Russia considers retail restrictions on imported meat products

The new bill, currently under consideration, will not only affect meat, but also other grocery retail products and, according to experts, may well force high-end retailers to leave the market, while other retailers may increase the prices of their meat products.

"If the bill is approved, retailers would have to abandon some imported goods. In Russia, these products are sold with the highest level of margin. This means [retailers’] revenues will fall and they will have to compensate for that somehow. As a result they will increase prices on basic goods, and, given the current situation, this will not benefit the market,"​ said Alexey Filatov, managing director of B2B Conference Group, a retail business analyst.

The news comes at the same time as Russian veterinary watchdog Rosselhoznadzor announced temporary restrictions on the import of certain meat products from the European Union, not currently covered by the existing ban, as of 21 October.

These include namely bovine and porcine by-products, including bovine, porcine and avian fat, "due to multiple detections of banned and harmful substances"​ said the watchdog.

Reactionary price increases took place in the Russian retail market earlier this year; when the country closed its doors to beef imports from Europe, retailers switched to more expensive meat from Brazil, and increased logistics costs on cheaper pork and chicken, even though these were mostly of Russian origin.

At the same time, the bill is likely to bring major problems to premium retail chains, which often offer up to 90% imported meat in their ranges. Russian experts forecast that most of them will probably close.

Mikhail Burmistrov, CEO of Moscow-based analytical agency INFOLine-Analytics, believes the bill will bring problems to all retail chains, as Russian farmers cannot guarantee a stable supply of products in the amounts needed.

Burmistrov explained that retailers need to meet a certain set of requirements when it comes to product certification and supply. However, many do not have their own distribution centres, which means farmers need to deliver the correct amounts directly to stores – a process difficult for them to achieve.

Meanwhile, importers usually not have any delivery problems – they specialise in logistics, so can quickly deliver the right volume of goods to the stores.

Some experts believe the ban could be a substitute for the embargo on meat products from the European Union and US.

"If restrictions on the sale of imported meat in the retail sector were to be implemented, lifting of the embargo introduced in August would not result in a return of imported meat products from Europe to the shelves of Russian stores. Perhaps this is the main objective of the authorities – to pave the way for lifting the ban against the Western countries,"​ said the Russian agricultural analyst Eugene Gerden.