LLC Russian
hatchery, breeders, rearing, Dairy Penza
8 150 2011 2012
processing plant, packaging, Company Region
feed mill and grain storage. (Rusmoloko)
The project is expandable
to 60 000 tonnes of turkey
meat/year.

Chelyab-
Broiler complex for 50 000 Sitno
9 insk 140 2010 2011
tonnes of poultry/year. Company
Region

Renovation and
construction of new poultry Chelyab-
10 farms in the Yetkulsk Area: LLC Bektysh insk 116.7 - -
infrastructure, broiler Region
houses, feed mill.

169
Implementing Investment, Project
Name and brief project Starting
company Region million at full
description year
(holding) USD capacity

Construction of a new CJSC


poultry processing plants in Stavropolsky
Blagodarny was scheduled broiler – in Stavropol
11 60 2009 2010
for August 2010. Plant 2011 acquired Region
capacity is 80 000 tonnes by GAP
per year. Resource

Reconstruction of the
Vertunovsky breeder
operation of the
Cherkizovo Penza
12 Vassilievskya poultry 53 2009 2010
Group Region
farm with the production
capacity of 60 million
hatching eggs/year.

Renovation and installation


of new equipment for
breeder farms Pskov
and Borovichi (Novgorod Novgorod
Rubezh Group First stage
13 Region) and broiler houses and Pskov 2009 2012
of Companies 123.3
Pervomayskaya, Novgorod Regions
and Valdai farms. The total
capacity will increase by 36
tonnes of broiler meat/year.

Source: Authors’ presentation based on information obtained from market operators,


companies’ announcements, development programmes, etc.

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Russian Federation - Meat sector review

Annex 9 - Broiler meat production (Far


East Russian Federation): investment
model assumptions, results and
sensitivity

Table 56: Investment cost to set up a large- scale broiler


production farm, in 2012 prices
Investment cost, in RUR
Fixed assets Percent
million
Poultry house 699 64

Equipment for broilers 91 8


Slaughter (building) 33 3

Slaughtering equipment 75 7
Incubator building 11 1
Incubator equipment 43 4

Other 145 13

Total 1 098 100

Source: Authors’ calculations based on available business plans.

171
The following main assumptions about input prices and
productivity were used to calculate investment efficiency in a
large-scale broiler production farm:

• o
ne hatching egg costs RUR 13.23 (expected to increase by
6 percent annually);
• o
ne incubation egg costs RUR 4.11 (expected to increase by
6 percent annually);
• e
gg hatchability for the first four years of the project was
assumed to be 75 percent and 80 percent in the following
years;
• livability (rate of survival) of broilers was set at 93 percent;
• t arget weight of the broiler in the first ten years of the project
is two kilograms and 2.2 kilograms in the following years;
• a verage cost of feed is RUR 12.48 per kg (expected to increase
by 17.5 percent yearly);
• f eed conversion rate is 2.1 kg of feed per 1 kg of weight in the
first year, 2.0 kg in the second year and 1.9 in the following
years;
• o
perational costs such as gas, electricity, work force and others
account for RUR 44-49 per kg.

Considering those assumptions, the production cost of poultry


meat should reach RUR 78 per kg. This cost increases by
RUR 7.11 per kg including the delivery cost.

The following are assumptions about outputs and prices:

• o
utput of meat is expected to reach 78 percent per head,
approximately 1.56-1.73 kg of meat per broiler;
• a verage poultry meat sales price of RUR 123 per one kg
provides the company with a gross income of RUR 45 per
one kg of broiler meat. The sales price is expected to grow by
12 percent per year;
• t otal quantity of meat farms will be able to supply will gradually
increase until it reaches 12 500 tonnes of meat per year in the
eighth project year.

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Russian Federation - Meat sector review

Table 57: Sensitivity analysis of investments in broiler meat


production
NPV sensitivity
(billion RUR)
Feed cost fluctuations, RUR/kg
9.984 11.232 12.48 13.728 15
87 -1.10 -1.35 -1.61 -1.86 -2.32
Average meat price, 111 0.30 0.05 -0.20 -0.46 -0.92
RUR/kg 123 1.03 0.78 0.53 0.27 -0.19
135 1.76 1.51 1.26 1.00 0.54
148 2.49 2.24 1.99 1.73 1.27
Input cost (feed) inflation

14 % 16 % 18 % 20 % 22 %

8% -0.15 -0.31 -0.44 -0.68 -0.89


Output prices inflation 10% 0.32 0.16 0.02 -0.21 -0.42
12% 0.82 0.66 0.53 0.29 0.08
14% 1.36 1.20 1.07 0.83 0.62
16% 1.94 1.78 1.65 1.41 1.20
Average feed conversion rate, kg of feed per kg of meat
2.02 1.92 1.82 1.75 1.62
87 -1.74 -1.61 -1.47 -1.34 -1.21
Average meat price, 111 -0.33 -0.20 -0.07 0.06 0.19
RUR/kg 123 0.39 0.53 0.66 0.79 0.92
135 1.12 1.26 1.39 1.52 1.65
148 1.85 1.99 2.12 2.25 2.38
IRR sensitivity
(Percentage)
Average feed conversion rate, kg of feed per kg of meat
2.02 1.92 1.82 1.75 1.62
87 Negative Negative Negative Negative 0
Average meat price, 111 6 8 9 10 12
RUR/kg 123 14 15 17 18 19
135 21 22 23 24 25
148 26 27 28 29 30
Payback period sensitivity
(Years)
Average feed conversion rate, kg of feed per kg of meat
2.02 1.92 1.82 1.75 1.62
87 - - - - -
Average meat price, 111 11 10 10 9 9
RUR/kg 123 8 8 8 8 7
135 7 7 7 7 7
148 6 6 6 6 6
Source: Authors’ calculations.

