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Food embargo impact on the situation with swine and poultry in Russia

Three years ago, the government approved a list of agricultural products and foods banned from being imported into Russia from states that imposed sanctions on our country or joined them. The day before, on August 6th, 2014th, President Vladimir Putin signed a decree on the application of special economic measures to ensure the security of the country and protect its national interests.
According to Alexander Tkachev the Minister of Agriculture, after limiting the import of food products, Russian farmers received carte blanche. «This opened a» window of opportunity «for the industry. The market does not tolerate emptiness; therefore the place of importers was taken by domestic agricultural producers. Domestic food products became dominant on the Russian shelf, while imports of imported food almost halved in three years: from $ 43 billion to $ 25 billion in 2016th», quotes him press-service of agrarian ministry. According to Rosstat, the share of imported food in retail trade resources declined from 34% in 2014th to 23% in the first quarter of 2017th, the same figure was present for the entire 2016th.


As a whole the embargo contributed to the growth of domestic production: Were it not for import restrictions, many investors would not risk investing in the development of a number of directions since it would be extremely difficult for them to compete with western, primarily European products. However, the importance of retaliatory sanctions is also not to be exaggerated: the country is still open to foreign products, which are now supplied from other countries, and because of longer logistics it is often more expensive than before. In addition, it is important to take into account that in the autumn of 2014th the dollar began to rise — in January 2015th its rate exceeded 65 rubles against 36 rubles in August 2014th, which led to an increase in prices for imported products. Due to the population falling real disposable incomes and because of the difficult macroeconomic situation in the country, the sale of foreign goods would still have declined even without the introduction of a product embargo.

According to the words of Senior Consultant of AIK consulting group “NEO Centre” Roman Khristoforov swine and poultry producers benefited from the introduction of the food embargo.
In 2013th the import of swine from the sanctions countries amounted to almost $ 1.6 billion (74% of total swine imports) or 455,000 tones (73%). Total supplies of this type of meat in 2013-2016th decreased by 58% — from 620 thousand tons to 259 thousand tons. At the same time, swine production in Russia during this time increased from 2.9 million tons to almost 3.4 million tons in slaughter weight (plus more than 550 thousand tons), Khristoforov compares. So, in three years, the volume import of swine from countries that have been banned has been replaced, and the effect of the embargo in this sector has already been won, he concludes. The import of poultry from countries that were subject to restrictions in 2013 was $ 506 million (60% of its imports) or 378,000 tons (72%), Khristoforov continues. Total supplies for 2013-2016th decreased by 63% to 316 thousand tons. Production in Russia increased from 3.8 million tons in slaughter weight to 4.5 million tons (plus 763,000 tons), thus, it was also possible to replace the dropped volumes of foreign products in this segment.

The head of the Executive Committee of the National Meat Association, Sergei Yushin, believes that the prohibitive measures did not significantly affect the development of the meat sector since the import substitution process began long before the embargo was imposed. Swine import from Europe was closed as early as the beginning of 2014th due to the outbreak of African swine fever in Lithuania. In fact, only Canada was affected by sanctions, as swine was not bought in the US: state enterprises could not fulfill the requirements of the FSVPS for lack of trace amounts of fodder additives, in particular, ractopamine. In the segment of poultry meat, the ban was mainly restricted to the USA, since small amounts of mechanically deboned meat were mainly supplied from Europe. American chicken thighs left the Russian market, but by the time the food supply was introduced, the need for them was already insignificant, they were replaced by meat from Brazil and Argentina, Yushin said.

The share of imports in swine consumption decreased from 26% in 2013th to 8% in 2016th, poultry meat — from 12% to 5%. According to the Federal Customs Service from January to May 2017th, Russia imported 242.6 thousand tons of cattle and swine meat (including 106.9 thousand tons of the latter), as well as 87.7 thousand tons of poultry. For the same period of 2014th, the volume of import of fresh and frozen meat was at the level of 340 thousand tons, poultry — 159 thousand tons.

Source: Agroinvestor

Export capacity of Russian poultry farming


Today, Industrial poultry farming is the most intensively developing and competitive branch of animal husbandry in Russia.

For the last ten years, the volume of poultry products has increased three-fold and continues to grow annually. The reconstruction and modernization of poultry farms over a short period of time allowed the agrarians to enter a completely new, world-class level of business.

More than four and a half million tons of poultry meat and forty-three billion eggs are produced annually in Russia, mainly at large enterprises that have a high-levels of biosecurity. On vertically integrated agricultural complexes only progressive technologies of poultry farming and production of ready-made meat and egg products are used.

Production principle “from the field to counter” can be traced; it allows not only to increase the efficiency of the enterprise but also to comply with stringent requirements for biosafety. In the conditions of unstable epizootic situation all over the world — protection of the veterinary well-being in the poultry industry in Russia is of priority importance for both the state and business.


Russians buying more meat



From November 2016th to April 2017 sales volume of chilled meat products in the largest federal networks of Russia grew by 11.5% in volume terms and by 20% in rubles.

This is stated in a study conducted by Nielsen (owned by RBC). The head of the Executive Committee of the National Meat Association Sergei Yushin confirms that “the demand for the meat products is recovering after a recession”. As he says, “first of all, it explains the increase of purchasing ability of Russians”.

