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Russian Federation – Meat sector review
Russian Federation Meat sector review
FAO Investment Centre
Russian Federation: Meat sector review Report No. 15 - July 2014
Report No. 15
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 [email protected] http://www.fao.org/investment/en
I3533E/1/11.13
COUNTRy HIGHLIGHTS
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
The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) or the European Bank for Reconstruction and Development (EBRD) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO or EBRD in preference to others of a similar nature that are not mentioned. The views expressed in this information product are those of the author(s) and do not necessarily reflect the views or policies of FAO or EBRD. © FAO 2014 FAO encourages the use, reproduction and dissemination of material in this information product. Except where otherwise indicated, material may be copied, downloaded and printed for private study, research and teaching purposes, or for use in non-commercial products or services, provided that appropriate acknowledgement of FAO as the source and copyright holder is given and that FAO’s endorsement of users’ views, products or services is not implied in any way. All requests for translation and adaptation rights, and for resale and other commercial use rights should be made via www.fao.org/contact-us/licencerequest or addressed to [email protected]. FAO information products are available on the FAO website (www.fao.org/ publications) and can be purchased through [email protected]. For further information on this publication, please contact: Director Investment Centre Division Food and Agriculture Organization of the United Nations (FAO) Viale delle Terme di Caracalla, 00153 Rome, Italy Cover photo: ©Dreamstime
TABLE OF CONTENTS
Foreword
v
Acknowledgements vi Acronyms and abbreviations Executive summary 1
lobal medium-term meat market outlook G with focus on the Russian Federation
viii xi
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
Annex 10 Recent investments in the pork sector
iv
171 174
Annex 11 Recent investments in the beef sector
178
Annex 12 Foreign meat trade
180
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 Moscowbased 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.
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Acronyms and abbreviations
AI AMS ASF
avian influenza aggregate measurement of support 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
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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
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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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
xi
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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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) policyrelated 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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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
million tonnes
120 100 80 60 40 20
Beef and veal (cwe)
Pig meat (cwe)
2020
2018
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
0
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
250 200
234
262
314 319 325 330 298 303 309 278 282 286 292
150
1
100 8.6 8.7
9.0
9.2
9.4
0 21
20
20
19
20
18
20
17
20
16
Russian production (left axis)
8.9 20
15
20
14
20
20
13
8.4
12
8.3
11
8.0
10
06
20
05
20
01
20
20
World production (left axis)
7.7
20
7,3 6.0 7.3
4.6
20
-
20
50
2
percent
million tonnes
300
Share of Russian Federation 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 0.3
0.5
0.5
-1.7
0 -0.2
4.9
0.3 0.7 1.5 0
percent/yr
2012-21
Projected
111
153
139
122
144 130
108
122 144 83 174
kg/head
2005-09
Offtake ratio
1.5
0.9
2.9
3.2
1 -0.2
3
4.2 1.2 5.3 2
percent/yr
1985-2011
Growth
1.2
0.5
1.5
2
0.7 -0.1
1.7
2.3 0.7 3.2 1.1
percent/yr
2012-21
Projected
Pork
4.6
8
7.7
5
8 13
3
14 9 9 7
kg/head
2005-09
Offtake ratio
1.2
1.4
0.1
8.4
0.5 1.8
3.2
4.6 1.4 4.4 0.7
percent/yr
1985-2011
Growth
0.8
0.8
0
1.1
0.3 1.1
1.8
2.5 0.8 2.7 0.4
percent/yr
2012-21
Projected
Poultry meat
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.
0.3
0.8
120
42
1.1
-2.7
57
80
Source: OECD and FAO Secretariats.
World
South Africa United States of America
Russian Federation
8.5
0.1 -0.3
55
91 133
China
EU-27 Japan
percent/yr
kg/head 0.5 1.3 2.5 0.1
1985-2011
2005-09
60 158 45 126
Argentina Australia Brazil Canada
Growth
Offtake ratio
Bovine meat
Table 1: Trends in meat offtake ratios in selected countries
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 12 24
25
27
29
28
28
28
27
31
30
30
30
29
12 10
9
20 19
8
7
7
15
6
6
6
6
5
10 5
2.4
3.0
2.3
0
2.0
11 0 20 201 06 20 g 05 av -20 01 20 g av
20
World trade (left axis)
12
1.9
20
13
1.7
20
14
1.7
20
15
1.6
20
Russian imports (left axis)
16
5
5
4
4
4
2
1.6
1.5
1.5
1.3
1.3
20
20
20
20
20
17
18
19
20
percent
million tonnes
30
14 13
0
21
Share of Russian Federation 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
-3 000
-1 000
Ukraine Kazakhstan Turkey Malaysia Indonesia China Republic of South Africa Philippines Egypt Viet Nam Mexico Korea Russian Federation Saudi Arabia Sub Sharan Africa Japan 1 000 3 000 2006-2010 (average)
5 000
7 000
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 subSaharan 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
12 000
43
10 000
38
8 000
33
6 000
kg
current international dollars
Figure 5: World per capita meat consumption and income, 1980-2009
28
4 000
23
2 000 0
2 2 2 2 2 1 1 1 1 1 1 1 1 1 80 982 984 986 988 990 992 994 996 998 000 002 004 006 008
19
PPP GNI per capita (left axis)
18
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
kg
80
97 97 93 90 87 83
60 40 75
70 64 61 60 97 87
20
34 34 25 23 50 50 38 44 46 41 42 41 38 35 33 31 18 19
Un
Ur u ite gua y d St at es Isr ae B l Eu Ar raz ro il g pe an enti na U Ru ni o ss ia Au n-2 n Fe stra 7 de lia ra tio n Ch M i l al e ay s Uk ia ra in Ko e Re re pu bl Ka Me a ic x of nza ico Sa kh ut sta h n Af ric a Sa ud Chi i A na ra W Vie bia or tN ld av am er ag Ja e pa Tu n rk Th ey ai la nd
0
71 78 78 61 65
54 53 53 52 49 49 47 46
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
21 610
26 917
33 248
41 277
38 809
45 166
1 381
1 571
1 932
2 461
2 516
2 619
6.4
5.8
5.8
6
6.5
5.8
711
806
929
1 155
1 277
1 439
295
328
367
442
556
591
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
GDP of which: Agricultural products Agricultural products, % GDP of which: Livestock sector of which: Meat from livestock and poultry Meat, % GDP
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 2005
2006
2007
2008
2009
2010
Change 2011 vs. 2005
50
54
63
72
77
82
65%
Average number of all employees, thousand persons
1 167
1 003
888
695
639
606
- 48%
Average annual gross income per employee, RUR/month
3 544
4 515
5 948
8 583
10 056
11 294
219%
Payroll fund for all employees, RUR billion/year
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). May 2012, http://www.oecd.org/site/oecd-faoagriculturaloutlook). 2 (January 2013), available at http://www.ers.usda.gov/data-products/international-baseline-data 3 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 9
3 179
3 500 3 000
3 1191
7
2 461
2 500
2 068
2 000
8
1 710
6 5
1 500
4
1 000
3
500
2
0
19
98
20
20
00
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
percent
thousand tonnes
4 000
1
20
20
Beef and veal (cwe) (left axis)
Pigmeat (cwe) (left axis)
Share of Russian Federation in world beef and veal production (right axis)
Poultry meat (rtc) (left axis)
Share of Russian Federation in world pigmeat meat (right axis)
Share of Russian Federation in 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.
10
80
9
76
8
74
7
72
6 5
70 68
4 3
66 64
2
62
1 -
60 2005
2006 Production (left axis)
2007
2008
Import (left axis)
2009
2010
percent
million tonnes
Figure 8: Russian Federation’s meat production imports and levels of self-sufficiency, 2005-2010
58
Self-sufficiency (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
Poultry
Pork
Beef
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
Import
1 318
1 274
1 295
1 224
986
661
Export
0
0
1
3
6
Production
1 569
1 699
1 930
2 042
Consumption
2 154
2 361
2 615
Import
585
662
Export
0
Production
240
90
***
60
400
2 170
2 331
2 925
3 389
2 864
2 836
2 970
3 165
3 439
685
822
667
639
240
50
0
0
0
0
0
40
200
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
Import
674
734
789
874
760
621
570
500
Export
0
0
0
0
0
0
0
0
19
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
4.0
80
3.5
70
3.0
60
2.5
50
2.0
40
1.5
30
1.0
20
0.5
10
-
2005
2006
2007
Production (left axis)
Import (left axis)
2008
2009
2010
percent
million tonnes
Figure 9: Russian Federation’s production, imports and self-sufficiency in poultry meat, 2005-2010
0
Self-sufficiency (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 2005
2006
2007
2008
2009
2010
2011
Change 2011 vs. 2005
Chicken inventories as of Jan. 1, mln head
329
343
358
351
366
391
406
24%
Chicken slaughter, mln head
96
108
125
132
151
166
184
91%
Chicken meat production, mln tonnes
1.35
1.58
1.87
2.00
2.31
2.56
2.91
116%
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.
3.5
80
3.0
78
2.5
76
2.0
74
1.5
72
1.0
70
0.5
68
-
2005
2006
2007
Production (left axis) Source: FSSS of Russian Federation.
20
2008
Import (left axis)
2009 Self-sufficiency (right axis)
2010
66
percent
million tonnes
Figure 10: Russian Federation’s production, imports and selfsufficiency in pork, 2005-2010
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
2005
2006
2007
2008
2009
2010
2011
Change 2011 vs. 2005
Pig inventories as of Jan 1, mln head
13.4
13.5
15.9
16.3
16.2
17.2
17.2
28%
Pig slaughter, mln head
18.3
19.4
22.3
24.1
26.0
28.0
29.1
59%
Pig slaughter, percent of inventories
136
145
140
147
161
162
169
24%
Yield, kg/head
83
84
84
85
83
83
84
1%
1.52
1.64
1.87
2.04
2.17
2.33
2.43
60%
Pork production, 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
3 000
74
2 500
72
2 000
70
1 500
68
1 000
66
500
64
0
2005
2006
2007
Production (left axis)
2008
Import (left axis)
2009
2010
percent
million tonnes
Figure 11: Russian Federation’s production, imports and level of self-sufficiency in beef, 2005-2010
0
Self-sufficiency (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 2005
2006
2007
2008
2009
2010
2011
Change 2011 vs. 2005
Cattle inventories as of 1 Jan, mln head
23.0
21.5
21.5
21.5
21.0
20.7
20.0
-13%
Cattle slaughter, mln head
10.7
9.6
9.5
9.6
9.4
9.3
8.6
-20%
Yield, kg/head
168
177
178
184
185
185
190
13%
1.8
1.7
1.7
1.8
1.7
1.7
1.6
-9%
Beef and veal production, mln 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
Production/Infrastructure
Type of risk
Risk description
Possible consequences
Mitigation and opportunities
• high volatility in feed prices
• additional costs for project’s startup development
• vertical integration with feed production
• poor quality of purchased feeds
• decreasing margin and lack of working capital
• feed price risk hedging for outsourced grain/feed
• lack of experience and knowledge of key staff and (nutrition, vet services, management, etc.)
• low quality/food safety of the final product
• investment in staff training and education, outsourcing of key services to result in better production indicators
• poor infrastructure (electricity outages, road transportation blocked in winter, etc.)
• low competitiveness and loss of market share
• lack of effective food safety control/monitoring system
• inability to improve feed conversion and other efficiency indicators
• location in areas with welldeveloped infrastructure
23
Risk description
Possible consequences
Mitigation and opportunities
• African swine fever
• risk of flocks/heard depopulation
• investment in veterinary services and biosecurity measures
• avian influenza
• loss of investment
• work with local communities to create buffer zones around production facilities
Epizootic
Type of risk
• trade disruptions and bans • other diseases
• significantly delayed payback period
• disease
Policy
Investment and financial
• significant additional expenditures on eradication leading to bankruptcy • long payback periods, especially in cattle/beef production
• limited expansion capacity
• cancellation or reduction of current interest rate subsidies due to policy changes
• reduced profitability, increased costs
• increase of credit interest • reduced or negative margins and higher risks of loan rates defaults
• legally binding commitments from government/local authorities and banking sector
• lack of operating capital due to financial sector crisis.