173
Annex 10 - Recent investments in the
pork sector

Implementing Investment, Project at


Name and brief Starting
company Region million full
project description year
(holding) USD capacity

Construction of a
swine complex for one
Belgorod
1 million pigs (90 000 GK Rusagro 433.3 2009 2016
Region
tonnes of pig meat/
year).

Construction of a
swine complex in
Zherdevsky and
LLC Tambov Tambov
2 Sampursky Districts 320 2010 2014
bacon Region
for one million pigs/
year, including breeder
farms.
Construction of
a slaughter and
processing plant with a
capacity of 100 tonnes LLC Altay-
3 Altay Region 233.3 2011 2013
per day (consisting of myasoprom
three pig farms and
three rearing farms for
330 000 pigs).

Construction of a pig-
breeding complex with
capacity of 50 000 Tambov
4 LLC Resurs 230.5 2011 2012
tonnes of pig meat per Region
year in five districts of
the region.

Commissioning in
Pristensk Area for the
first phase of a rearing Agroindustrial Kursk
5 210 2010 2018
farm for 20 000 pigs: holding Miratorg Region
50 000 tonnes of pork/
year.

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Russian Federation - Meat sector review

Implementing Investment, Project at


Name and brief Starting
company Region million full
project description year
(holding) USD capacity

Construction in
Vygonich Area of
two pig farms of
300 000 heads, or
33-35 000 tonnes/
year. The complex
will include four JSC Bryansk
Bryansk
6 commercial farms with Meat Processing
Region
116.7 2010 -
2.5 000 pigs each, Factory
a breeding farm for
1.8 000 pigs, a feed
mill with a production
capacity of 30 tonnes/
hour and a selection-
hybrid center.

Construction of
pig farm in the
Fatezhsk Area for
112 000 heads/year
with a complete Investor - LLC
Kursk
7 production cycle, UniversStroyl-
Region
116.7 2010 2011
including slaughter, uxe
prime processing and
a feed mill. Target
capacity: 50 000
tonnes of pork.

Construction of swine
complex for 250 000
pigs in Yetkulsky,
Chebarkulsky and Romkor Chelyabinsk
8 > 100 2010 2015
Nyazeptrovsk Districts. Corporation Region
Payback period is
expected not to
exceed five years.

Construction of the
pig farm Glebovsky
Dmitrova gora
for 52 000 pigs. The
9 (Agropro- Tver Region 100 2010 2013
complex will also
mkomplektatsiya)
include a feed mill and
other manufacturing.

Construction of the
pig farm East-Siberian,
for 12.900 tonnes of
CJSC Siberian Buryat
10 meat in live weight/ 100 2011 2013
agrogroup Republic
year. Project payback
period is estimated to
be eight years.

175
Implementing Investment, Project at
Name and brief Starting
company Region million full
project description year
(holding) USD capacity

Construction of a pig
farm for
70 000 heads in
Zaigraivsk District.
CJSC Siberian Buryat
11 Production capacity is 86.6 2011 -
agrogroup Republic
13 000 tonnes of pork
meat in live weight/
year; the payback
period is eight years.

Increasing the capacity


of pig farm in order
Uralsky (affiliate
to reach the level of Sverdlovsk
12 of CJSC Siberian 50-66.7 2011 2012
27 000 heads/year, Region
agrogroup)
or 37.5 000 tonnes of
meat in live weight.

Opening of a new pig


complex for 5250 pigs
in Budanovka Village Kursk
13 OJSC Global Eco 64 2011 2012
in Zolotukhinsky Area Region
with a capacity of
14 500 tonnes/year.

Finalizing the fifth pig


farm Troparevo that JSC Ostankino Moscow
14 15 - 2009
has a capacity 55 000 Meat Processing Region
pigs/year.

Construction of
pig complex in
Bogdanovich and
Kamyshlovo Areas:
CJSC Pig farm
two independent
Uralsky (affiliate Sverdlovsk
15 farms, each of which 143.3 2007 2009
of CJSC Siberian Region
includes a reproducer,
agrogroup)
rearing and feed grow.
Construction started in
2007. Capacity: 25 000
tonnes of meat/year.

