Summary

In 2011, sow stocks reflect newly available data. The stronger pig crop demonstrates pork producers’ reaction to easing feed prices, expectation of increased government support, and a larger-than-expected share of agricultural enterprises controlling swine stocks. While live swine imports for slaughter is relatively flat, imports of feeder pigs and breeding stock is up. This results in a reversed outlook for 2011 production. The swine industry’s resurgence in 2011 should carry over to 2012 as government policies become even more favourable.

Despite Brazil’s current absence from the market, significant over-quota trade and a strong increase in quota-exempt pork drive FAS/Moscow’s increased import estimate. In 2012, a 150,000-metric ton (MT) reduction in TRQ will severely limit available supply and prices will rise; however, these conditions may only mildly stimulate increased over-quota and quota-exempt pork trade.

Production

According to the Russia’s State Statistical Service (Rosstat), producers of all types produced about 5.3 million metric tons (MMT) of poultry and livestock for slaughter (live weight) in January-July 2011, which is 3.9 per cent more than in January-July 2010 (107.4 per cent 2010/2009). Agricultural enterprises increased production by 7.4 per cent during the same period. The Russian Ministry of Agriculture (MinAg) reported in the middle of July 2011 that Russia will increase production of livestock-origin products by 2.8 per cent in 2011.

Swine Inventory

Russia’s swine inventory will likely grow about 2.7 per cent to 17.545 million head at the end of December 2012 from 17.2 million head at the end of December 2011, supported by lower feed prices in the second half of the year and increased state support.

In accordance with the latest Russian Federal Statistic Service (Rosstat) report, FAS/Moscow increased its estimate of sow beginning stocks for 2011 from 2.135 million head to 2.150 million head. State support of swine husbandry in the first half of 2011 and a positive outlook for the 2011 crop harvest stimulated the Russian swine industry beginning in May 2011, following lower feed prices. As a result, the pig crop should increase to 30.225 million head, which is 2.3 per cent higher than the previous FAS/Moscow estimate. According to Rosstat, the swine herd increased 0.1 per cent at the end of July 2011 from the year-ago level to 18.8 million head.

The share of private households in total pork production continues to decrease as support is directed toward agricultural enterprises. Households accounted for 34.2 per cent of total swine stocks at the end of July 2011 (in 2010: 36.2 per cent).

African Swine Fever

The continual spread of African Swine Fever (ASF) across European Russia remains a growing concern to the security of the Russian pork industry. Russia’s Chief Veterinary Officer (CVO) acknowledged at a press conference this August that the ASF situation in Russia continues to deteriorate. According to him, an ASF endemic situation has been observed not only in the South and the North-West of Russia, but almost throughout the country. The CVO considers protection of domestic pigs from wild boars in Russia’s Northwest as a priority measure. The ASF situation in the South (specifically Krasnodar kray and Rostov oblast) remains unfavourable. In many cases, the uncontrolled transportation of goods is blamed for the spread of ASF. The CVO noted that a veterinarian has no authority to stop and check trucks transporting goods. He also said a programme to combat ASF is being currently developed.

According to Russia’s Federal Veterinary and Phytosantiary Surveillance Service (VPSS), ASF outbreaks have resulted in more than 500 deaths and more than 12,000 head being slaughtered during stamping-out activities in 2011. However, VPSS forecasts that continued spread of ASF could result in an economic impact as high as eight billion roubles (RUB; US$267 million) by year’s end – RUB700 million ($23 million) in direct losses (culling 200,000 head) and RUB6.7 billion ($223 million) in indirect losses.

In order to prevent the spread of ASF, Russian regions have started to develop programmes to transfer small swine farms to alternative types of livestock production (cattle, sheep, goats, poultry etc.).

Pork Production

Russia should produce 2.02MMT of pork in 2012, 2.4 per cent more than 2011, resulting from improved conditions for swine rearing. FAS/Moscow also increased its 2011 pork production estimate by 2.8 per cent for the same reasons.

Rosstat reported agricultural establishments increased pig production 7.5 per cent in January–June 2011, compared to the same period in 2010. MinAg also reported in its 2010 National Report that most of the production growth in 2010 came from 78 new, reconstructed, and modernized pig farms. These facilities produced 67,800MT of pork, valued at RUB4.7 billion ($162 million).

Six regions of the Russian Federation – Belgorod, Lipetsk, Orel, Tambov, Volgograd, and Sverdlovsk regions produced 139,700MT (75.8 per cent) of the 184,400MT increase in pork production for slaughter, obtained in 2010.

According to MinAg reports, average daily weight gain increased in 44 regions from 350 to 395g (by 12.9 per cent) in 2010.