• inability to purchase inputs and feed in a timely manner (reduces production volumes and cash flow income to critical levels)
• reduced availability of public funding due to lower budget revenues or public focus shifting to other priorities
• higher interest rates and lack of state co-financing
• investment planning assuming stiffer import competition and minimum tariff protection
• the Russian Federation’s accession to the WTO and decreased import tariff protection
• lack of operating and investment capital as financial institutions shift focus away from agriculture/ meat sector
• investment planning without price support payments
• the need to restrict overall domestic support in line with WTO commitments
• reduced sales and incomes
• changes in standards and regulations (environmental, waste treatment, food safety, animal welfare)
• slow growth, extended payback or bankruptcy
Source: Author/LMC International, based on calculations and estimates.
24
• investment planning at market rather than subsidized interest rates
• plan investment considering the latest environmental, animal production and advanced food safety systems
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 32%
31%
28%
1%
1%
1%
68%
68%
71%
percent
80
25%
23%
21%
1%
1%
1%
74%
76%
77%
60 40 20
0
2005
2006
Agricultural enterprise
2007
2008
Individual (peasant) farm
2009
2010
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
percent
80
43%
43%
60
38%
41%
4%
5%
5%
5%
53%
52%
53%
57%
40 20 0
2005
2006
Agricultural enterprise
2007
2008
Individual (peasant) farm
34%
33%
4%
5%
62%
63%
2009
2010
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
percent
80
51%
49%
48%
48%
46%
46%
4%
5%
6%
6%
7%
7%
51%
49%
48%
47%
46%
46%
60 40 20
0 2005
2006
Agricultural enterprise
2007
2008
Individual (peasant) farm
2009
2010
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 Meat type
2005
2006
2007
2008
2009
2010
Change 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%
161
171
183
189
193
194
+20.5%
7 505
7 894
8 505
9 134
9 072
9 139
+22%
Other kinds of meat** Total
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%
36%
37%
38%
38%
39%
38%
29%
30%
31%
31%
31%
33%
33%
31%
29%
29% 29%
28%
27%
2005
2006
2009
2010
100 90 80
percent
70 60 50 40 30 20 10 0
Veal & beef
2007 Pork
2008 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 2010 2010 vs. 2005
Meat type
2005
2006
2007
2008
2009
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%
11.1
15.3
16.4
20.1
24.6
22.1
+99%
530.4
578.5
626.6
803.8
889.8
928.6
+75%
Other kinds of meat Total
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
20 000
60
kg
10 000 20
0
5 000
1992
1994
1996
1998
2000
Meat consumption per capita (left axis)
2002
2004
2006
2008
0
PPP GNI per capita (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
current international dollars
15 000 40
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
1.1
kg/year
50.0 40.0
1.3
1.4
1.4
18.6
17.6
17.3
20.2
20.0
20.9
24.2
25.0
24.7
2008
2009
2010
1.3
60.0
17.4
30.0 15.1
1.2 17.2
16.6
17.5
18.4
20.0 10.0 0.0
18.9
2005
20.4
2006 Poultry
22.7
2007 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
Pork
Bone-in
Autumn-winter-spring (except during Lent)
Pork
Half-carcass
Year-round
Pork
Boneless
Year-round + holidays
Pork
Neck (collar)
Summer
Beef
Year-round (less in summer)
Further processed
Sausages, franks, hams
Year-round
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
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
All goods and services
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 Units
All households
Incl. in urban areas
Incl. in rural areas
Aggregate income per member of the household
RUR/ month
12 688
14 357
10 129
Expenses for meat and meat products
RUR/ month
1 034
1 094
869
percent
8.1
7.6
8.6
Index
Share of expenses for meat and meat products 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 midterm 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
Central
2% 21%
Ural
Volga
29%
9%
9%
20%
6%
N. Western
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 40.1-90
90.1-160 160.1-300
300.1-500 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 2%
Siberian
Central
18 %
Ural
35 %
7%
4%
21 %
N. Western
Volga 2%
11 % 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 0-100 100.1-200
200.1-300 300.1-500
500.1-900 over 900
Source: FSSS of Russian Federation.
Figure 24: Share of Federal Districts in cattle inventories N. Western Central 4% Siberian
14% 21% 2%
Ural
11%
6%
12%
Far Eastern N. Caucasian 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 Broiler feed USD/tonne
Cost live broiler USD/kg
Processing wage (cost of labour) 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)
Hatching egg
USA
Bulgaria Company A
Company B
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
43.20
52.77
55.19
53.77
Cost of 1 kilogram of meat
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
7.4
7.8
7.2
Chicks hatch, percent
75.9
81.5
80.2
Livability, percent
92.8
93.4
93.1
Average grow-out period, days
37.5
39.5
41
74.4
80.7
73.3
1.85
1.86
1.87
53.3
54.2
47
Cycles (turnovers), per year
Meat yield, percent of live weight Feed conversion adjusted to 2 000 g of live weight Average daily 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 of pigs, kg per head
107
121
121
139
160
159
Average daily weight gain of pigs, g
310
328
335
385
414
439
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 Rusagro Europe, North (Belgorodsky Bacon) America
Indicator
Units
Least efficient farms
Most efficient farms
Cherkizovo
Miratorg
Piglets per sow per year
heads
18
25
19
22.36
25.9
27
kg
1 400
2 100
2 090
n/a
n/a
2 190
Feed conversion
kg/kg gain
5.6
3
2.95
2.94
2.78
2.76
Total length of growout period
days
200
168
177
n/a
n/a
160
percent
69
75
n/a
72
n/a
79
Meat produced per sow per year
Yield
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 one head of cattle, kg
93
100
102
109
114
112
Average daily gain on feed, g
414
437
445
478
503
501
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 months
Older than 8 months
Total
Orenburg Region
555
327
419
Chelyabinsk Region
705
519
575
Republic of Kalmykia
611
207
375
Region
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 -
45.16
-
Cherkizovo Group
Miratorg
21.2
40.6
-
Rusagro
18**
42
-
Eurodon
-
-
-
15
25***
-17****
Average sector
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-poultrymeat 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
40 000
40
43 350
35
45 075 40 813
39 822
30
30 000
25 21.7
20 000 10 000
0
45
12.9
14.2
5 276
5 639
2005
2006
17.1
17.7
20
percent
RUR/tonne (excl. VAT)
50 000
52 966
15
16.1
10
6 960 2007
9 770
9 257
9 362
2008
2009
2010
5 0
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
percent
200 175 150 125 100 75
Poultry meat
Sep 2010
Jan 2010
May 2010
Sep 2009
May 2009
Jan 2009
Sep 2008
Jan 2008
May 2008
Sep 2007
Jan 2007
May 2007
Sep 2006
May 2006
Jan 2006
Sep 2005
May 2005
Jan 2005
50
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 50
80 000 69 263 60 988
60 000 50 000
50 420
51 821
40 35
49 051
30 25
40 000 30 000 20 000 10 000 0
16.4 11.6
20 14.1
14.3
9.1
9.6
4 574
4 825
5 850
8 248
7 094
7 231
2005
2006
2007
2008
2009
2010
15 10 5 0
Pigs (left axis) Comparison of feed price to product price (right axis) Combined feed for pigs (left axis) Source: FSSS of Russian Federation.
48
45
percent
RUR/tonne (excl. VAT)
70 000
69 748
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
RUR/tonne (excl. VAT)
225 200 175 150 125 100 75 Sep 2010
Jan 2010
May 2010
Sep 2009
Jan 2009
May 2009
Sep 2008
Jan 2008
May 2008
Sep 2007
Jan 2007
Pig meat
May 2007
Sep 2006
Jan 2006
May 2006
Sep 2005
Jan 2005
May 2005
50
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
7
10
Total cost
68.6
100
Revenues from sales
76.3
Other costs (maintenance, overhead)
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
54 371
40 000
41 762
39 235
55 951
40 35
45 641
34 003
30
30 000
25
20.8 10.8
3 606
3 669
4 963
2005
2006
2007
10 7 074
5 912
6 366
2008
2009
2010
Combined feed for cattle (left axis)
Cattle (left axis)
20 15
10.6 10 000
18.7
17.4
14.6
20 000
0
45
percent
RUR/tonne (excl. VAT)
50 000
50
5 0
Comparison of feed price 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
percent
200 175 150 125 100
Sep 2010
Jan 2010
May 2010
Sep 2009
Jan 2009
May 2009
Sep 2008
Jan 2008
May 2008
Sep 2007
Jan 2007
Beef
May 2007
Sep 2006
Jan 2006
May 2006
Sep 2005
Jan 2005
50
May 2005
75
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 1
Index
Value
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 1.6
Haylage Corn silage Other costs (maintenance, fuel, etc.)
1.9 1.2 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
thousand tonnes
4 000 3 500 3 000 2 500 2 000
288
405
4 500 86 293 272
108 194 350 322 290 306
270 391 442
252 423 524
279 452
315 429
663
718
1 150 1 084 1 177 1 507 1 287 1 199 1 298
351
464 252
439
862
757
481 1003
1 353 1 337
510 1 088
605 1078
1 500 1000 500
1 560 1 800
1 840 1 944 2016 1 920 1 860 1 788 1 692 1 500 1 632
Barley
Maize
1/ 12 20 1
0/ 11 20 1
9/ 10 20 0
08 /0
9
8
Meal, sunflower seed
20
07
07 /0 20
06
20 06 /
05
Wheat
20 05 /
/0 4
20 04 /
20 03
20 02
/0 3
0
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
thousand tonnes
14 000
12 464 11 390
12 000 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 2010 2010 vs. 2005
Product type
2005
2006
2007
2008
2009
Fresh meat and by-products:
1 857
2 185
2 561
2 899
3 441
3 888
109%
-Beef
327
303
284
278
252
251
-23%
-Pork
337
405
502
502
666
800
137%
1 141
1 424
1 721
2 067
2 426
2 729
139%
-Other types of meat
13
13
12
11
13
16
23%
-By-products
39
39
42
41
84
92
136%
Sausages and cooked meats
2 014
2 198
2 411
2 454
2 246
2 388
19%
Further processed meat products
987
1 093
1 254
1 451
1 503
1 614
64%
Standard cans, million*
549
523
521
580
690
651
19%
-Poultry meat and byproducts
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 precrisis 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 state needs
390.1
6.8
Retail stores, branded stores, street kiosks
232.9
4.1
HORECA
190.1
3.3
33.3
0.6
4.9
0.1
5 712.1
100.0
Barter (exchange operations) Consumer cooperatives Total 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 Channel format
Change Change 2010/09 2010/06
2006
2007
2008
2009
2010
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 specialized stores
3 555.9
4 422.4
5 052.7
4 355.8
5 162.9
18.5%
45.2%
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 grocers
34 192.4
42 886.6
52 529.9
46 519.4
55 238.1
18.7%
61.6%
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.
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Russian Federation - Meat sector review
Table 28: Cost breakdown of producing one tonne of boneless meat products Item 1
Index
RUR thousand (excl. VAT)
Percent
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 3 (1+2) 4 5 (4-3)
Overheads, maintenances, etc.
30.5
15
Total cost
197.1
100
Revenues from sales
212.2
-
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
Ranking
Company
Poultry production, slaughter weight, thousand tonnes
1
JSC Prioscoliye
355.2
14.1
10.1
2
Cherkizovo Group
194.1
7.7
5.5
3
Agroholding BEZRKBelgrankorm
148.8
5.9
4.2
4
Prodo Group
146.4
5.8
4.2
5
JSC Belaya Ptitza
78.0
3.1
2.2
922.5
36.6
26.2
Total Source: Russian Poultry Union.
