Russia to introduce social security cards for meat production
The measure is part of a special package of support for agricultural activity in the country that was recently submitted to the State Duma (lower chamber of the Parliament) by the ruling political party United Russia.
Social cards are a special mechanism which provide a discount of about 10-15% for certain categories of "socially important products", with the discount covered jointly by the state and business via an exchange of tax benefits. In Russia, the use of social security cards has already proven successful in the pharmaceutical industry and the government wants to use the measure to decrease the price of domestic meat and give it an important competitive advantage.
A Congress resolution stated: "We will develop measures to stimulate domestic demand for agricultural products, both in domestic and foreign markets, including through the purchasing of meat for state and municipal needs, mainly from domestic producers of agricultural products, as well as through special programs to support consumer demand, including through social cards."
Another important initiative is the rapid modernisation of the meat industry, as the state announced it was ready to cover 35-40% of the cost of any modern agricultural machinery and equipment purchased. The main focus will be on Russian equipment.
However, industry observers believe the implementation of social cards in the country will probably not change the structure of supply in the Russian meat market dramatically.
"Indeed, the measures taken to stimulate domestic demand for meat could reduce consumption of imported meat. However, most of Russia’s meat processing plants use imported raw materials because of their cheapness. So the level of demand for imported meat from meat plants will remain stable," said Sergey Chernyshev, an expert from information and analytical agency EMEAT, which specialises in the meat market.
"In the consumer market, imported meat is present in extremely small quantities. You rarely find imported meat on the shelves, while the vast majority of sales come from chilled meat. In addition, surveys conducted by EMEAT in March 2014 confirmed consumers’ loyalty for local and domestically produced products (close to the region of residence). So we are not expecting a significant change in the structure of supply from foreign countries," he added.
In addition, any goal to abandon foreign meat supply would be impossible at the moment, say experts. Russia currently imports 35% of its pork and 50% of its beef supply, according to data from EMEAT. A ban on supplies of pork from Europe has led to a 40% jump in its price, which illustrates Russia’s high level of dependence on imported meat.