In addition, “consumers are more likely to buy meat in federal networks, rather than in markets or in traditional retail”, says Yushin. This is due not only to the geographical spread of retailers but also to the convenience of packaging and the shelf life of products. For retailers, the meat category has a special significance — 55% of Russian consumers call «quality meat department» an extremely important factor for choosing the store, says the expert on retail-audit from Nielsen Russia Marina Lapenkova.

What, follows from the Nielsen data is that most of all meat is bought in the discount stores, they account for about 60% in bulk and about 55% in monetary terms. Another 20% of meat is sold in superstores, and supermarkets account for only 15% of total sales.

Despite the restoration of purchasing power, Russians are still trying to save money. As such, they prefer chicken meat, the average cost of which is 143 rubles/kg, quotes Lapenkova. In addition, sales of products under their own brand, which is usually cheaper than brand, grew by 24% in rubles compared to the previous year. Now the share of private brands in the sales of meat and meat products is 15%.

Source: RBC

Russia forecasts grow of swine production

According to the forecast of the National Swine union, swine production will increase up to 600 000 by 2020th, including the slaughter weight. The share of the top-2o companies will grow from the current 60% to 75% which will correspond to the world trend.


In 2009th, the 20 largest companies accounted for about 45% of the industrial production of swine, and the consolidation trend in the industry will continue, which indicates the development of the market. Competition with world players is inevitable both domestically and during exporting. Thus, in the countries with already established meat markets, top 3 companies control at least 50% of production. It is typical for Brazil and the United States. The share of the three largest Russian swine — breeding companies «Miratorg», «Rusagro» and «Cherkizovo» — at the end of last year had only about 25%, and not total production, but only in the industrial sector.

The fact that Russia has perspectives for growth from the from the point of view of concentration of production, is the fact that the leaders of the domestic meat market are not yet among the world’s leading players (according to Rabobank rating).  The first place in this list is Brazilian JBS with a volume of almost 13 million tons (beef, swine and poultry), in the second position — American Tyson with about 8 million tons, the third line with a volume of about 6.8 million is occupied by Chinese WH Foods. For comparison, the group «Cherkizovo», which took the first place in the rating of «Agroinvestor» of the largest Russian meat producers last year, released about 602 thousand tons of pork and poultry in slaughter weight.

In future swine production in the country will grow mainly due to the sector leaders. In particular, the implementation of the program of entrenched import substitution, which began in swine production in 2014th, and it implies an increase in the capacity of a number of operating players by almost half to 2.8 million tons in live weight by 2020th. The volume of investments is estimated at 268 billion rubles. As a result, the share of companies from the top 20 will have 80-90% of the planned increase in swine production in the country


According to the calculations of the National Swine union, by 2020 about 85% of swine in the industrial sector will be produced at new enterprises and 12% — at modernized, whose technical and technological levels will meet world standards.

Source: Agroinvestor

The Russian market of veterinary products has grown to 619 million dollars

Sergei Lakhtyukov, the Executive Director of the Russian Veterinary Association, during the First swine Summit, said that according to the 2016th results, the market volume of the Russian veterinary products grew by $25 million and reached $ 169 million (excluding products for household animals and cattle meat production).

picture 1

As experts say, the market directly depends on the development dynamics of the livestock sector, and because last year its driver was swine production, sales of veterinarian products for swine has increased more than for poultry and cattle. From $171 million in 2015th to $195 millions in 2016th. Volume market for poultry products increased from $268 to $271 million, and decreased for dairy cattle from $154 to $153 million, due to the herd reduction.

picture 2

Market structure for the veterinary products is similar to the one in EU and US, noted Lakhtyukov, 39% are vaccines, 34%-antibiotics, 10%-vitamins and feed additives, 9% are hygiene and disinfectants and 8% miscellaneous. At the same time, there are types of products, in which domestic companies are at least as good as foreign ones, the expert said. For example, their share in the market for injectable and oral solutions of antibiotics was 50%; Antiparasitic injection solutions — 60%, oral powders — 65%; Injection solutions of vitamins, micro- and macroelements — 55%.

For many types op products import dependence remains high, the average proportion of domestic products is estimated at 39%. 90% of anti-mastitis gels are imported from aboard, the share of imported oral anti-inflammatory products reaches 80%, antibiotics and antiparasitic products in the form of pills reach- 75%.

At the same time, the expert emphasized that the export of Russian veterinary products is growing, and they are supplied not only to the CIS countries and the EEU. Last year, Russia sold veterinary products to Germany, the Netherlands, Romania, Latvia, Bulgaria, Egypt, Saudi Arabia, etc. However, Lakhtyukov specified that in general, exports do not exceed 10% of the domestic market, but added that this figure is increasing.

Another positive trend in the veterinary industry is the gradual cleansing of the market from falsified products. «Unfortunately, the» gray «sector still remains, — Lakhtyukov admitted. «The Russian Veterinary Association, together with the Ministry of Agriculture, continues to fight against counterfeiting, shadow production, and imports.»

Source: Agroinvestor

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