68
Poultry production share, percent
Meat market share, percent
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 Company
Pork production, slaughter weight, thousand tonnes
Pork production share, percent
Meat market share, percent
1
APH Miratorg
137.6
8.4
4.6
2
GK AgroBelogorie
100
6.1
3.4
3
Cherkizovo Group
87.6
5.4
2.9
4
PRODO Group
77.43
4.8
2.6
5
GK RUSAGRO
61.9
3.8
2.1
464.53
28.5
15.6
Ranking
Total
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 Company
Cattle production, slaughter weight, thousand tonnes
Cattle production share, percent
Meat market share, percent
1
AKGUP (Promyshlenny)
5
0.9
0.2
2
JSC (Agrocomplex)
4-5
0.8
0.2
3
OAO “KRASNY VOSTOK AGRO”
4
0.7
0.2
4
OAO (Agrofirma Mtsenskaya)
3
0.5
0.1
5
OAO “Belorechenskoe”
2-2.5
0.4
0.1
18-19.5
3.3
0.8
Ranking
Total 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 AgroBelogorie; • 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
percent
50 40 30 20 10 0
Vo
lg
a
Ce
nt
er
So
ut
h
U
N
Ca
uc
or
as
us
th
N
ra
ls
W
or
th
Fa
rE
es
t
as
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).
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Russian Federation - Meat sector review
Table 33: Top five meat processors, 2010 Processed Processed meat meat production, production thousand tonnes share, percent
Meat market share, percent
N
Producer
1
Ostankinsky myasokombinat
151.0
3.6
3.5
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
5
JSC Mikoyanovsky myasokombinat
79.1
1.9
1.9
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 PitProduct 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 N
Sales volume (billion RUR)
Brand cost (million USD)
Share of consumer preference, percent
1
OstaNkino (22.5), Ostankinsky myasokombinat
Mikoyan (86), Mikoyanovsky myasokombinat*
Mikoyan (24.1), Mikoyanovsky myasokombinat
2
Cherkizovsky (12.9), Cherkizovo Group**
Cherkizovsky (77), Cherkizovo Group
Dymov (14.1), Dymov sausage production***
Tsaritsyno (10.5), GK Tsaritsyno
OstaNkino (49), OAO Ostankinsky myasokombinat
OstaNkino (12.6), Ostankinsky myasokombinat
3
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.
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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 mid2000, 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
2.13
-5.47
1.82
-1.56
2.38
0.19
7.05
3.44
2.28
Pilgrim’s Pride
Sanderson Farms, USA
Brasil Foods, Brazil
Marfrig, Brazil
CP Foods, Thailand
DaChan Food, China
LDC, France
Cherkizovo, Russia
MHP, Ukraine
2.31
2.95
7.17
N/A
2.75
0.29
2.14
2.96
0.65
2.02
2012
2.69
3.12
7.93
N/A
3.16
0.40
2.48
4.91
0.91
2.31
2013
5.8
4.4
12.0
N/A
13.5
38.5
15.9
17.3
10.6
8.9
2012
P/E
5.0
4.2
10.8
N/A
11.7
28.0
13.7
10.4
7.5
7.8
2013
2 302
1 499
992
231
10 868
6 827
18 970
1 432
3 198
7 998
EV
426
319
226
N/A
1.045
1.003
1 923
170
453
1 833
2012
EBITDA
491
351
225
N/A
1 210
1 164
2 272
235
539
1 996
2013
5.4
4.7
4.4
N/A
10.4
6.8
9.9
8.4
7.1
4.4
2012
4.7
4.3
4.4
N/A
9.0
5.9
8.4
6.1
5.9
4.0
2013
EV/EBITDA
802
718
7
-139
1 462
4 618
2 808
274
1 432
1 466
Net Debt
2.0
3.0
0.0
-0.5
2.3
4.8
1.8
-3.0
-8.6
0.8
Net Debt/ LTM EBITDA
* Rabobank Poultry Quarterly: Outlook for Global and Regional Markets, April 2012 http://www.rabobank.de/uploads/media/Rabobank_Poultry2012_01.pdf.
Source: Bloomberg, 2012 as reported by Rabobank*.
1.89
Tyson Foods, USA
2011
EPS
Table 35: Key financial indicators of world meat producers, 2011-2013
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 description
Implementing company (holding)
Region
Investment, million USD
Starting year
Project at full capacity
1
Slaughter and processing plant for beef cattle operation
Prodcontract Group
Republic of Kalmykia
166.7 (total for vertically integrated complex)
2
New meat processing plant in Gorelovo with a daily capacity of 90 tonnes of hot dogs, sausages and cooked sausages under the brand Pit-product.
Atria Group
Leningrad Region
93.3
Zarechnoe
Voronezh Region
10 (estimate)
2011
2012
4
Slaughter and prime processing plant with a capacity of 22.5 tonnes of chilled pork meat per day. The company targets the retail market of Russia.
LLC GC AgroBelogor’e
Belgorod Region
117
2009
2009
5
Commissioning of slaughter and primary processing of pork with full capacity of 2 million heads.
AIH Miratorg
Belgorod Region
150-200 estimate
3
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 creation of the genetic center of Aberdeen Angus and Hereford and feedlots for 20 thousand animals. The total project cost is RUR 6 billion (USD 200 million).
2010
2010
Source: Author/LMC International, based on calculations and estimates.
86
3rd quarter 2012
2009
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 3 000
21 307 247
20 321 267
thousand tonnes
2 500 2 000
1 287
12 298
20
256
292
36
266
291
1 218
1 000
650 713
500 672 0 2007
289
280
948 1 500
41 273
470
404
791
791
2008
585
624
606
567
636
641
657
720
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.
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Russian Federation - Meat sector review
Figure 44: Structure of the value and quantity of imported meat products, 2012 1 0 90 80
percent
70
396 219 460 474 707
60 50
2 407
737 27 41 273 289
40 470
30 20
2 583
10 0
Value, million USD Beef (frozen) Pork (fresh and frozen) Poultry (fresh and frozen)
585 Quantity, thousand tonnes Edible meat offal Beef (chilled) 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.
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Figure 45: Major importers of meat to the Russian Federation, 2010-2012, average Beef 16% Brazil 7%
Paraguay 44%
7%
Uruguay 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 SouthEast 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
thousand tonnes
25 20 15 10 5 0
2007
2008
0207 Poultry meat
2009
2010
0210 Meat & Ed Offal Salted, Dried Etc. & Flour & Meal
2011
2012
Other meat products
Source: Russian Customs Committee as reported by the Global Trade Atlas.
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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 Million USD
Commodity (HS Code) and trade flow
Description
1602, Import
Prepared or preserved meat, meat offal
1601, Import
1602, Export
1601, Export
Main
Percent change
2010
2011
2012
2012/ 2011
Spain, Germany, France, Hungary
119
197
172
44
Sausages, similar product meat, etc.
Lithuania, Spain, Latvia, U.S.
27
54
69
157
Prepared or preserved meat, meat offal
Turkmenistan, Azerbaijan, Georgia
14
15
15
2
Sausages, similar product meat, etc.
Azerbaijan, Armenia, Georgia
36
10
10
-73
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 freetrade 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).
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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
25 000
1.50
20 000 15 000
1.00
10 000 0.50
5 000
0 1998
2000
2002
2004
Export quantity
2006
2008
2010
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 pricecompetitive 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
USD/kg
tonnes
30 000
Russian Federation - Meat sector review
Figure 48: Russian imports of pork from the Customs Union and Ukraine, 1995-2011 70
thousand tonnes
60 50 40 30 20 10 0 1995
1997
1999
2001
Kazakhstan
2003 Belarus
2005
2007
2009
2011
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
thousand tonnes
200
150
100
50
0 1995
1997
1999
2001
Kazakhstan
2003 Belarus
2005
2007
2009
2011
Ukraine
Source: UN Comtrade.
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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
70 000
69 748.3
RUR/tonne (excl. VAT)
65 000 60 988.3 60 000 54 371.4
55 000 50 000
50 420.4
51 821.0
49 050.6 43349.7
40 813.4 40 000
45 074.8
39 821.9 41 762.2 39 235.4
35 000 34 003.1 2005
2006
2007
Poultry and other farming birds Source: FSSS of Russian Federation.
18 For all fatness classes.
96
54 229.5 52 966.3
45 641.0
45 000
30 000
55 950.5
2008
2009 Swine
2010 Cattle
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.
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Figure 51: Prices for raw and processed meat products, annual average, 2005-2010 141 128.7 14 000 127 502.1
RUR/tonne (excl. VAT)
12 000 115 673.7 10 000
8 000
6 000
82 345.1 81 896.5
84 363.5
77 008.9
71 333.1 70 865.3
58 371.7 55 683.6 51 283.0
38 662.4
4 000 2 000
27 081.5 2005
2006
Sausage and cooked meat Pork Beef Animal slaughter sub-products
2007
2008
2009
2010
Poultry Semi-prepared foods from meat pork Meat cans (thousand pcs)
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.
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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.
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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 (20082010), 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.
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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
25 102
98
100
67
60
15
44
40
10
s
w
er
ra in
0
lo
MPS (left axis)
es m O od th iti er es m co
gs Eg
5
ta to
Po
m ea t
try
gm ea t
ul Po
Pi
ef
an d
M ilk
-16
Be
-27
ve al
Su ga r
-40
-24
Su
-11
-20
8
nf
er g th
12
O
0
W he at M ai ze
20
percent
RUR billion
20
75
80
0
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 interestrate 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
USD/tonne
2 000
1 500
1 000
500
0 2001
2002
2003
2004 2005
Poultry
2006
Pork
2007
2008
2009
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:
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2010
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
Number of projects
Loans amount, billion RUR
Subsidies from the federal budget, billion RUR
Construction, reconstruction and modernization of livestock facilities, including poultry farms (with breeder farms)
492
154.81
2.36
Construction, reconstruction and modernization of facilities for primary processing and grain storage
105
25.99
0.34
Construction, reconstruction and modernization of facilities for primary processing of meat and milk
43
7.75
0.18
Construction, reconstruction and modernization of sugar mills
29
4.52
0.13
Other
79
4.23
0.07
Total
748
197.3
3.08
Description
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, hightech 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.
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Russian Federation - Meat sector review
Table 40: Types and rates of subsidy for beef cattle in the Voronezh Region Item 1 1.1
Trade line
Size (subsidiary rate)
From the federal budget Development of beef cattle production
1.1.1
For purchase of pedigree cattle of specialized beef breeds
about 12 thousand RUR/head
1.1.2
For establishing rearing farms of beef purebred and cross-bred cattle to the live weight of 450 kg within two years
21 RUR/kg of the live weight
1.1.3
For maintenance of breeding stock at farms with Cow-Calf system
3 000 RUR/head per year
Reimbursement of interest rates for loans
80 percent of the CBR refinancing rate
1.2 2 2.1
Ministry of Agriculture Order of 6 October 2008 N494
Russian Government Decree from 4 February 2009 N 90
From the regional budgets Development of beef cattle production
2.1.1
For the purchase of pedigree cattle of specialized beef breeds
65 RUR/kg of the live weight
2.1.2
For purchases of genetic material
bull semen at a 50 RUR/dose and embryos at 6 000 RUR/pcs.
2.1.3
For acquiring equipment for feed preparation and distribution, generators for autonomous power supply, electric fences
20 percent of cost (VAT excluded)
2.1.4
For the increase of breeding stock at farms with Cow-Calf system
4 000 RUR/head/year
2.2
Base
Reimbursement of interest rates for loans
20 percent of CBR refinancing rate
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)
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).
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Under the programme Development of Beef Cattle in Russia 2009-2012, the State co-financed 22 regional programmes in 20092010 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
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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-ofquota 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
thousand tonnes
1 200
1 050
1 050
1 130.8
1 171.2
1 211.6
1 252
1 000 780
800 600 400
450 447.5
467.4 457.5
476.1
484.8
493.5
502.2
462.78
468.3
473.9
473.5
2008
2009
560
200 0 2004
2005
2006
2007
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
1
Product name
Quota volume, thousand tonnes
Fresh or frozen bovine meat (CU HS code 0201) - total
30
Including:
2
European Union
29
Other countries
1
Frozen bovine meat (CU HS code 0202) – total
530
In quota tariff
Above quota tariff
50% 15% but not less but not less than 0.2 EUR than 1.0 EUR per kilo per kilo
Including: European Union
60
United States
60
Costa Rica
3
Other countries
407
3
Fresh, chilled or frozen pork (CU HS code 0203) – all countries
4
Pork trimming (CU HS codes 0203 29 550 2 and 0203 29 900 2)* – all countries
400
5
Frozen bone-in chicken halves or quarters, (CU HS code 0207 14 200 1) frozen bonein chicken legs and their cuts (CU HS code 0207 14 600 1) – all countries
250
6
Frozen boneless chicken meat (CU HS code 0207 14 100 1) – total, including:
70
European Union Other countries
56 14
Frozen boneless turkey meat (CU HS code 0207 27 100 1) – all countries
10
7
50% 15% but not less but not less than 0.2 EUR than 0.2 EUR per kilo per kilo
75% 15% but not less but not less than 0.25 than 1.5 EUR per kilo EUR per kilo
80% 25% but not less but not less than 0.2 EUR than 0.7 EUR per kilo per kilo
Source: Custom Union Commission, 2011. * Pork trimming can be imported using both pork trimming quotas and frozen pork meat quotas.