176
Russian Federation - Meat sector review

Implementing Investment, Project at


Name and brief Starting
company Region million full
project description year
(holding) USD capacity

Construction of two
pig complexes in
Karachai District.
LLC Bryansk
The complexes can
Meat Processing Bryansk
16 hold 63 000 pigs and - 2007 2012
Complex» (Tsar- Region
2 530 sows and the
Myaso Group)
slaughterhouse has a
capacity of 20 tonnes/
shift.

Completion of the
pig farm Zhuravskii,
Agroindustrial Belgorod
17 and 1 200 gilts 56.7 - 2009
holding Miratorg Region
were delivered to
reproducer.

Completion of the last,


fourth area of the pig
GC Russian
complex in Millerovo Rostov
18 Agroindustrial 53.3 2008 2011
District, which has Region
Trust
a capacity of 11 000
tonnes of pork/year.

Source: Authors’ presentation based on information obtained from market operators,


companies’ announcements, development programmes, etc.

177
Annex 11 - Recent investments in the
beef sector

Implementing Investment, Project


Name and brief project Starting
company Region million at full
description year
(holding) USD capacity

Phase one of beef


production and processing
project completed in 2010.
Payback period is 15 years.
In December 2011, four
new farms in Trubchevsk
and Pochep Areas were
populated with 14 000
Aberdeen-Angus breeding
cattle. The total volume of
six cattle farms accounts
to 20 000 heads. By 2014,
Agro-industrial Bryansk
1 the project will comprise 37 800 2009 2014
holding Miratorg Region
farms with 274 000 animals,
112 000 of which will be
the breeders. Feedlots
will allow breeding up to
37 000 animals. Production
capacity of the project is
48 000 tonnes of meat/
year. Slaughter and primary
processing facilities will
be built in 2013-2014.
The project requires
150 000 hectares of land.

Construction of the first


Agro-holding Republic
of a set of five rearing
2 Marble Meat of of 133 2011
complexes for 5 860 heads
Kalmykia Kalmykia
of beef cattle.

JSC
Construction of a farm for
Maximovsky
beef production for 4 000 Tambov
3 Meat 66.1 2010 2013
cows or 2 000 tonnes of Region
Processing
beef.
Complex

178
Russian Federation - Meat sector review

Implementing Investment, Project


Name and brief project Starting
company Region million at full
description year
(holding) USD capacity

Construction of a dairy
and meat complex for
600 heads of cattle in CJSC Agro-
Tambov
4 Goreloe. In 2012 there was complex 33.3 2011 2013
Region
an annual production of TAmbovsky
4 000 tonnes of milk and
180 tonnes of meat.

A beef cattle breeding


farm, started in 2007 in the
Kaluga on 3 000 hectares,
produced 1.1 thousand
heads in 2012 and
2 500 heads in 2013. The
Kaluga
5 total population is projected LLC Nesterovka EUR 4 million 2007 2013
Region
to reach
2 – 25 000 bulls in 2016.
The project uses Hereford
and Simmental breeds,
mainly from Germany and
Russian Federation.

Expansion of marbled
Lipetsk
6 beef project in Hlevensky LLC Allbeef No data 2010 2011
Region
District.

Establishment of new beef


LLC Gereford- Pskov
7 cattle farms in Pytalovo Around 20 2011 2013
center Region
Area.

1.4 000 heads of Aberdeen
Angus and Hereford
breeders from the United
States were delivered at
LLC Stevenson-
the end of 2010 to the Voronezh
8 Sputnik and LLC 38 2010 2012
farm Stevenson Sputnik. Region
Angus
1.8 thousand head were
delivered to LLC Breeding
Farm Angus-Shestakovo in
fall 2011.

Source: Authors’ presentation based on information obtained from market operators,


companies’ announcements, development programmes, etc.

179
180
Table 58: Foreign trade statistics: poultry, yearly, 2007-2012
Poultry
The Russian Federation’s Yearly Statistics

Commodity: 0207, Meat and Edible Offal of Poultry (Chickens, Ducks, Geese, Turkeys And Guineas), Fresh, Chilled or Frozen

Calendar Year: 2007-2011, Year to Date: 12/2011 & 12/2012

Calendar year Year to date

Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

Export (value,
1 115 5 671 6 172 172 58 140 82 140 82 110 53 -21.51
thousand USD)

Export (quantity,
510 2 813 5 896 186 55 18806 18806 153 86 -18.18
tonne)

Export (price,
2 187.82 2 015.56 1 046.74 925.12 748.83 748.83 718.35 -4.07
USD/tonne)
Annex 12 - Foreign meat trade

Import (value,
1 051714 1 339 318 1 064212 862 807 572 068 572 068 706 814 23.55
thousand USD)

Import (quantity,
1287349 1 217 587 948 459 650 432 403 524 403 524 469 561 16.37
tonne)

Import (price,
816.96 1 099.98 1 122.04 1326.51 1417.68 141 7.68 1505.27 6.18
USD/tonne)
Import

