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Russia's Pig Farmers Brace for Changes in Trade

9 December 2011, at 9:12am

RUSSIA - Russia's longest transition period to lower its import duties in compliance with WTO commitments will be for pork but pig farmers do not feel protected.

TheMoscowTimes reports that imports could grow from this year's 23 per cent of the market as soon as Russia joins the World Trade Organisation, a move expected by the middle of next year, said Yury Kovalyov, chief executive of the National Pig Farmers' Union. This would stem chiefly from the government's agreement to reduce import duties for live pigs, he said.

While Russia won a transition period of eight years to reduce pork duties, a cut in live pig imports from the current 40 per cent to 10 per cent will take effect immediately, he said.

"This is an opportunity that could prompt construction of new farms abroad, say, in the neighbouring Baltic states," he said.

Foreign competitors are willing to operate at a profit rate of five per cent, which threatens renascent Russian farms that need a higher rate to repay loans they took in recent years to grow their business.

"We need to break free of the loans," Mr Kovalyov said. "We have started from scratch."

By 2005, pork production from corporate pig farming had fallen to just a quarter of its 1991 level, he said. Output then began rising, thanks to state support and protective import duties. Import duties on live pigs shot up to 40 per cent in 2009, following record foreign deliveries.

Corporate output has risen three-fold since 2006 to measure 1.2 million tons this year, Mr Kovalyov said.

Under WTO commitments, Russia will reduce the import duty to zero in 2019 from 15 per cent now for pork entering the country within a government quota. Outside the quota, the duty will slide to 65 per cent from the current 75 per cent.

As of 2020, the country will scrap pork quotas and introduce a flat duty of no more than 25 per cent.

The government will maintain the right to set quotas for poultry and beef. Import duties will remain at 25 per cent for in-quota poultry and 15 per cent for in-quota beef. Outside the quotas, the duty will go down for poultry, from 95 per cent to 80 per cent, and up for beef, from 50 per cent to 55 per cent.

In other changes that have been announced, Russia will open its market wider for sugar imports, Interfax reported. The sugar price at the New York Mercantile Exchange will have to fall to $0.09 a pound – half of the current $0.18 – to offset the lower-end duty of $140 a ton, thus allowing less expensive foreign sugar into the country.

The duty will gradually rise to $270 a ton if the price continues to fall and reaches $0.045 a pound in New York.

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