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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 2 1.5 1 0.5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Russian Federation
Brazil
Ukraine
China
USA
EU
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 Federation
Brazil
Ukraine
China
USA
EU
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 Federation
China
Source: OECD.
112
Brazil
Ukraine
USA
EU
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 -10 Federation
China
Brazil 2001-02
Ukraine 2005-06
USA
EU
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 -10
Russian Federation
China
Brazil 2001-02
Ukraine 2005-06
USA
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
EU
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 2001-02
Ukraine 2005-06
USA
EU
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 inquota imports percent (no less than .xx Euro per kg)
Tariff rate for in-quota imports after WTO accession (no less than .xx Euro per kg / flat tariff option)
15 (.50)44
15 (.55-27.5)
Pork
15 (.75)
0 (.65-25)
Poultry
25 (.95)
25 (.80-37.5)
40
5
Commodity
Cattle
Live pigs
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.
116
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 agricultureexporting 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.
118
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 withinquota 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 farms
Ag enterprise
Household farms
Individual farms
Russian Federation
471 013.7
369 709.6
5 522.5
95 781.6
Central Federal District
136 541.6
115 366.1
373.8
20 801.6
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
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
Moscow Region
120
Russian Federation - Meat sector review
All types of farms
Ag enterprise
Household farms
Individual 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 Federal District
44 113.7
42 987.4
116.1
1 010.2
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
0.1
0.0
0.0
0.1
Arkhangelsk Region (excl. Nenets Autonomous Area)
2 823.7
2 789.8
0.2
33.8
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
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 District
61 633.2
34 167.7
734.3
26 731.3
Republic of Adygea
3 342.1
2 567.2
96.8
678.0
230.5
0.5
21.1
208.9
22 831.8
12 680.3
340.5
9 811.0
Republic of Karelia
Including Nenets Autonomous Area
Murmansk Region
Republic of Kalmykia Krasnodar Territory
121
All types of farms
Ag enterprise
Household farms
Individual 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 Federal District
27 719.9
13 892.6
1 764.2
12 063.1
Republic of Dagestan
3 012.0
505.2
410.2
2 096.7
Republic of Ingushetia
254.7
0.0
67.6
187.1
Kabardino-Balkar Republic
3 639.7
925.6
831.7
1 882.4
KarachaevoCherkessia Republic
2 616.6
1 096.7
16.1
1 503.8
Republic of North Ossetia-Alania
1 692.7
758.3
44.1
890.3
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 District
94 966.6
73 632.9
1 858.3
19 475.5
Republic of Bashkortostan
10 370.2
6 649.1
328.7
3 392.4
Republic of Mari El
4 388.0
3 991.8
38.6
357.6
Republic of Mordovia
8 981.0
7 881.7
35.4
1 064.0
Republic of Tatarstan
14 094.6
11 178.5
879.9
2 036.3
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
122
Russian Federation - Meat sector review
All types of farms
Ag enterprise
Household farms
Individual farms
Nizhny Novgorod Region
9 039.6
7 840.2
8.3
1 191.1
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
40 284.0
37 096.7
191.2
2 996.1
1 667.9
741.9
26.0
900.0
12 139.7
11 732.2
96.9
310.6
8 293.2
7 697.8
46.5
549.0
173.3
99.8
40.9
32.6
3.1
0.6
1.7
0.8
Tyumen Region (excl. Khanty-Mansy Autonomous Area-
8 116.8
7 597.4
3.9
515.6
Chelyabinsk Region
18 183.2
16 924.8
21.8
1 236.5
Siberian Federal District
55 054.9
43 651.1
274.5
11 129.2
83.0
0.0
2.5
80.5
416.9
239.3
13.0
164.6
23.0
8.3
0.2
14.5
1 355.6
1 137.0
3.1
215.5
11 199.3
7 159.2
3.1
3 990.0
Ural Federal District Kurgan Region Sverdlovsk Region Tyumen Region Including KhantyMansy Autonomous Area-Yugra Yamalo-Nenets Autonomous Area
Republic of Altai Republic of Buryatia Republic of Tyva Republic of Khakassia Altai Territory
123
All types of farms
Ag enterprise
Household farms
Individual 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
10 699.8
8 915.1
19.6
1 574.6
Republic of Sakha (Yakutia)
777.3
719.1
210.2
51.9
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 Region
143.3
0.5
59.8
83.0
12.4
11.9
0.0
0.4
Far Eastern Federal District
Chukot Autonomous Area
Source: FSSS of Russian Federation.
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Russian Federation - Meat sector review
Swine Table 44: Number and structure of swine inventories by region, 2010
Russian Federation
All types of farms
Ag enterprise
Household farms
Individual farms
17 332.8
11 408.8
656.6
5 267.4
Central Federal District
5 993.8
5 163.4
87.8
742.6
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
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
59.0
53.8
1.4
3.7
737.4
639.7
18.8
78.9
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
Smolensk Region
Yaroslavl Region Northwestern Federal District
125
All types of farms
Ag enterprise
Household farms
Individual farms
0.0
0.0
0.0
0.0
20.1
10.8
1.2
8.1
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
79.0
66.2
1.2
11.7
1 946.7
972.8
74.9
898.9
Republic of Adygea
53.9
39.5
1.6
12.8
Republic of Kalmykia
17.4
0.2
3.3
13.9
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 Federal District
418.3
204.8
8.3
205.2
1.1
0.2
0.3
0.7
-
-
-
-
56.5
47.1
0.3
9.1
18.7
13.5
2.6
2.6
28.4
7.8
0.5
20.0
Chechen Republic
-
-
-
-
Stavropol Territory
313.7
136.3
4.6
172.8
Including Nenets Autonomous Area Arkhangelsk Region (excl. Nenets Autonomous Area) Vologda Region
Pskov Region Southern Federal District
Krasnodar Territory
Republic of Dagestan Republic of Ingushetia Kabardino-Balkar Republic Karachaevo-Cherkessia Republic Republic of North Ossetia-Alania
126
Russian Federation - Meat sector review
All types of farms
Ag enterprise
Household farms
Individual farms
3 714.9
2 166.5
189.1
1 359.3
Republic of Bashkortostan
309.5
160.3
25.1
124.0
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 Region
143.2
72.8
5.4
65.0
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
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
40.5
7.2
29.9
3.3
2.3
1.3
0.9
0.1
331.7
167.0
3.5
161.1
386.4
288.7
10.6
87.1
Volga Federal District
Ural Federal District
Including KhantyMansy Autonomous Area-Yugra Yamalo-Nenets Autonomous Area Tyumen Region (excl. Khanty-Mansy Autonomous AreaChelyabinsk Region
127
All types of farms
Ag enterprise
Household farms
Individual farms
3 050.6
1 386.6
151.8
1 512.2
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
309.1
144.6
56.1
108.4
27.4
10.2
9.5
7.7
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
19.9
1.8
10.5
7.6
0.3
0.3
0.0
0.0
Siberian Federal District
Far Eastern Federal District Republic of Sakha (Yakutia)
Jewish Autonomous Region Chukot Autonomous Area Source: FSSS of Russian Federation.
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Russian Federation - Meat sector review
Cattle Table 45: Number and structure of cattle inventories by region, 2010 All types of farms
Ag enterprise
Household farms
Individual farms
20 069.4
9 155.2
1 656.6
9 257.6
Central Federal District
2 843.9
2 023.3
116.6
703.9
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
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 District
697.1
556.5
29.6
111.0
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
Russian Federation
Kostroma Region
129
All types of farms
Ag enterprise
Household farms
Individual farms
1.6
1.5
0.0
0.1
52.7
34.8
6.7
11.2
185.7
161.9
7.6
16.2
61.5
31.9
2.5
27.0
179.1
166.1
2.3
10.7
7.8
7.1
0.5
0.2
43.0
29.3
2.4
11.3
102.3
84.1
1.7
16.5
2 447.2
736.0
456.1
1 255.1
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
2 205.6
328.4
225.3
1 651.9
Republic of Dagestan
909.7
105.8
77.2
726.6
Republic of Ingushetia
55.8
1.4
11.1
43.2
265.1
41.5
39.6
184.0
235.8
36.4
40.0
159.3
138.9
20.1
8.7
110.1
Chechen Republic
221.4
7.8
22.6
190.9
Stavropol Territory
379.0
115.3
26.0
237.6
Including Nenets Autonomous Area Arkhangelsk Region (excl. Nenets Autonomous Area) Vologda Region Kaliningrad Region Leningrad Region Murmansk Region Novgorod Region Pskov Region Southern Federal District Republic of Adygea
North Caucasian Federal District
Kabardino-Balkar Republic Karachaevo-Cherkessia Republic Republic of North Ossetia-Alania
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Russian Federation - Meat sector review
All types of farms
Ag enterprise
Household farms
Individual farms
Volga Federal District
6 048.7
3 116.0
375.1
2 557.6
Republic of Bashkortostan
1 268.6
484.2
77.6
706.8
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 Region
315.5
234.1
18.6
62.8
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
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
11.8
3.3
5.0
3.5
1.0
0.9
0.0
0.1
255.6
135.2
11.3
109.2
360.8
163.0
14.2
183.7
Ural Federal District
Including KhantyMansy Autonomous Area-Yugra Yamalo-Nenets Autonomous Area Tyumen Region (excl. Khanty-Mansy Autonomous AreaChelyabinsk Region
131
All types of farms
Ag enterprise
Household farms
Individual farms
4 281.5
1 724.2
311.4
2 245.9
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
461.0
130.3
87.7
242.9
233.6
50.2
63.5
120.0
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
14.5
1.8
4.5
8.2
0.0
0.0
0.0
0.0
Siberian Federal District
Far Eastern Federal District Republic of Sakha (Yakutia) Kamchatka Territory
Jewish Autonomous Region Chukot Autonomous 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 firstlitter sows, of all breeds and types of farms were as follows: • • • •
134
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.
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 20082010: • 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.
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Russian Federation - Meat sector review
Table 46: Relative number of heads of cattle, dairy and dairy/ meat breeds, percent, 2009-2010 Breed
Total
Incl. cow
2009
2010
2010/09
2009
2010
2010/09
100
100
0
100
100
0
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
-
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
Total in Russian Federation Black-and-white types:
Moscovsky
137
Total
Breed
Incl. cow
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
-
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
-
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
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
0.003
0.003
0
0.005
0.005
0
Smena
Vazuzsky
Red Estonskaya
Tagilskaya
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 Breed
Number of heads
2009
Share, Number percent of heads
2010
Share, Number percent of heads
Share, 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 Ural type
-
-
-
-
4 750
1.49
Kazakh white
5 057
17. 90
55 990
18.38
56 743
17.79
AberdeenAngus
5 657
4.55
18 257
5.99
19 941
6.25
Charolais
2 193
1.94
6 401
2.1
6 812
2.14
Simmental beef total
2 834
2.17
6 771
2.22
8 751
2.74
Incl. Bredin type
2 218
0.84
4 113
1.35
6 339
1.99
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 hornless
-
0.38
849
0.28
925
0.29
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
Large modern operations (>50 000 tonnes/y)
1
Production processes organization
Large modern operations (>50 000 tonnes/y) Medium and small farms of new type (30 000-50 000 tonnes/y)
Small and medium farms of old type Annual capacity less than 30 000 tonnes
140
Description • Vertically integrated operations, which include own feed production, hatching, breeding and grow-out operations, processing, rendering and marketing; • use modern technologies and equipment; • high degree of automation; • implement food safety measures; • use local and foreign consultants; • have support from local and federal governments; • comprise operations in various regions; • integrated with pig production in many cases; • assure quality control.