Value in thousand USD

Calendar year Year to date


Partner country
Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

World 1 051 714 1 339 318 1 064 212 862 807 572 068 572 068 706 814 23.55

United States 634 887 835 895 733 133 331 208 307 044 307 044 338 312 10.18

Brazil 245 694 294 935 131 719 257 693 150 010 150 010 156 008 4

Germany 71 621 95 688 97 486 123 868 32 442 32 442 10 334 -68.15

France 49 694 58 179 59 967 40 329 31 736 31 736 35 466 11.75

Ukraine 0 0 0 165 11 417 11 417 68 937 503.8

Hungary 2 161 3 630 5 482 14 907 7 143 7 143 10 580 48.12

Argentina 3 123 6 321 6 744 9 811 6 824 6 824 19 477 185.41

Belgium 22 463 15 018 6 192 11 890 5 116 5 116 9 057 77.04

Denmark 1 261 3 749 7 423 25 697 4 723 4 723 979 -79.26

Finland 3 751 3 390 1 075 5 145 3 922 3 922 7 392 88.49

181
Russian Federation - Meat sector review
182
Export

Value in thousand USD

Calendar year Year to date


Partner country
Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

World 1 115 5 671 6 172 17 258 14 082 14 082 11 053 -21.51

Hong Kong 0 0 679 6 083 6 886 6 886 5 491 -20.25

Viet Nam 24 120 1 428 4 814 4 661 4 661 1 540 -66.97

Abkhazia 0 650 2 486 1 823 1 948 1 948 3 224 65.49

China 0 0 0 45 257 257 0 -100

Tajikistan 0 6 199 264 204 204 3 -98.39

Azerbaijan 0 13 0 0 87 87 0 -100

Svalbard & Jan


0 0 0 0 38 38 0 -100
Mayen

Panama 0 0 0 0 1 1 0 -100

Norway 0 0 0 0 0 0 0 -100

Belize 0 0 0 0 0 0 0 -100

Source: Customs Committee of the Russian Federation and GTIS.


0
500
1 000
1 500
2 000
2 500
3 000
3 500
0
50 000
100 000
150 000
200 000
250 000
300 000
01/2009
02/2009 01/2009
03/2009 02/2009

2008-2012
2009-2012

04/2009 03/2009
05/2009 04/2009
06/2009 05/2009
07/2009 06/2009

Export value,
08/2009 07/2009

Import value,
09/2009 08/2009
10/2009 09/2009
11/2009 10/2009
12/2009 11/2009
01/2010 12/2009

thousand USD (left axis)


02/2010 01/2010
03/2010 02/2010

thousand USD (left axis)


04/2010 03/2010
05/2010 04/2010
06/2010 05/2010
07/2010 06/2010
08/2010 07/2010
09/2010 08/2010
10/2010 09/2010
11/2010 10/2010

(left axis)
12/2010 11/2010
01/2011 12/2010
02/2011 01/2011
03/2011 02/2011
04/2011 03/2011
05/2011 04/2011
06/2011 05/2011
Import quantity,

06/2011
tonnes (left axis)

07/2011

Export quantity, tonnes


07/2011

Source: Customs Committee of the Russian Federation and GTIS.


08/2011 Source: Customs Committee of the Russian Federation and GTIS.
09/2011 08/2011
10/2011 09/2011
11/2011 10/2011
12/2011 11/2011
01/2012 12/2011
02/2012 01/2012
03/2012 02/2012
04/2012 03/2012
Figure 66: Foreign trade statistics: poultry export, monthly,

05/2012 04/2012
Figure 65: Foreign trade statistics: poultry imports, monthly,

06/2012 05/2012
06/2012
07/2012
07/2012
Import price,

Export price,
08/2012 08/2012
09/2012 09/2012
10/2012 10/2012
11/2012 11/2012
12/2012 12/2012

0
USD/ tonne (right axis)
0

USD/ tonne (right axis)


500
200
400
600
800

1 000
1 500
2 000
2 500
1 000
1 200
1 400
1 600
1 800

183
Russian Federation - Meat sector review
184
Table 59: Foreign trade statistics: pork meat, yearly, 2007-2012

The Russian Federation’s Yearly Statistics


Pork

Commodity: 0203, Meat of Swine (Pork), Fresh, Chilled or Frozen

Calendar Year: 2007-2011, Year to Date: 12/2011 & 12/2012

Calendar year Year to date

Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

Export (value,
194 194 505 320 287 287 151 -47.3
thousand USD)

Export (quantity,
90 60 162 120 46 46 33 -29.62
tonne)

Export (price, USD/


2 148 3 232 3 123 2 677 6 170 6 170 4 619 -25.13
tonne)

Import (value,
1 636 651 2 200 464 1 860 679 1 923 034 2 108 704 2 108 704 2 406 649 14.13
thousand USD)

Import (quantity,
671 739 790 955 635 670 640 626 656 590 656 590 720 241 9.69
tonne)

Import (price, USD/


2 436 2 782 2 927 3 001 3 211 3 211 3 341 4.04
tonne)
Import

Value in thousand USD

Calendar year Year to date


Partner country
Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

World 1 636 651 2 200 464 1 860 679 1 923 034 21 08 704 2 108 704 2 406 649 14.13

