Russia: No Clear Import Map for Future

May 3, 2001

After reaching $2.5 billion as recently as 1997, Russian imports of poultry, pork, and beef slipped to $1 billion last year. A new USDA report says with total domestic production of poultry, pork, and beef down by 58% from the 1990's, Russia had to turn to international markets to meet its domestic consumption needs, albeit sharply reduced due to economic distress.

Although U.S. exports of poultry, pork, and beef also declined, the United States expanded its share of the total Russian meat and poultry market from 30.5% in 1997 to 33.1% in 2000, according to Russian import statistics. Going into 2001, the spread of bovine spongiform encephalopathy (BSE) in Europe and the emergence of foot-and-mouth disease (FMD) in several key supplying countries have dealt a one-two punch to reliable supplies and flows of pork and beef to Russia. However, poultry imports, dominated by U.S. suppliers, are expected to continue at the million-ton level.

Poultry consumption in Russia has nearly escaped the drastic reductions seen in beef and pork consumption. Russia is one of the top destinations for U.S. poultry meat. Although Russian poultry production is forecast to increase by 3% to 700,000 tons this year, recent production gains have not kept pace with demand. Total Russian imports of poultry are projected to grow by 5% to again surpass 1 million tons in 2001.

The United States supplies much of Russia's poultry and products, and captured 72% of Russian poultry imports in 2000. U.S. exports in 2000 reached 643,000 tons and $326 million, virtually doubling U.S. 1999 exports. On March 26, Russia placed an import ban on all EU poultry, meat, and livestock due to FMD. Although Russia on April 20 modified the ban to allow poultry from all EU members, U.S. producers are still well positioned to provide the leg quarters and drumsticks so favored by Russian consumers, according to the USDA report.

Supplies from the EU have not exceeded 36% of imports since the early 1990s. Although Russia's import dependency remains at 60% of consumption, problems in commercial credit, feed delivery, and product processing continue to thwart efforts to rebuild the domestic poultry industry. For January-February 2001, U.S. poultry meat exports surged to $73 million, well above the $45 million in sales placed for the same period last year.

The report says with the current Russian ban on European livestock and meat in place, "a window of opportunity has opened for U.S. poultry exporters, especially since U.S. product is the most competitively priced source of animal protein on the Russian market."

Russia's import dependency on pork has continued at near 20% of consumption. Throughout the latter half of the 1990s, the EU was its major supplier. In addition to FMD, several major factors may shift Russia's pork imports away from the EU. EU pork subsidies, a major vehicle for moving product to Russia, have temporarily ceased as EU market prices have fallen to competitive export levels. The subsequent removal of a subsidized product from the Russian market offers a new advantage for U.S. pork.

While Russia on April 20 did amend its EU meat ban to allow table-ready meat from all EU members, pressure still remains to find alternative sources for fresh, chilled, and frozen pork. Major pork suppliers, such as Poland, Romania, and Kazakhstan, have a limited pork export availability. Russia has banned pork imports from China since June of 2000 due to their outbreak of FMD. U.S. exports are picking up this year, with January-February 2001 pork export values to Russia reaching $3.9 million, continuing the gains made in the previous quarter.

Russia's pork imports for 2001 are forecast to remain at 2000's level of 350,000 tons. Similarly, domestic pork production is projected to remain virtually unchanged at 1.5 million tons for the fourth consecutive year. Although U.S. pork exports to Russia were down by 84% from the 1999 record $87 million to $14 million in 2000, U.S. producers may be able to capitalize on recent trade developments to capture additional market share. U.S. pork trimmings for sausage and picnic hams are becoming increasingly popular with Russian food processors, according to the U.S. Agricultural Counselor in Moscow.

Beef import dependency has varied greatly in recent years. While declining to 16% in 2000, imports are expected to increase to 24% of consumption in 2001. Although the EU is Russia's main beef supplier, EU sales to Russia declined by 250,000 tons to a five-year low of 100,000 tons in 2000 due to the temporary cessation of EU export subsidies from declining product prices in the beginning of 2000 and the onset of the BSE crisis in late 2000.

Should Russia lift the EU FMD ban on fresh, chilled, and frozen beef, the predicted EU "beef mountain" of competitively priced, BSE-free beef may once again find its way to Russian shores, the USDA report says. Should the ban remain in place, Ukraine and Poland may attempt to expand sales, especially for low-priced beef variety meats, but their export availability is limited.

The entire report is available on the Internet at http://www.fas.usda.gov/dlp/highlights/2001/russia_01.html.