• Vertically integrated in most case; • use modern technologies and equipment; • observe biosecurity measures; • use local and foreign consultants; • very often have a high degree of automation; • assure quality control.
• Use old equipment and technologies; • have weak food safety control; • do not invest in staff and its training; • have problems with financing; • usually have state shares in equity; • produce too many different products; • cannot handle costs due to lack of knowledge.
Russian Federation - Meat sector review
Item
2
Technology
Description
Floor housing: birds are raised on the floor covered with wood shavings or straw
• Strong food safety control; • higher quality due to less damage to birds; • better welfare; • easier to handle and manage flocks; • low maintenance equipment; • better ventilation and lighting; • additional cost of shavings or straw to collect litter.
Broiler housing technology Cage housing: birds are raised in cages built on several levels
3
4
Grow-out (rearing) technology planning
All-in all-out: houses are built by zones for complete zone cleaning
• Best for disease prevention; • allow better flock management and performance; • provide savings on livability and yield; • require additional investment in housing.
Continuous cycle: no free time between houses cleaning in zones
• No need for additional capital construction; • prevent full cleaning of production areas; • cause disease retransmission; • affect flock performance.
Old technology: Feed mash – crushed grains
• Low cost of equipment and of production process; • high losses of feed; • low feed conversion.
New technology: pelleted heat-treated combined feeds
• Capacity to produce several feed recipes; • good feed conversion; • minimal waste of feed throughout production chain; • consistently ensured quality, higher food safety.
Feed type / feed plant
Local genetics (both Russian and Western breeds) 5
• Higher yields per square meter; • higher food safety risks; • intensive labour and technology; • high maintenance of climate control; • higher rates of damaged birds.
• Good local availability; • high maintenance; • inconsistent performance; • tainted with various diseases.
Genetics Foreign genetics (supplied from abroad)
• Most productive breeds from best genetic centers; • have good service from breed suppliers; • risk of non-delivery for various reasons; • higher hatchability and fertility; • require complicated vaccination programmes.
141
Item
Technology
Prime processing (slaughter and evisceration) 6
8
• High cost savings on labour, packaging, energy, equipment, infrastructure and marketing; • no added value.
Processing Full processing (including cut-up, further processing and packaging)
7
Description
• Added value on basic product; • higher yield; • wide product range; • better marketing prospects; • additional expenses on equipment and staff; • higher technological risks.
Water chilling: birds are immersed in huge tanks filled with ice water
• Higher yields because of retained water; • better product appearance; • shorter chill time; • retained water leaks in packaging; • higher risk of cross contamination; • excessive waste of water.
Air/combined: birds are passed through a chilling hall with com-pressed cold air
• No leaks in packaging; • no cross contamination; • higher energy consumption; • longer chill time; • risk of improper anti-microbial treatment.
Composting outside the farm and further use as a fertilizer
• Minimal cost involved; • potential benefits from fertilizer sales or use; • require big lots of land; • high ecological risk.
Chilling
Litter utilization Processing for biofuels, burning, etc.
• Capital consuming (expensive); • resolve ecological issues; • 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;
1
Production processes organization
• depending on capacity, herds are placed and transferred every 14 or 21 days, Small farms of new which doesn’t allow effective utilization 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.
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Item
2
Technology
Technology of keeping pigs
• Floor in pig house is covered with straw or wood shavings (litter) to absorb manure; “Nesting” • need for large amounts of litter, but this gives good compost; technology • high costs of labour; • no resource-saving equipment.
“Nesting” technology Slotted floor technology
Old technology 3
Technology of manure removal from houses with slotted floor Modern technology
4
144
Feeding technology and diets
Description
• Reduces cost of cleaning by 10-15 times; • stringent requirements for the microclimate (temperature, humidity, air velocity, etc.); • need to build dump yards based on 12-month exposure of manure in each of the lagoons; • high level of process automation, energy use and conservation equipment. • Use of water wash for dung removal, which leads to the formation of a large amount of manure runoff.
• General use of waterless methods of manure removal to ensure the reduction 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. • 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.
Russian Federation - Meat sector review
Item
5
Technology
Feeding type
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. • 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.
Natural insemination 6
• Requires more hogs, bigger production areas and more feed and labour; • increased production costs.
Insemination type • Effective and quick; • increases productivity; • improves quality; Artificial insemination • reduced costs; • maximum use of breeding potential of hogs and sows.
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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 Modern high productive foreign genetics (Denmark, Great Britain, Canada, USA, Germany)
• Reduces (i) the volume of capital investments, particularly in construction and equipment, (ii) operating costs, (iii) energy and water consumption, (iv) feed costs, (v) use of veterinary preparations and (vi) cost of manure disposal; • provide higher quality of end products; • 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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Table 50: General technologies of cattle meat production Item
1
2
3
Technology
Description
Cattle meat by culling dairy cattle
Meat is obtained from culled dairy cows and calves. It is much more costly to grow bull calves than to dispose of them at early ages.
Specialized beef farming
The animals of meat breeds gain weight faster than dairy cattle. Beef from meat cattle breeds is tastier and has higher yield. Such animals require much less energy than dairy cattle. Disadvantages: monoproductivity and relatively low return on investments.
Stall-barn system
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 recommended for farms with minimum grazing areas; therefore, it is more expensive because it requires lots of prepared fodder.
Pen system
Stall-barn system in winter, pens in summer (feeding green chop of green forage chain and silage). This system is used when grazing is not far from land with plentiful grass (e.g. wet meadows along rivers) and if grazing areas are not sufficient or remote.
Grazing-stall system
In the stall period animals are kept in barns and in the pasture period, in artificial or natural pastures.
Grazing system
Preferable for farms that have large areas of natural and improved pastures. Keeping cattle in the wild pastures for 24 hours a day is the most efficient way to avoid animal stress.
Traditional farmanimal method
This is a traditional method for dairy cattle rearing. Its advantage compared with free-stall housing is that individual maintenance of cows provides milk and 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.
Free-stall method
Compared with traditional housing, this method can significantly reduce labour costs and efficiently use production equipment. This technology is used by some dairy farms, and takes the leading place in meat production. It requires a lot of bedding or big investments in slotted floors.
General principles
Housing system
Housing method
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Item
4
5
6
7
Grazing technology
Technology
Description
Natural grazing
The main advantage of natural grazing is the low cost of feed.
Artificial grazing
Artificial grazing is the use of annual and perennial grasses, clover, etc. These pastures provide forage 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.
Animal feed use
Winter diet of beef cattle generally includes “slightly dried,” low-moisture silage with combined feed.
Change of animal feed for flattened grains and grain forage
Conditioning is the most efficient way of processing wet grain to feed, which provides high-quality forage. The technology is effective because it allows cheaper feed grain forage by eliminating the cost of drying food and better digestibility.
Artificial insemination
This method is modern and inexpensive (no need for bulls or additional labour), has a higher guaranteed result when compared with mating and means that calving occurs uniformly throughout the year. Embryo implantation is even more productive as it allows control of the proportion of bulls and cows.
Natural insemination
Natural insemination is less effective and controllable. It requires keeping breeding bulls, additional space, feed, labour and other expenses.
Dairy cattle
Ayshirsky, Holstein, Yaroslavl, Taghil and other low meat quality breeds.
Meat and dairy cattle
Simmental, Bestuzhev, Kostroma, Shvitsky and other breeds. Meat quality is satisfactory.
Special meat cattle breeds
Aberdeen-Angus, Hereford, Limousine, Charolais, Kazakh Whitehead and other breeds. Meat quality is high.
Feeding
Insemination
Genetics
Source: Authors’ compilation based on various sources.
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Annex 4 - Applicable state standards in the Russian Federation Feed Table 51: Applicable state standards for feed Designation
Title
GOST R 54954-2012
Feeds. Feeds and fodder additives for domestic 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.
GOST R 51550-2000
Mixed feeds-concentrates for pigs. General specifications.
GOST 9268-90
Mixed feeds-concentrates for fodder cattle. Specifications.
GOST R 51166-98
Mixed feeds for fur-bearing animals, rabbits and nutrias. Specifications.
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Meat Table 52: Applicable state standards for meat Designation
GOST R 50848-96
Title
Cattle. The criteria for raising and feeding young livestock for the production of meat foodstuffs for children. Requirements. Standard technological process.
GOST R 52702-2006
Chicken meat (carcasses of chickens, broiler chickens and their 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.
GOST 12.2.135-95
Equipment for processing meat and poultry farming products. Safety requirements: precautions, sanitation and ecology.
GOST R 53476-2009
Food processing machinery. Cutting machines for meat. Specifications.
GOST R 53848-2010
Frozen cooked mussel meat. Specifications.
GOST R 52674-2006
Frozen in blocks meat and meat by-products for production of babies’ nutritional foods. Specifications.
GOST R 54704-2011
Frozen meat blocks. General specifications.
GOST 4814-57 GOST R 54675-2011
Frozen meat in blocks. Specifications. Geese meat (carcasses and their parts). Specifications.
GOST 23126-78
Horses for meat for export. Specifications.
GOST 30146-95
Machines and equipment for the production of sausage products and meat semi-finished products. General specifications.
GOST 28107-89
Machines for mixing minced meat. Main parameters, technical requirements and test methods.
GOST 31799-2012
Meat and meat by-products, frozen in blocks, for production of children’s nutritional foods. Technical specifications.
GOST R 52704-2006
Meat and vegetable preserves from poultry meat for babies’nutrition. Specifications.
GOST R 52479-2005
Meat cooked sausage products for children’s food. General specifications.
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Designation
GOST R 52427-2005 GOST 28532-90 GOST 31490-2012
Title
Meat industry. Food products. Terms and definitions. Meat mincers. General specifications. 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 GOST 10.76-74
Meat. Dressing of pork into cuts. Specifications. Meat. Horse flesh for export. Technical requirements.
GOST R 54048-2010
Meat. Pork for children’s nutrition. Specifications.
GOST R 52418-2005
Mechanically separated chicken meat for children’s food. Specifications.
GOST 3739-89 GOST 21784-76
Packed meat. Specifications. Poultry meat (carcasses of hens, ducks, geese, turkeys, guineafowls). Technical requirements.
GOST R 52306-2005
Poultry meat (carcasses of chickens, broiler-chickens and their cut parts) for children’s nutrition. Specifications.
GOST R 54356-2011
Poultry meat and by-products of semi-prepared foods. Acceptance regulations.
GOST R 54349-2011
Poultry meat and by-products. Acceptance regulations.
GOST R 53163-2008
Poultry meat of mechanical separation. Specifications.
GOST 28693-90
Production equipment for meat and poultry processing industry. 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 GOST R 54672-2011
Rabbit meat. Specifications. Raw-smoked and raw-jerked sausage products from poultry meat. General specifications.
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Designation
Title
GOST R 52818-2007
Sausage cooked goods from poultry meat for children’s nutrition. General specifications.
GOST R 52986-2008
Meat. Dressing of pork into cuts. Specification.
GOST R 54520-2011
Meat. Dressing of veal into cuts. Specifications.
GOST 27095-86 GOST 9792-73 GOST R 54754-2011 GOST R 51187-98
Meat. Horse meat and young horse meat in half-carcasses and quarters. Specifications. Sausage products and products of pork, mutton, beef and meat of other kinds of slaughter animals and poultry. Acceptance rules and sampling method. Semi-prepared boneless meat products in pieces for children’s nutrition. Specifications. Semi-prepared ground meat products, stuffed dumplings, comminuted meat for children’s nutrition. General specifications.
GOST R 52675-2006
Semi-prepared meat and meat-contained products. General specification.
GOST 31465-2012
Semi-prepared poultry meat for children’s nutrition. General specifications.
GOST R 53517-2009
Semi-prepared poultry meat for children’s nutrition. General specifications.
GOST R 53008-2008
Semi-prepared poultry meat and poultry offal. General specifications.
GOST R 53588-2009
Semi-smoked meat sausages. Specifications.
GOST R 53852-2010
Semi-smoked sausages of poultry meat. General specifications.
GOST 29123-91
Symbols of controls of equipment for meat and bird processing industries. Designations.