Brazil 698 861 697 029 769 404 712 722 429 934 429 934 392 951 -8.6

Germany 97 329 189 302 232 696 316 234 353 079 353 079 302 686 -14.27

Canada 159 079 260 368 105 416 178 006 339 333 339 333 565 785 66.73

Denmark 218 595 178 763 195 117 222 913 260 034 260 034 213 490 -17.9

United States 180 388 435 878 298 996 177 738 186 676 186 676 292 692 56.79

Spain 73 199 102 549 82 705 96 121 173 554 173 554 203 959 17.52

France 37 611 88 437 70 784 86 559 96 631 96 631 67 615 -30.03

Ukraine 0 0 0 1 971 57 132 57 132 89 978 57.49

Belgium 39 426 45 559 40 977 44 157 51 311 51 311 44 539 -13.2

Ireland 23 686 34 775 71 22 444 46 155 46 155 48 648 5.4

185
Russian Federation - Meat sector review
186
Export

Value in thousand USD

Calendar year Year to date


Partner country
Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

World 0 0.086 30.885 30.274 0 0 3.569 n/a

Abkhazia 0 0 0 4.289 0 0 3.569 n/a

Kazakhstan 0 0.086 30.885 25.985 0 0 0 n/a

Source: Customs Committee of the Russian Federation and GTIS.


0
20
80
60
80
100
120
140
160
180
200
01/2009

0
50 000
100 000
150 000
200 000
250 000
300 000
02/2009
03/2009 01/2009
04/2009

2009-2012
02/2009
05/2009 03/2009
06/2009 04/2009
07/2009 05/2009
08/2009 06/2009

Export value
09/2009 07/2009

Import value
10/2009 08/2009
11/2009 09/2009
monthly, 2009-2012

12/2009 10/2009
01/2010 11/2009
02/2010 12/2009
03/2010 01/2010

thousand USD (left axis)


04/2010 02/2010

thousand USD (left axis)


05/2010 03/2010
06/2010 04/2010
07/2010 05/2010
08/2010 06/2010
09/2010 07/2010
10/2010 08/2010
09/2010
11/2010
10/2010
12/2010 11/2010
01/2011 12/2010
02/2011

(right axis)
01/2011
03/2011 02/2011
(right axis)
04/2011 03/2011
05/2011 04/2011
06/2011 05/2011
07/2011 06/2011

Source: Customs Committee of the Russian Federation and GTIS.


Source: Customs Committee of the Russian Federation and GTIS.
08/2011 07/2011
09/2011 08/2011

Export price USD/tonne


10/2011 09/2011
Import price USD/tonne

11/2011 10/2011
12/2011 11/2011
Figure 67: Foreign trade statistics: pork meat imports,

01/2012 12/2011
02/2012 01/2012
03/2012 02/2012
04/2012 03/2012
05/2012 04/2012
06/2012 05/2012
06/2012
Figure 68: Foreign trade statistics: pork meat exports, monthly,

07/2012
07/2012

(left axis)
08/2012
08/2012
(left axis)

09/2012
10/2012 09/2012
11/2012 10/2012
12/2012 11/2012
12/2012

0
0
500

2 000
4 000
6 000
8 000

Export quantity tonnes


10 000
12 000
1 000
1 500
2 000
2 500
3 000
3 500
4 000

Import quantity tonne

187
Russian Federation - Meat sector review
188
Table 60: Foreign trade statistics: bovine meat frozen, yearly, 2007-2012

The Russian Federation’s Yearly Statistics

Commodity: 0202, Meat of Bovine Animals, Frozen


Beef

Calendar Year: 2007-2011, Year to Date: 12/2011 & 12/2012

Calendar year Year to date

Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

Export (value,
31.471 224.08 371.659 4.366 147.426 147,426 115.022 -21.98
thousand USD)
Export
(quantity, 11 90 86 2 28 28 16 -44.65
tonne)
Export (price,
2 836.5 2 495.57 4 335.23 2 617.51 5 185.27 5 185.27 7 308.71 40.95
USD/tonne)

Import (value,
1 698 705.944 2 572 922.413 2 195 178.435 2 072 237.098 2 217 048.923 2 217 048,92 2 583 316.18 16.52
thousand (USD)
Import
(quantity, 712 812 791 159 62 4077 606 083 566 545 566 545 584 615 3.19
tonne)
Import (price,
2 383.1 3 252.09 3 517.48 3 419.07 3 913.28 3 913.28 4 418.83 12.92
USD/tonne)
Import

Value in thousand USD

Calendar year Year to date


Partner country
Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

World 1 698 705.944 2 572 922.413 2 195 178.435 2 072 237.098 2 217 048.923 2 217 048.92 2 583 316.18 16.52

Brazil 1 074 881.155 1 344 138.619 1 173 074.819 972 393.667 920 217.661 920 217.661 109 6487.5 19.16

Uruguay 50 290.68 262 859.416 226 239.527 262 139.18 288 561.237 288 561.237 277 565.953 -3.81

Australia 8 219.121 227 217.011 59 786.534 148 384.445 239 471.504 239 471.504 122 937.282 -48.66

Paraguay 157 187.371 269 676.366 16 1321.84 210 740.807 182 910.782 182 910.782 546 990.862 199.05

