February 25, 2003

Russia has imposed tariff rate quotas (TRQs) on beef and pork imports that will become effective April 1. The yearly TRQs were set at 450,000 tons for imports of pork and 420,000 tons for beef, although the pro-rated 2003 quota will equal 337,500 tons and 315,000 tons respectively, USDA reports.

Pork production is forecast to increase by 6% in 2003 to 1.73 million tons due to continuing investment into infrastructure and better animal management practices. However, beef production is forecast to continue its nearly decade-long decline by 2% this year to 1.7 million tons.

Total imports of pork in 2003 are forecast to decline by 20% to 600,000 tons, while imports of beef are forecast to decline only slightly to 750,000 tons, according to the USDA report.

With imports forecast to decline and domestic production is not expected to be able to completely substitute for the import decline, consumption of beef and pork is expected to fall slightly this year.

All aspects of pig production are forecast to increase this year with the pig crop, slaughter and ending inventories up by 8%, 8% and 4% respectively. Consequently, pork production is forecast to expand by 6% this year.

The report said pork production is benefiting from significant investments that have gone into the industry in the past few years. These investments have been primarily in the areas of ration/nutritional improvement, capital investment, and management. Russian pig producers are making strong improvements in breeding and animal husbandry resulting in higher pig birth and weaning rates.

Additionally, expertise in developing better feed rations also is helping the productivity of pig raising enterprises. However, room for more improvement is evident, says USDA. While a handful of the best producers are starting to reach Western levels of efficiency, there are many large and medium producers that are just beginning the long process of step-by-step efficiency gains and herd increases.

However, the cattle situation is forecast to continue deteriorating in 2003. Ending cattle inventories, calf crop, and slaughter are forecast to contract by 5%, 4% and 6% respectively. As a result, beef and veal production in 2003 are forecast to decrease by 2%.

Despite the import restrictions on beef and some bright spots in the cattle breeding sector, recovery in the beef sector is still several years away, according to USDA. While this trend has been evident for years, some regions were hit by drought in 2002 and the reduction in fodder has forced the slaughter of a greater than expected number of cattle.

Unlike the pork sector, which has been able to take advantage of abundant and cheap grain, the dependence of cattle on these other additional feed sources will lead to the decrease in cattle.

The entire report can be accessed on the Internet at http://www.fas.usda.gov/gainfiles/200302/145884735.pdf.