GOST 28534-90
Tracks for meat industry. Main parameters, dimensions and 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.
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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 (loss), percent Profitability
Number of subjects
Administrative unit
55
Up to 10
27
Bashkotostan, Udmurtskaja, Kabardino-Balkanskaja, Kabardevo-Cherkesskaja, Karelija, Marij El, Mordovia,Hakasija, Chuvashkaja, Zabajkalsky, Krasnodarsky, Krasnoyarsky, Stavropolsky, Habarovsky, Belhorodskaya, Volgogradskaya, Belgorod, Volgograd, Kemerovo, Murmansk, Novgorod, Novgorod, Orenburg, Orel, Samara, Sverdlovsk, Tula, Ulyanovsk, Chelyabinsk
10-1-20
17
Adygea, Altai, Perm, Primorsky, Bryansk, Vladimir, Vologda, Voronezh, Irkutsk, Kaliningrad, Kaluga, Leningrad, Novosibirsk, Rostov, Ryazan, Tyumen, Yaroslavl
Over 20
11
Komi, Tatarstan,Amur, Kurgan, Kursk, Lipetsk, Moscow, Omsk, Penza, Tver, Tomsk
Loss
21
-
Up to 10
8
Dagestan, Sakha (Yakutia), the Chechen Arkhangelsk, Kostroma, Pskov, Saratov, Tambov
10.1-20
5
Kamchatka Astrakhan, Kirov
Over 40
5
Buryatia,Smolensk,Khanty-Mansiysk, Chukotka Saint Petersburg
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Pork Table 54: Profitability of pork in the administrative subjects of the Russian Federation, 2010 Number of subjects
The subjects
Profitability
51
-
Up to 10
14
Buryatia, Kabardino-Balkaria, Karachay-Cherkessia, Chuvash Kraj: Perm, Primorsky, Khabarovsk Astrakhan, Voronezh, Ivanovo, Kostroma, Kurgan, Murmansk, Ryazan
10.1-20
11
Adygea, Bashkortostan, Mordovia, Udmurtia Altai, Kamchatka, Krasnoyarsk and Stavropol Vologda, Kemerovo, Kursk
20.1-30
12
Bryansk, Kaluga, Kirov, Moscow, Novgorod, Novosibirsk, Pskov, Sverdlovsk, Tverskaya. Tula, Tyumen Evrejskaja
Over 30
14
Mari El, Tuva Belgorod, Volgograd, Irkutsk, Kaliningrad, Leningrad, Lipetsk, Orel, Omsk, Penza, Tambov, Tomsk, Chelyabinsk
Loss
26
-
Up to 20
16
Karelia, Komi, North Ossetia, Tatarstan, Khakassia Transbaikalia, Krasnodar Amur, Arkhangelsk, Vladimir, Nizhny Novgorod, Orenburg, Rostov, Sakhalin, Ulyanovsk, Yaroslavl
20.1-40
3
Samara, Smolensk Khanty-Mansiysk
Over 40
7
Altai, Dagestan, Kalmykia,Saratov Chukotka, Yamal-Nenets Saint Petersburg
Profitability (loss), percent
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Beef Table 55: Profitability of beef in the administrative subjects of the Russian Federation, 2010 Profitability (loss), percent
Number of subjects
The subjects
2
Kalmykia, Karachay-Cherkessia
Loss
78
-
Up to 20
14
Altai, Bashkortostan, Buryatia, Dagestan, Sakha (Yakutia), Udmurt,Altai, Transbaikalia, Krasnoyarsk, Primorsky,Orel, Kirov, Novosibirsk, Chelyabinsk
20.1-30
16
Kabardino-Balkaria, Mari El, Mordovia, Tatarstan,,Chuvashia, Krasnodar, Perm Volgograd, Voronezh, Irkutsk, Kurgan, Omsk, Orenburg, Penza, Saratov, Ulyanovsk
27
North Ossetia-Alania, Tuva, Khakassia Stavropol,Arkhangelsk, Astrakhan, Belgorod, Bryansk, Vologda, Ivanovo, Kaluga, Kemerovo, Kostroma, Kursk, Nizhny Novgorod, Novgorod, Pskov, Rostov, Ryazan, Samara, Sverdlovsk, Smolensk, Tambov, Tver, Tomsk, Tula, Tyumen
21
Adygea, Ingushetia, Karelia, Komi Kamchatka, Khabarovsk, Amur, Vladimir, Kaliningrad, Leningrad, Lipetsk, Magadan, Moscow, Murmansk, Sakhalin, Yaroslavl Khanty-Mansiysk, Chukotka, Yamal-Nenets Evrejskaja Saint Petersburg
Profitability
30.1-40
Over 40
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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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 groundmeat Company: Dimov Name: Dimov Products: cooked, smoked and semi-smoked sausages, ham, cutlets, chilled meat, frozen meat and others
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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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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).
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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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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.
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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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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.
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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 meatprocessing 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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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 company (holding)
Region
Investment, million USD
Starting year
Project at full capacity
1
Industrial turkey complex for 240 000 tonnes of live weight per year (stage 1: 90 thousand tonnes). Stage 1includes hatchery and processing facilities, feed mill with grain storage and manure disposal system.
LLC Evrodon
Rostov Region
800
2010
2012-13
2
Livestock production systems for poultry meat (poultry slaughter and processing plant, hatchery, feed, 128 breeders, 336 chicken houses, rendering plant, residential housing). Project capacity: 230 thousand tonnes/year. Complex start-up is planned for 2013.
Cherkizovo Group
Lipetsk Region
600
2011
2019
3
Broiler complex in Tatischevsk District of Saratov Region (broiler houses, hatchery, feed mill, slaughter and processing plant, cold store). Capacity: 31.5 thousand tonnes/year.
RE-EM-FORM s.r.o. (Czech Republic)
Saratov Region
357
2010
-
4
Broiler complex with annual capacity of 100 000 tonnes. The complex was built on the premises of Inzhavinskaya Poultry Farm and will comprise broiler houses in six rearing zones, processing plant, grain elevator, rendering plant, cold stores.
CJSC Izhavinskaya Poultry Farm (as a part of Prioskol’e)
Tambov Region
283
2010
2012
Name and brief project description
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Russian Federation - Meat sector review
Name and brief project description
Implementing company (holding)
Region
Additional poultry farms with capacity of 50 000 tonnes of poultry per year. 5 Modernization of poultry farms in the Argayashsky Area to increase the volume of poultry meat production by 21 tonnes/year.
Investment, million USD
190 Uralbroiler Group of Companies
Starting year
Project at full capacity
-
Chelyabinsk Region
46.7
2010
6
Additional broiler housing in Novgorod Region with a total capacity of 22.500 tonnes/year.
Belgrankorm
Novgoro-d Region
166
2010
-
7
Breeder operation of ten houses brought the total company’s broiler meat output to 80 000 tonnes in 2012.
LLC LISKoBroiler
Voronezh Region
150
2009
2015
8
Vertically integrated turkey complex with an annual capacity of 15 000 tonnes/year, including hatchery, breeders, rearing, processing plant, packaging, feed mill and grain storage. The project is expandable to 60 000 tonnes of turkey meat/year.
LLC Russian Dairy Company (Rusmoloko)
Penza Region
150
2011
2012
9
Broiler complex for 50 000 tonnes of poultry/year.
Sitno Company
Chelyabinsk Region
140
2010
2011
10
Renovation and construction of new poultry farms in the Yetkulsk Area: infrastructure, broiler houses, feed mill.
LLC Bektysh
Chelyabinsk Region
116.7
-
-
169
Name and brief project description
Implementing company (holding)
Region
Investment, million USD
Starting year
Project at full capacity
11
Construction of a new poultry processing plants in Blagodarny was scheduled for August 2010. Plant capacity is 80 000 tonnes per year.
CJSC Stavropolsky broiler – in 2011 acquired by GAP Resource
Stavropol Region
60
2009
2010
12
Reconstruction of the Vertunovsky breeder operation of the Vassilievskya poultry farm with the production capacity of 60 million hatching eggs/year.
Cherkizovo Group
Penza Region
53
2009
2010
13
Renovation and installation of new equipment for breeder farms Pskov and Borovichi (Novgorod Region) and broiler houses Pervomayskaya, Novgorod and Valdai farms. The total capacity will increase by 36 tonnes of broiler meat/year.
Rubezh Group of Companies
Novgorod and Pskov Regions
First stage 123.3
2009
2012
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 million
Percent
699
64
Equipment for broilers
91
8
Slaughter (building)
33
3
Slaughtering equipment
75
7
Incubator building
11
1
Incubator equipment
43
4
145
13
1 098
100
Fixed assets Poultry house
Other Total
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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Table 57: Sensitivity analysis of investments in broiler meat production NPV sensitivity (billion RUR) Feed cost fluctuations, RUR/kg
Average meat price, RUR/kg
9.984
11.232
12.48
13.728
15
87
-1.10
-1.35
-1.61
-1.86
-2.32
111
0.30
0.05
-0.20
-0.46
-0.92
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
14 %
16 %
18 %
Input cost (feed) inflation
Output prices inflation
20 %
22 %
8%
-0.15
-0.31
-0.44
-0.68
-0.89
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
Average meat price, RUR/kg
2.02
1.92
1.82
1.75
1.62
87
-1.74
-1.61
-1.47
-1.34
-1.21
111
-0.33
-0.20
-0.07
0.06
0.19
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
Average meat price, RUR/kg
2.02
1.92
1.82
1.75
87
Negative
Negative
Negative
Negative
1.62 0
111
6
8
9
10
12
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
Average meat price, RUR/kg
2.02
1.92
1.82
1.75
87
-
-
-
-
1.62 -
111
11
10
10
9
9
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 company (holding)
Region
Investment, million USD
Starting year
Project at full capacity
1
Construction of a swine complex for one million pigs (90 000 tonnes of pig meat/ year).
GK Rusagro
Belgorod Region
433.3
2009
2016
2
Construction of a swine complex in Zherdevsky and Sampursky Districts for one million pigs/ year, including breeder farms.
LLC Tambov bacon
Tambov Region
320
2010
2014
3
Construction of a slaughter and processing plant with a capacity of 100 tonnes per day (consisting of three pig farms and three rearing farms for 330 000 pigs).
LLC AltayAltay Region myasoprom
233.3
2011
2013
4
Construction of a pigbreeding complex with capacity of 50 000 tonnes of pig meat per year in five districts of the region.
LLC Resurs
Tambov Region
230.5
2011
2012
5
Commissioning in Pristensk Area for the first phase of a rearing farm for 20 000 pigs: 50 000 tonnes of pork/ year.
Agroindustrial holding Miratorg
Kursk Region
210
2010
2018
Name and brief project description
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Russian Federation - Meat sector review
Name and brief project description
Implementing company (holding)
Region
Investment, million USD
Starting year
Project at full capacity
JSC Bryansk Meat Processing Factory
Bryansk Region
116.7
2010
-
Investor - LLC UniversStroyluxe
Kursk Region
116.7
2010
2011
6
Construction in Vygonich Area of two pig farms of 300 000 heads, or 33-35 000 tonnes/ year. The complex will include four commercial farms with 2.5 000 pigs each, a breeding farm for 1.8 000 pigs, a feed mill with a production capacity of 30 tonnes/ hour and a selectionhybrid center.
7
Construction of pig farm in the Fatezhsk Area for 112 000 heads/year with a complete production cycle, including slaughter, prime processing and a feed mill. Target capacity: 50 000 tonnes of pork.
8
Construction of swine complex for 250 000 pigs in Yetkulsky, Chebarkulsky and Nyazeptrovsk Districts. Payback period is expected not to exceed five years.
Romkor Corporation
Chelyabinsk Region
> 100
2010
2015
9
Construction of the pig farm Glebovsky for 52 000 pigs. The complex will also include a feed mill and other manufacturing.
Dmitrova gora (Agropromkomplektatsiya)
Tver Region
100
2010
2013
10
Construction of the pig farm East-Siberian, for 12.900 tonnes of meat in live weight/ year. Project payback period is estimated to be eight years.