United States 0 71 853.878 1 1622.925 87 875.951 163 669.743 163 669.743 220 022.267 34.43

Mexico 0 0 0 10 541.157 88 242.631 88 242.631 118 188.193 33.94

Argentina 259 401.483 212 176.375 470 031.225 113 489.252 56 549.995 56 549.995 36 822.137 -34,89

Germany 14 427.712 23 882.894 6 332.394 55 370.667 41 463.002 41 463.002 15 436.093 -62.77

Italy 7 608.095 27 091.809 3 096.221 42 775.113 39 466.235 39 466.235 22 836.044 -42,14

Ukraine 92 926.361 62 108.311 59 111.227 43 208.884 34 933.609 34933.609 24952.126 -28.57

189
Russian Federation - Meat sector review
190
Export

Value in thousand USD

Calendar year Year to date


Partner country
Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

World 31.471 224.08 371.659 4 366 147.426 147.426 115.022 -21.98

South Ossetia 0 0 0 0 146.643 146.643 55.685 -62.03

Panama 0 0 0 0 0.589 0.589 0 -100

Belize 0 0 0 0 0.194 0.194 0 -100

Denmark 0 2 397 0 0 0 0 0 n/a

Georgia 0 0 139.68 0 0 0 0 n/a

Germany 0 0 0 0 0 0 14.708 n/a

Kazakhstan 31.471 18.414 105 317 4 366 0 0 0 n/a

Korea, South 0 0.233 0 0 0 0 0 n/a

Netherlands 0 70.816 0 0 0 0 0 n/a

Poland 0 72.298 62.051 0 0 0 0 n/a

Source: Customs Committee of the Russian Federation and GTIS.


Russian Federation - Meat sector review

Figure 69: Foreign trade statistics: bovine meat frozen imports,


monthly, 2009-2012

350 000 5 000


4 500
300 000
4 000
250 000
3 500
200 000 3 000
150 000 2 000
1 500
100 000
1 000
50 000 500
0 0
01/2009
02/2009
03/2009
04/2009
05/2009
06/2009
07/2009
08/2009
09/2009
10/2009
11/2009
12/2009
01/2010
02/2010
03/2010
04/2010
05/2010
06/2010
07/2010
08/2010
09/2010
10/2010
11/2010
12/2010
01/2011
02/2011
03/2011
04/2011
05/2011
06/2011
07/2011
08/2011
09/2011
10/2011
11/2011
12/2011
01/2012
02/2012
03/2012
04/2012
05/2012
06/2012
07/2012
08/2012
09/2012
10/2012
11/2012
12/2012
Import value Import quantity Import price
thousand USD (right axis) tonnes (right axis) USD/tonne (left axis)

Source: Customs Committee of the Russian Federation and GTIS.

Figure 70: Foreign trade statistics: bovine meat frozen exports,


monthly, 2009-2012

160 10 000
9 000
140
8 000
120
7 000
100 6 000
80 5 000
60 4 000
3 000
40
2 000
20 1 000
0 0
01/2009
02/2009
03/2009
04/2009
05/2009
06/2009
07/2009
08/2009
09/2009
10/2009
11/2009
12/2009
01/2010
02/2010
03/2010
04/2010
05/2010
06/2010
07/2010
08/2010
09/2010
10/2010
11/2010
12/2010
01/2011
02/2011
03/2011
04/2011
05/2011
06/2011
07/2011
08/2011
09/2011
10/2011
11/2011
12/2011
01/2012
02/2012
03/2012
04/2012
05/2012
06/2012
07/2012
08/2012
09/2012
10/2012
11/2012
12/2012

Export value Export quantity Export price


thousand USD (left axis) tonnes (left axis) USD/tonne (right axis)

Source: Customs Committee of the Russian Federation and GTIS.

191
Table 61: Foreign trade statistics: bovine meat fresh or chilled, yearly, 2007-2012

192
The Russian Federation’s Yearly Statistics

Commodity: 0201, Meat of Bovine Animals, Fresh or Chilled

Calendar Year: 2007-2011, Year to Date: 12/2011 & 12/2012

Calendar year Year to date

Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change
Export
(value, thousand 0 0.086 30.885 30.274 0 0 3.569 n/a
USD)
Export
0 0 4 4 0 0 1 n/a
(quantity, tonne)

Export
0 1 954.55 6 881.68 6 806.2 0 0 4 406.57 n/a
(price, USD tonne)

Import (value,
70 858.4 88 196.63 58 250.53 98 128.18 199 983.47 199 983.47 218 550.3 9.28
thousand USD)

Import
21 133 19 571 11 765 19 748 35 732 35 732 41 165 15.2
(quantity,tonne)

Import (price, USD/


3 352.9 4 506.54 4 951.23 4 969.1 5 596.8 5 596.8 5 309.16 -5.14
tonne)
Import

Value in thousand USD

Calendar year Year to date


Partner
country
2007 2008 2009 2010 2011 12/2011 12/2012 Percent change

World 70 858.4 88 196.63 58 250.53 98 128.18 199 983.47 199 983.47 218 550.3 9.28