State Support

The GOR issued Resolution #1247-R on 20 July 2011, approving RUB9.0 billion ($300 million) of State financial support to Russian poultry and pork producers as compensation for increased feed costs in 2011. Initially announced by Prime Minister Putin in March 2011, the Resolution amends the 2011 federal budget allocations to regional authorities for poultry and swine industries.

Trade

NOTICE: Higher FAS/Moscow trade estimates compared to previous reports and official USDA estimates reflect the formal accounting of Russia’s trade with Belarus. This trade has long been excluded from Russian Customs data and formal PS&D estimates.

FAS/Moscow forecasts Russian beef imports will grow one per cent in 2012 to maintain relatively stable supply. However, significantly reduced market access for pork will constrict trade and ultimately reduce overall supply available for consumption.

Tariff-rate Quotas

Meat imports remain highly regulated by tariff-rate quotas (TRQs) for suppliers outside the Commonwealth of Independent States. GOR Resolution #616, signed on 27 July 2011, maintains TRQ quantities for chilled beef (30,000MT) and frozen beef (530,000MT) but sets new marks for pork (320,000MT) and pork trimmings (30,000MT), representing a 150,000-MT reduction from 2011. FAS/Moscow has confirmed with Russia’s Ministry of Economic Development that the GOR has no current plans to issue country-specific allocations in 2012. However, Russia's World Trade Organization accession talks are ongoing and could result in changes for 2012 before the end of the year.

Russian-Belarusian Trade

Russia and Belarus have not yet established plans for 2012 but FAS/Moscow expects a 2012 agreement will closely resemble 2011 with the strong potential to increase bilateral trade in beef and pork in order to maintain stable supply.

The agreement for 2011 allows Belarus to export to Russia 130,000MT of beef; 20,000MT of pork; 15,000MT of poultry and 45,000MT of other meat products. However, since border control was removed at the beginning July 2011, Russian-Belarusian trade should be more difficult to regulate and tabulate for official authorities. According to Rosstat, Belarus exported 48,400MT of frozen beef to Russia in January – May 2011, compared to 56,100MT in January May 2010. Belarus exported 125,000MT of beef to Russia in 2010.

Press reports and GOB actions confirm Belarus is having difficulty balancing supply and demand. Retail meat supplies in Belarus have become scarce, and reports insist that reduced retail supplies have resulted from consumer trafficking of meat from Belarus to Russia. In August alone, the Belarusian Ministry of Economy increased the regulated meat prices three times – five per cent, 10 per cent and 10 per cent – "to compensate for growth in the cost of raw meat, eliminating the disparity between the prices of foreign and domestic markets and market saturation of the Republic with meat in the required volumes" (Ministry of the Economy, Resolution #139, 26 August 2011). The current maximum price for beef and pork carcasses in Belarus are $2.98 and $2.87 per kilo, respectively.

SPS barriers

Meat imports remain volatile throughout the year due to Russian sanitary barriers. Effective from 15 June 2011, VPSS restricted effectively all Brazilian pork, citing a lack of trust in the Brazilian veterinary service for alleged violations of Russian requirements discovered during plant audits. Market experts recognise the restrictions extended to Brazilian beef facilities, while also significant in number, is not as crippling an impact on supply. Nonetheless, alternative suppliers such as Australia (beef) and Canada (pork) are expected to continue benefiting.

Reassuring trade will continue uninterrupted in 2012, the Customs Union recently published Decision #726, which extends the validity of existing bilateral veterinary certificates between Russian and third parties through the end of 2012. Starting in 2013, the Customs Union will require all third countries to have renegotiated all veterinary certificates consistent with Customs Union requirements.

Pork imports

Excluding Customs Union partners, in the first half of 2011, pork imports increased 6.5 per cent to 336,004MT. The major suppliers were the European Union (50 per cent), Brazil (27 per cent), Canada (13 per cent) and the United States (7.0 per cent). Year-to-date trade includes more imports from Canada (24 per cent), the United States (48 per cent) and the European Union (9 per cent), while imports have declined from the top supplier, Brazil (-18 per cent). Current restrictions on Brazil will soon put into question whether Canada can maintain their pace in order to fulfill the ‘other countries’ TRQ allocation in 2011.

For the year to June 2011, 47 per cent of the TRQ was utilised. In-quota import volumes represented 73.8 per cent of total pork imports; 15.9 per cent came as over-quota pork, and 10.2 per cent were shipped to special economic zones.

Consumption

The Draft "State programme of agricultural development and regulation of agricultural products, raw materials, and foodstuffs for 2013-2020" envisages growth of per-capita meat and poultry consumption from 68.2kg in 2010 to 72.0kg in 2020.

Red meat prices – especially beef prices – continue to increase at the retail level, rising faster than poultry and general consumer prices. Rosstat reports consumer inflation through August has slowed to 4.7 per cent since the beginning of the year, versus 5.4 per cent over the same time period last year.

Further Reading

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