CJSC Siberian agrogroup
Buryat Republic
100
2011
2013
175
Name and brief project description
Implementing company (holding)
Region
Investment, million USD
Starting year
Project at full capacity
CJSC Siberian agrogroup
Buryat Republic
86.6
2011
-
11
Construction of a pig farm for 70 000 heads in Zaigraivsk District. Production capacity is 13 000 tonnes of pork meat in live weight/ year; the payback period is eight years.
12
Increasing the capacity of pig farm in order to reach the level of 27 000 heads/year, or 37.5 000 tonnes of meat in live weight.
Uralsky (affiliate of CJSC Siberian agrogroup)
Sverdlovsk Region
50-66.7
2011
2012
13
Opening of a new pig complex for 5250 pigs in Budanovka Village in Zolotukhinsky Area with a capacity of 14 500 tonnes/year.
OJSC Global Eco
Kursk Region
64
2011
2012
14
Finalizing the fifth pig farm Troparevo that has a capacity 55 000 pigs/year.
JSC Ostankino Meat Processing
Moscow Region
15
-
2009
15
Construction of pig complex in Bogdanovich and Kamyshlovo Areas: two independent farms, each of which includes a reproducer, rearing and feed grow. Construction started in 2007. Capacity: 25 000 tonnes of meat/year.
CJSC Pig farm Uralsky (affiliate of CJSC Siberian agrogroup)
Sverdlovsk Region
143.3
2007
2009
176
Russian Federation - Meat sector review
Implementing company (holding)
Region
Investment, million USD
Starting year
Project at full capacity
16
Construction of two pig complexes in Karachai District. The complexes can hold 63 000 pigs and 2 530 sows and the slaughterhouse has a capacity of 20 tonnes/ shift.
LLC Bryansk Meat Processing Complex» (TsarMyaso Group)
Bryansk Region
-
2007
2012
17
Completion of the pig farm Zhuravskii, and 1 200 gilts were delivered to reproducer.
Agroindustrial holding Miratorg
Belgorod Region
56.7
-
2009
18
Completion of the last, fourth area of the pig complex in Millerovo District, which has a capacity of 11 000 tonnes of pork/year.
GC Russian Agroindustrial Trust
Rostov Region
53.3
2008
2011
Name and brief project description
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 company (holding)
Region
Investment, million USD
Starting year
Project at full capacity
1
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 the project will comprise 37 holding Miratorg 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.
Bryansk Region
800
2009
2014
2
Construction of the first of a set of five rearing complexes for 5 860 heads of beef cattle.
Agro-holding Marble Meat of Kalmykia
Republic of Kalmykia
133
2011
3
Construction of a farm for beef production for 4 000 cows or 2 000 tonnes of beef.
JSC Maximovsky Meat Processing Complex
Tambov Region
66.1
2010
Name and brief project description
178
2013
Russian Federation - Meat sector review
Name and brief project description
4
Construction of a dairy and meat complex for 600 heads of cattle in Goreloe. In 2012 there was an annual production of 4 000 tonnes of milk and 180 tonnes of meat.
5
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 total population is projected to reach 2 – 25 000 bulls in 2016. The project uses Hereford and Simmental breeds, mainly from Germany and Russian Federation.
6
Expansion of marbled beef project in Hlevensky District.
7
Establishment of new beef cattle farms in Pytalovo Area.
8
1.4 000 heads of Aberdeen Angus and Hereford breeders from the United States were delivered at the end of 2010 to the farm Stevenson Sputnik. 1.8 thousand head were delivered to LLC Breeding Farm Angus-Shestakovo in fall 2011.
Implementing company (holding)
Region
Investment, million USD
Starting year
Project at full capacity
CJSC Agrocomplex TAmbovsky
Tambov Region
33.3
2011
2013
LLC Nesterovka
Kaluga Region
EUR 4 million
2007
2013
LLC Allbeef
Lipetsk Region
No data
2010
2011
LLC Gerefordcenter
Pskov Region
Around 20
2011
2013
LLC StevensonVoronezh Sputnik and LLC Region Angus
38
2010
2012
Source: Authors’ presentation based on information obtained from market operators, companies’ announcements, development programmes, etc.
179
180
1 115
510
2 187.82
1 051714
1287349
816.96
Export (value, thousand USD)
Export (quantity, tonne)
Export (price, USD/tonne)
Import (value, thousand USD)
Import (quantity, tonne)
Import (price, USD/tonne)
2007
1 099.98
1 217 587
1 339 318
2 015.56
2 813
5 671
2008
1 122.04
948 459
1 064212
1 046.74
5 896
6 172
2009
Calendar year
1326.51
650 432
862 807
925.12
186 55
172 58
2010
1417.68
403 524
572 068
748.83
18806
140 82
2011
141 7.68
403 524
572 068
748.83
18806
140 82
12/2011
1505.27
469 561
706 814
718.35
153 86
110 53
12/2012
Year to date
6.18
16.37
23.55
-4.07
-18.18
-21.51
Percent change
Calendar Year: 2007-2011, Year to Date: 12/2011 & 12/2012
Commodity: 0207, Meat and Edible Offal of Poultry (Chickens, Ducks, Geese, Turkeys And Guineas), Fresh, Chilled or Frozen
The Russian Federation’s Yearly Statistics
Table 58: Foreign trade statistics: poultry, yearly, 2007-2012
Annex 12 - Foreign meat trade
Poultry
0
2 161
3 123
22 463
1 261
Ukraine
Hungary
Argentina
Belgium
Denmark
3 751
49 694
France
Finland
71 621
245 694
Brazil
Germany
634 887
1 051 714
2007
United States
World
Partner country
Import
3 390
3 749
15 018
6 321
3 630
0
58 179
95 688
294 935
835 895
1 339 318
2008
1 075
7 423
6 192
6 744
5 482
0
59 967
97 486
131 719
733 133
1 064 212
2009
Calendar year
5 145
25 697
11 890
9 811
14 907
165
40 329
123 868
257 693
331 208
862 807
2010
3 922
4 723
5 116
6 824
7 143
11 417
31 736
32 442
150 010
307 044
572 068
2011
3 922
4 723
5 116
6 824
7 143
11 417
31 736
32 442
150 010
307 044
572 068
12/2011
7 392
979
9 057
19 477
10 580
68 937
35 466
10 334
156 008
338 312
706 814
12/2012
Year to date
88.49
-79.26
77.04
185.41
48.12
503.8
11.75
-68.15
4
10.18
23.55
Percent change
Value in thousand USD
Russian Federation - Meat sector review
181
182
0
0
0
0
0
0
0
0
Abkhazia
China
Tajikistan
Azerbaijan
Svalbard & Jan Mayen
Panama
Norway
Belize
0
0
0
0
13
6
0
650
120
0
5 671
2008
0
0
0
0
0
199
0
2 486
1 428
679
6 172
2009
Calendar year
Source: Customs Committee of the Russian Federation and GTIS.
24
Viet Nam
1 115
0
2007
Hong Kong
World
Partner country
Export
0
0
0
0
0
264
45
1 823
4 814
6 083
17 258
2010
0
0
1
38
87
204
257
1 948
4 661
6 886
14 082
2011
0
0
1
38
87
204
257
1 948
4 661
6 886
14 082
12/2011
0
0
0
0
0
3
0
3 224
1 540
5 491
11 053
12/2012
Year to date
-100
-100
-100
-100
-100
-98.39
-100
65.49
-66.97
-20.25
-21.51
Percent change
Value in thousand USD
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
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
Russian Federation - Meat sector review
Figure 65: Foreign trade statistics: poultry imports, monthly, 2009-2012 300 000 1 800
250 000 1 600
200 000 1 400
1 200
150 000 1 000
100 000 800
600
50 000 400
200
Import value, thousand USD (left axis)
Export value, thousand USD (left axis) Import quantity, tonnes (left axis)
3 500
3 000
500
Export quantity, tonnes (left axis) 0
Import price, USD/ tonne (right axis)
Source: Customs Committee of the Russian Federation and GTIS.
Figure 66: Foreign trade statistics: poultry export, monthly, 2008-2012
2 500
2 500 2 000
2 000 1 500
1 500
1 000 1 000
500
0
Export price, USD/ tonne (right axis)
Source: Customs Committee of the Russian Federation and GTIS.
183
184
2 436
671 739
Import (quantity, tonne)
Import (price, USD/ tonne)
1 636 651
Import (value, thousand USD)
2 148
90
Export (quantity, tonne)
Export (price, USD/ tonne)
194
Export (value, thousand USD)
2007
2 782
790 955
2 200 464
3 232
60
194
2008
2 927
635 670
1 860 679
3 123
162
505
2009
Calendar year
Calendar Year: 2007-2011, Year to Date: 12/2011 & 12/2012
Commodity: 0203, Meat of Swine (Pork), Fresh, Chilled or Frozen
The Russian Federation’s Yearly Statistics
3 001
640 626
1 923 034
2 677
120
320
2010
Table 59: Foreign trade statistics: pork meat, yearly, 2007-2012
3 211
656 590
2 108 704
6 170
46
287
2011
3 211
656 590
2 108 704
6 170
46
287
12/2011
3 341
720 241
2 406 649
4 619
33
151
12/2012
Year to date
4.04
9.69
14.13
-25.13
-29.62
-47.3
Percent change
Pork
39 426
Belgium
23 686
0
Ukraine
Ireland
37 611
180 388
United States
France
218 595
Denmark
73 199
159 079
Canada
Spain
97 329
698 861
Brazil
Germany
1 636 651
2007
World
Partner country
Import
34 775
45 559
0
88 437
102 549
435 878
178 763
260 368
189 302
697 029
2 200 464
2008
71
40 977
0
70 784
82 705
298 996
195 117
105 416
232 696
769 404
1 860 679
2009
Calendar year
22 444
44 157
1 971
86 559
96 121
177 738
222 913
178 006
316 234
712 722
1 923 034
2010
46 155
51 311
57 132
96 631
173 554
186 676
260 034
339 333
353 079
429 934
21 08 704
2011
46 155
51 311
57 132
96 631
173 554
186 676
260 034
339 333
353 079
429 934
2 108 704
12/2011
48 648
44 539
89 978
67 615
203 959
292 692
213 490
565 785
302 686
392 951
2 406 649
12/2012
Year to date
5.4
-13.2
57.49
-30.03
17.52
56.79
-17.9
66.73
-14.27
-8.6
14.13
Percent change
Value in thousand USD
Russian Federation - Meat sector review
185
186
0
0
Abkhazia
Kazakhstan
0.086
0
0.086
2008
30.885
0
30.885
2009
Calendar year
Source: Customs Committee of the Russian Federation and GTIS.
0
2007
World
Partner country
Export
25.985
4.289
30.274
2010
0
0
0
2011
0
0
0
12/2011
0
3.569
3.569
12/2012
Year to date
n/a
n/a
n/a
Percent change
Value in thousand USD
60 80 20 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
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
Russian Federation - Meat sector review
Figure 67: Foreign trade statistics: pork meat imports, monthly, 2009-2012 300 000 4 000
250 000 3 500
200 000 3 000
2 500
150 000 2 000
100 000 1 500
50 000 1 000
500
Import value thousand USD (left axis)
Export value thousand USD (left axis) Import price USD/tonne (right axis)
200 180 160 140 120 100 80
Export price USD/tonne (right axis) 0
Import quantity tonne (left axis)
Source: Customs Committee of the Russian Federation and GTIS.
Figure 68: Foreign trade statistics: pork meat exports, monthly, 2009-2012 12 000
10 000
8 000
6 000
4 000
2 000
0
Export quantity tonnes (left axis)
Source: Customs Committee of the Russian Federation and GTIS.