Lithuania 38 661.11 45 958.15 31 433.39 42 116.19 80 600.207 80 600.207 68 361.823 -15.18

Germany 24 225.95 27 422.13 15 103.15 25 213.08 36 224.399 36 224.399 14 058.928 -61.19

Ukraine 24 225.95 0 150.488 663.748 22 987.652 22 987.652 40 542.403 76.37

Australia 3 811.043 8 849.542 9 531.085 14 389.18 13 615.255 13 615.255 18 257.393 34.1

United
0 2 889.336 1 504.434 63 83.922 13 101.351 13 101.351 16 935.466 29.27
States

Poland 0 1 026.115 81.797 6 300.07 12 902.914 12 902.914 2 3164.72 79.53

Moldova 0 0 43.757 1 274.492 8 473.478 8 473.478 8 230.08 -2.87

Denmark 0 1 428.414 0 0 4 202.246 4 202.246 7 289.031 73.46

Austria 30.346 5.046 10.26 377.369 2 287.889 2 287.889 770.685 -66.31

Brazil 33.784 292.383 79.511 304.917 2 188.181 2 188.181 13 805.499 530.91

193
Russian Federation - Meat sector review
194
Export

Value in thousand USD

Calendar year Year to date


Partner country
Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

World 194 194 505 320 287 287 151 -47.3

Abkhazia 0 0 61 48 276 276 73 -73.64

Svalbard & Jan


0 0 0 0 7 7 0 -100
Mayen

Panama 0 0 0 0 3 3 0 -100

Belize 0 0 0 0 1 1 0 -100

Norway 0 0 0 3 0 0 0 -100

Azerbaijan 0 0 0 0 0 0 0 n/a

Belgium 0 0 58 0 0 0 0 n/a

Denmark 0 0 91 0 0 0 0 n/a

Georgia 0 0 17 0 0 0 0 n/a

Germany 64 84 0 147 0 0 0 n/a

Source: Customs Committee of the Russian Federation and GTIS.


Russian Federation - Meat sector review

Figure 71: Foreign trade statistics: bovine meat fresh or chilled


imports, monthly, 2009-2012

25 000 7 000

6 000
20 000
5 000
15 000
4 000

10 000 3 000
2 000
5 000
1 000
0 0
01/2009
02/2009
03/2009
04/2009
05/2009
06/2009
07/2009
08/2009
09/2009
10/2009
11/2009
12/2009
01/2010
02/2010
03/2010
04/2010
05/2010
06/2010
07/2010
08/2010
09/2010
10/2010
11/2010
12/2010
01/2011
02/2011
03/2011
04/2011
05/2011
06/2011
07/2011
08/2011
09/2011
10/2011
11/2011
12/2011
01/2012
02/2012
03/2012
04/2012
05/2012
06/2012
07/2012
08/2012
09/2012
10/2012
11/2012
12/2012
Import value Import quantity Import price
thousand USD (left axis) tonnes (left axis) USD/tonnes (right axis)

Source: Customs Committee of the Russian Federation and GTIS.

Figure 72: Foreign trade statistics: bovine meat fresh or chilled


exports, monthly, 2009-2012

30 8 000

25 7 000
6 000
20
5 000
15 4 000
10 3 000
2 000
5
1 000
0 0
01/2009
02/2009
03/2009
04/2009
05/2009
06/2009
07/2009
08/2009
09/2009
10/2009
11/2009
12/2009
01/2010
02/2010
03/2010
04/2010
05/2010
06/2010
07/2010
08/2010
09/2010
10/2010
11/2010
12/2010
01/2011
02/2011
03/2011
04/2011
05/2011
06/2011
07/2011
08/2011
09/2011
10/2011
11/2011
12/2011
01/2012
02/2012
03/2012
04/2012
05/2012
06/2012
07/2012
08/2012
09/2012
10/2012
11/2012
12/2012

Export value thousand Export price Export quantity


USD (left axis) USD/tonne (right axis) tonnes (left axis)

Source: Customs Committee of the Russian Federation and GTIS.

195
Table 62: Foreign trade statistics: edible offal, yearly, 2007-2012

196
The Russian Federation’s Yearly Statistics

Commodity: 0206, Edible Offal of Bovine Animals, Swine, Sheep, Goats, Horses, etc. Fresh, Chilled or Frozen
Offal

Calendar Year: 2007-2011, Year to Date: 12/2011 & 12/2012

Calendar year Year to date

Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

Export (value,
74.446 206.518 309.485 151.166 1 211.449 1 211.449 2 954.048 143.84
thousand USD)
Export
(quantity, 62 156 227 148 874 874 1 944 122.43
tonne)
Export (price,
1 208.26 1 325.39 1 362.68 1 019.85 1 385.81 1 385.81 1 519.26 9.63
USD/tonne)

Import (value,
330 232.581 421 592.642 404 600.368 405 565.234 440 603.146 440 603.146 459 726.872 4.34
thousand USD)
Import
(quantity, 307 163 321 352 297 762 291 833 291 005 291 005 273 458 -6.03
tonne)
Import (price,
1 075.1 1 311.93 1 358.8 1 389.72 1 514.07 1 514.07 1 681.16 11.04
USD/tonne)
Import

