Russia’s meat industry faces serious challenges

Between 2008-2012, the average annual growth-rate for Russia’s meat industry was between 15-20%. Yet, figures from the Russian analytical agency Agrorucom have indicated that, between 2012 and 2016, the industry will only experience 17% overall growth.  

The experts who wrote the report said the annual average growth will be just 4.3% during the period, noting that it was a result of decreasing interest in the meat industry from investors, “so after 2017 the development of the sector may stop”​, they said.

So far growth continues​

However, the report stated that, during the last four years, the Russian meat industry has shown strong growth. “In 2012, production growth in real terms was amounted to 12.4% year-on-year (yoy), while compared to the level of 2009, when it is equal to 35%. Such stability can be explained by stable positive dynamics of growth in poultry and pork production segments. However, the production of beef and lamb continued to decline,”​ the experts said.

Experts also cited an earlier forecast from the Economic Development Ministry (EDM), published in 2014-2016. The forecast noted that Russia may increase meat production in 2016 to between 9.2m tonnes (mt) and 9.6mt from 8.1mt in 2012. The forecast also said imports will stand at 2.3mt to 2.6mt per year. However, the EDM also confirms that Russian producers will probably not be able to keep the same pace of growth after 2016, when the largest pork and poultry projects will have been completed.

“According to the forecast, the production of live pigs by 2016 will grow by 15.4%, and poultry will grow by 27.5%. The share of imports of pork products in 2016 will amount to 20% as against 25.8% in 2012, while poultry imports will amount to 8%, compared to 12.7% in 2012. Growth in production of cattle for slaughter in 2016 will equate to 4.5%,”​ experts at Agrorucom said.

Problems are serious​

However, experts noted that the industry will continue to suffer from a number of negative factors.

In particular the poultry industry will not continue active growth due to lack of sales markets. “Russia did not establish large-scale exports of poultry abroad as its neighbour Ukraine did. While we can no longer work on import substitution, as in 2014, we will be able to fully cover our needs in poultry production,”​ experts commented.

Pig farming will continue to grow because of the number of projects started in recent years, which will be finalised in 2016. However, the number of investment projects in the sector is rapidly decreasing.

Meanwhile, African swine fever (ASF) is causing serious damage to Russian pig farms. According to Russian veterinary watchdog Rosselkhoznadzor, 76 outbreaks have been registered in Russia in 2013 alone, with the damage costing the industry US$1bn. According to analysts, ASF has damaged Russia’s pig investment potential, saying it could have been 30-40% higher than it is now.

Beef and lamb production is not set to have a positive future either, it has been claimed, since the popularity of the meat among Russians is falling and likely to continue in the coming years.