187
188
712 812
2 383.1
Import (price, USD/tonne)
1 698 705.944
2 836.5
11
31.471
Import (quantity, tonne)
Import (value, thousand (USD)
Export (price, USD/tonne)
Export (quantity, tonne)
Export (value, thousand USD)
2007
4 335.23
86
371.659
2009
3 252.09
791 159 3 517.48
62 4077
2 572 922.413 2 195 178.435
2 495.57
90
224.08
2008
Calendar year
Calendar Year: 2007-2011, Year to Date: 12/2011 & 12/2012
Commodity: 0202, Meat of Bovine Animals, Frozen
The Russian Federation’s Yearly Statistics
3 419.07
606 083
2 072 237.098
2 617.51
2
4.366
2010
2011
3 913.28
566 545
2 217 048.923
5 185.27
28
147.426
Table 60: Foreign trade statistics: bovine meat frozen, yearly, 2007-2012
3 913.28
566 545
2 217 048,92
5 185.27
28
147,426
12/2011
4 418.83
584 615
2 583 316.18
7 308.71
16
115.022
12/2012
Year to date
12.92
3.19
16.52
40.95
-44.65
-21.98
Percent change
Beef
7 608.095
Italy
92 926.361
14 427.712
Germany
Ukraine
259 401.483
Argentina
0
Mexico
157 187.371
Paraguay
0
8 219.121
Australia
United States
50 290.68
1 074 881.155
Brazil
Uruguay
1 698 705.944
2007
World
Partner country
Import
62 108.311
27 091.809
23 882.894
212 176.375
0
71 853.878
269 676.366
227 217.011
262 859.416
1 344 138.619
2 572 922.413
2008
59 111.227
3 096.221
6 332.394
470 031.225
0
1 1622.925
16 1321.84
59 786.534
226 239.527
1 173 074.819
2 195 178.435
2009
Calendar year
43 208.884
42 775.113
55 370.667
113 489.252
10 541.157
87 875.951
210 740.807
148 384.445
262 139.18
972 393.667
2 072 237.098
2010
34 933.609
39 466.235
41 463.002
56 549.995
88 242.631
163 669.743
182 910.782
239 471.504
288 561.237
920 217.661
2 217 048.923
2011
34933.609
39 466.235
41 463.002
56 549.995
88 242.631
163 669.743
182 910.782
239 471.504
288 561.237
920 217.661
2 217 048.92
12/2011
24952.126
22 836.044
15 436.093
36 822.137
118 188.193
220 022.267
546 990.862
122 937.282
277 565.953
109 6487.5
2 583 316.18
12/2012
Year to date
-28.57
-42,14
-62.77
-34,89
33.94
34.43
199.05
-48.66
-3.81
19.16
16.52
Percent change
Value in thousand USD
Russian Federation - Meat sector review
189
190
0
0
0
Denmark
Georgia
Germany
0
0
Netherlands
Poland
72.298
70.816
0.233
18.414
0
0
2 397
0
0
0
224.08
2008
62.051
0
0
105 317
0
139.68
0
0
0
0
371.659
2009
Calendar year
Source: Customs Committee of the Russian Federation and GTIS.
0
Korea, South
31.471
0
Belize
Kazakhstan
0
Panama
31.471
0
2007
South Ossetia
World
Partner country
Export
0
0
0
4 366
0
0
0
0
0
0
4 366
2010
0
0
0
0
0
0
0
0.194
0.589
146.643
147.426
2011
0
0
0
0
0
0
0
0.194
0.589
146.643
147.426
12/2011
0
0
0
0
14.708
0
0
0
0
55.685
115.022
12/2012
Year to date
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-100
-100
-62.03
-21.98
Percent change
Value in thousand USD
Russian Federation - Meat sector review
Figure 69: Foreign trade statistics: bovine meat frozen imports, monthly, 2009-2012 5 000
350 000
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 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
0
Import value thousand USD (right axis)
Import quantity tonnes (right axis)
0
Import price 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
160 140 120 100 80 60 40 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
20
Export value thousand USD (left axis)
Export quantity tonnes (left axis)
10 000 9 000 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0
Export price USD/tonne (right axis)
Source: Customs Committee of the Russian Federation and GTIS.
191
192
21 133
3 352.9
Import (quantity,tonne)
Import (price, USD/ tonne)
0
Export (price, USD tonne)
70 858.4
0
Export (quantity, tonne)
Import (value, thousand USD)
0
Export (value, thousand USD)
2007
4 506.54
19 571
88 196.63
1 954.55
0
0.086
2008
Calendar Year: 2007-2011, Year to Date: 12/2011 & 12/2012
4 951.23
11 765
58 250.53
6 881.68
4
30.885
2009
Calendar year
Commodity: 0201, Meat of Bovine Animals, Fresh or Chilled
The Russian Federation’s Yearly Statistics
4 969.1
19 748
98 128.18
6 806.2
4
30.274
2010
0
0
0
2011
5 596.8
35 732
199 983.47
Table 61: Foreign trade statistics: bovine meat fresh or chilled, yearly, 2007-2012
5 596.8
35 732
199 983.47
0
0
0
12/2011
5 309.16
41 165
218 550.3
4 406.57
1
3.569
12/2012
Year to date
-5.14
15.2
9.28
n/a
n/a
n/a
Percent change
Brazil
33.784
30.346
0
Denmark
Austria
0
Moldova
3 811.043
Australia
0
24 225.95
Ukraine
Poland
24 225.95
Germany
0
38 661.11
Lithuania
United States
70 858.4
2007
World
Partner country
Import
292.383
5.046
1 428.414
0
1 026.115
2 889.336
8 849.542
0
27 422.13
45 958.15
88 196.63
2008
2009
79.511
10.26
0
43.757
81.797
1 504.434
9 531.085
150.488
15 103.15
31 433.39
58 250.53
Calendar year
304.917
377.369
0
1 274.492
6 300.07
63 83.922
14 389.18
663.748
25 213.08
42 116.19
98 128.18
2010
2 188.181
2 287.889
4 202.246
8 473.478
12 902.914
13 101.351
13 615.255
22 987.652
36 224.399
80 600.207
199 983.47
2011
2 188.181
2 287.889
4 202.246
8 473.478
12 902.914
13 101.351
13 615.255
22 987.652
36 224.399
80 600.207
199 983.47
12/2011
13 805.499
770.685
7 289.031
8 230.08
2 3164.72
16 935.466
18 257.393
40 542.403
14 058.928
68 361.823
218 550.3
12/2012
Year to date
530.91
-66.31
73.46
-2.87
79.53
29.27
34.1
76.37
-61.19
-15.18
9.28
Percent change
Value in thousand USD
Russian Federation - Meat sector review
193
194
0
0
0
0
0
0
0
0
64
Svalbard & Jan Mayen
Panama
Belize
Norway
Azerbaijan
Belgium
Denmark
Georgia
Germany
84
0
0
0
0
0
0
0
0
0
194
2008
0
17
91
58
0
0
0
0
0
61
505
2009
Calendar year
Source: Customs Committee of the Russian Federation and GTIS.
0
194
2007
Abkhazia
World
Partner country
Export
147
0
0
0
0
3
0
0
0
48
320
2010
0
0
0
0
0
0
1
3
7
276
287
2011
0
0
0
0
0
0
1
3
7
276
287
12/2011
0
0
0
0
0
0
0
0
0
73
151
12/2012
Year to date
n/a
n/a
n/a
n/a
n/a
-100
-100
-100
-100
-73.64
-47.3
Percent change
Value in thousand USD
Russian Federation - Meat sector review
Figure 71: Foreign trade statistics: bovine meat fresh or chilled imports, monthly, 2009-2012 7 000
25 000
6 000
20 000
5 000 15 000
4 000 3 000
10 000
2 000
5 000
1 000 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
0
Import value thousand USD (left axis)
Import quantity tonnes (left axis)
0
Import price 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 3 000
10
2 000
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
5
Export value thousand USD (left axis)
Export price USD/tonne (right axis)
1 000 0
Export quantity tonnes (left axis)
Source: Customs Committee of the Russian Federation and GTIS.
195
196
307 163
1 075.1
Import (price, USD/tonne)
330 232.581
1 208.26
62
74.446
Import (quantity, tonne)
Import (value, thousand USD)
Export (price, USD/tonne)
Export (quantity, tonne)
Export (value, thousand USD)
2007
1 311.93
321 352
421 592.642
1 325.39
156
206.518
2008
1 358.8
297 762
404 600.368
1 362.68
227
309.485
2009
Calendar year
Calendar Year: 2007-2011, Year to Date: 12/2011 & 12/2012
1 389.72
291 833
405 565.234
1 019.85
148
151.166
2010
1 514.07
291 005
440 603.146
1 385.81
874
1 211.449
2011
1 514.07
291 005
440 603.146
1 385.81
874
1 211.449
1 681.16
273 458
459 726.872
1 519.26
1 944
2 954.048
12/2012
Year to date 12/2011
Commodity: 0206, Edible Offal of Bovine Animals, Swine, Sheep, Goats, Horses, etc. Fresh, Chilled or Frozen
The Russian Federation’s Yearly Statistics
Table 62: Foreign trade statistics: edible offal, yearly, 2007-2012
11.04
-6.03
4.34
9.63
122.43
143.84
Percent change
Offal
28 939.877
31 776.832
21 311.185
22 207.306
13 323.389
21 697.424
8 602.611
United States
Denmark
Spain
Australia
Canada
France
Italy
3 507.372
40 940.604
Argentina
Austria
47 961.085
330 232.581
2007
Germany
World
Partner country
Import
6 787.624
14 539.731
25 631.807
15 031.173
28 488.923
34 153.477
17 711.199
74 406.175
44 447.592
85 031.813
421 592.642
2008
7 371.114
9 158.255
20 775.056
17 314.534
17 959.482
20 078.982
16 124.033
70 262.589
68 155.057
94 082.841
404 600.368
2009
Calendar year
10 621.983
11 470.625
17 180.58
19 005.38
20 564.965
25 924.618
17 092.545
61 495.913
51 469.896
85 470.854
405 565.234
2010
16 227.321
17 027.217
18 204.489
18 892.108
24 045.793
31 626.347
34 825.021
49 288.394
54 485.621
75 125.3
440 603.146
2011
16 227.321
17 027.217
18 204.489
18 892.108
24 045.793
31 626.347
34 825.021
49 288.394
54 485.621
751 25.3
440 603.146
12/2011
14 739.109
18 570.169
16 848.929
23 361.818
23 350.687
47 307.158
29 146.671
62 317.588
72 836.826
60 241.875
459 726.872
12/2012
Year to date
-9.17
9.06
-7.45
23.66
-2.89
49.58
-16.31
26.43
33.68
-19.81
4.34
Percent change
Value in thousand USD
Russian Federation - Meat sector review
197
198
0
0
0
0
Svalbard & Jan Mayen
Thailand
Unidentified Country
United States
0
29.794
0
0
0
0
0
0
0
0
0
0
0
206.518
2008
14.274
0
0
42.689
71.08
1.426
0
0
0
0
309.485
2009
Calendar year
Source: Customs Committee of the Russian Federation and GTIS.
Poland
Netherlands
Lithuania
32.998
0
Vietnam
Italy
0
74.446
2007
Hong Kong
World
Partner country
Export
0
0
7.614
0
0
0
0
0
30.291
0
151.166
2010
0
0
0
0
0
0
0
2.893
27.026
1 181.53
1 211.449
2011
0
0
0
0
0
0
0
2.893
27.026
1 181.53
1 211.449
12/2011
0
0
0
0
0
5.598
20.254
0
0
2 927.272
2 954.048
12/2012
Year to date
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-100
-100
147.75
143.84
Percent change
Value in thousand USD
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
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
Russian Federation - Meat sector review
Figure 73: Foreign trade statistics: edible offal imports, monthly, 2009-2012 60 000 2 000
50 000 1 800
1 600
40 000 1 400
30 000 1 200
1 000
20 000 800
600
10 000 400
Import value thousand USD (left axis)
Export value thousand USD (left axis) Import quantity tonnes(left axis)
600
500
400
300
200
100
Export price USD/tonne (right axis)
0
200
Import price USD/tonnes (right axis)
Source: Customs Committee of the Russian Federation and GTIS.
Figure 74: Foreign trade statistics: edible offal exports, monthly, 2009-2012
4 500
4 000
3 500
3 000
2 500
2 000
1 500
1 000
500
0
Export quantity tonnes (left axis)
Source: Customs Committee of the Russian Federation and GTIS.
199
Russian Federation – Meat sector review
Russian Federation Meat sector review
FAO Investment Centre
Russian Federation: Meat sector review Report No. 15 - July 2014
Report No. 15
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 [email protected] http://www.fao.org/investment/en
I3533E/1/11.13
COUNTRy HIGHLIGHTS