Value in thousand USD

Calendar year Year to date


Partner country
Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

World 330 232.581 421 592.642 404 600.368 405 565.234 440 603.146 440 603.146 459 726.872 4.34

Germany 47 961.085 85 031.813 94 082.841 85 470.854 75 125.3 751 25.3 60 241.875 -19.81

Argentina 40 940.604 44 447.592 68 155.057 51 469.896 54 485.621 54 485.621 72 836.826 33.68

United States 28 939.877 74 406.175 70 262.589 61 495.913 49 288.394 49 288.394 62 317.588 26.43

Denmark 31 776.832 17 711.199 16 124.033 17 092.545 34 825.021 34 825.021 29 146.671 -16.31

Spain 21 311.185 34 153.477 20 078.982 25 924.618 31 626.347 31 626.347 47 307.158 49.58

Australia 22 207.306 28 488.923 17 959.482 20 564.965 24 045.793 24 045.793 23 350.687 -2.89

Canada 13 323.389 15 031.173 17 314.534 19 005.38 18 892.108 18 892.108 23 361.818 23.66

France 21 697.424 25 631.807 20 775.056 17 180.58 18 204.489 18 204.489 16 848.929 -7.45

Italy 8 602.611 14 539.731 9 158.255 11 470.625 17 027.217 17 027.217 18 570.169 9.06

Austria 3 507.372 6 787.624 7 371.114 10 621.983 16 227.321 16 227.321 14 739.109 -9.17

197
Russian Federation - Meat sector review
198
Export

Value in thousand USD

Calendar year Year to date


Partner country
Percent
2007 2008 2009 2010 2011 12/2011 12/2012
change

World 74.446 206.518 309.485 151.166 1 211.449 1 211.449 2 954.048 143.84

Hong Kong 0 0 0 0 1 181.53 1 181.53 2 927.272 147.75

Vietnam 0 0 0 30.291 27.026 27.026 0 -100

Svalbard & Jan Mayen 0 0 0 0 2.893 2.893 0 -100

Thailand 0 0 0 0 0 0 20.254 n/a

Unidentified Country 0 0 1.426 0 0 0 5.598 n/a

United States 0 0 71.08 0 0 0 0 n/a

Italy 32.998 0 42.689 0 0 0 0 n/a

Lithuania 0 0 0 7.614 0 0 0 n/a

Netherlands 29.794 0 0 0 0 0 0 n/a

Poland 0 0 14.274 0 0 0 0 n/a

Source: Customs Committee of the Russian Federation and GTIS.


0
100
200
300
400
500
600
0
10 000
20 000
30 000
40 000
50 000
60 000
01/2009
02/2009
01/2009
03/2009 02/2009
04/2009 03/2009
05/2009 04/2009
06/2009 05/2009
07/2009 06/2009
08/2009 07/2009
09/2009 08/2009
10/2009 09/2009

USD (left axis)


Import value

monthly, 2009-2012
monthly, 2009-2012

11/2009 10/2009
12/2009 11/2009
01/2010 12/2009
02/2010 01/2010

Export value thousand


03/2010 02/2010
04/2010 03/2010
05/2010 04/2010

thousand USD (left axis)


06/2010 05/2010
07/2010 06/2010
08/2010 07/2010
09/2010 08/2010
10/2010 09/2010
11/2010 10/2010
12/2010 11/2010
01/2011 12/2010

(right axis)
02/2011 01/2011
03/2011 02/2011
04/2011 03/2011
05/2011 04/2011
06/2011 05/2011
06/2011
Import quantity
07/2011 tonnes(left axis)

Source: Customs Committee of the Russian Federation and GTIS.


Source: Customs Committee of the Russian Federation and GTIS.
08/2011 07/2011
08/2011

Export price USD/tonne


09/2011
10/2011 09/2011
10/2011
11/2011
11/2011

Figure 74: Foreign trade statistics: edible offal exports,


12/2011
Figure 73: Foreign trade statistics: edible offal imports,

12/2011
01/2012 01/2012
02/2012 02/2012
03/2012 03/2012
04/2012 04/2012
05/2012 05/2012
06/2012 06/2012

(left axis)
07/2012 07/2012
Import price

08/2012 08/2012
09/2012 09/2012
10/2012 10/2012
11/2012 11/2012
12/2012 12/2012
0

0
USD/tonnes (right axis)

Export quantity tonnes


200
400
600
800

500

199
Russian Federation - Meat sector review

1 000
1 200
1 400
1 600
1 800
2 000

1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Russian Federation

Russian Federation – Meat sector review


Meat sector review

FAO Investment Centre


COUNTRy HIGHLIGHTS

Please address questions and comments to:


Investment Centre Division
Food and Agriculture Organization of the United Nations (FAO)
Viale delle Terme di Caracalla – 00153 Rome, Italy
investment-centre@fao.org
Report No. 15
I3533E/1/11.13

http://www.fao.org/investment/en

Russian Federation: Meat sector review


Report No. 15 - July 2014