Russia reduces long-term support of meat industry
However, industry executives claim the move threatens to reduce the profitability of the meat industry and, in particular, beef producers.
“According to new calculations, support for livestock production has been reduced by more than tenfold. At the same time, industry support will be allocated to a new subprogram, ‘Risk Management in Agriculture’,” said a report from the country’s Ministry of Agriculture.
The new subprogram ‘Risk Management in Agriculture’ is said to ensure meat producers can still expect to receive some additional money if the situation in a particular sector proves difficult. However, businessmen are afraid that the money for industry development, which the government decided to allocate a year ago, will not now be allocated.
The greatest opponents to these changes are beef producers. According to them, the move will result in a dramatic fall in investment attractiveness for the whole beef industry. During the past few years, profitability levels in beef production have been the lowest among all sectors of meat production in the country.
“This step can be interpreted as the state’s decision to cancel prioritising the development of livestock production,” claimed National Union of Beef Producers CEO Denis Cherkessov. “And this decision has been taken just one year after adoption of the special subprogram, which provided large funds for the development of our industry. As a result of such fluctuations, investors will completely lose interest in the industry.”
According to experts, the Russian government decided to reconsider its support of the meat industry due to the tough economic situation in general and a deficit in the budget, which is forcing the state to cut spending. Previously, state senator Sergei Lisowski had already spoken out against the principle of state support for beef cattle. He explained the budget deficit must focus on supporting dairy farming, and pig and poultry production as these were the promising areas of meat production.
“The state has redirected money that was promised earlier to the meat industry, based on a new complex scheme. As a result, farmers will probably get only a small part of the major funds promised, which was to be in the form of soft credit loans and direct subsidies both to the new and existing projects. Given this situation, we may soon witness the cancellation of a number of investment projects that had been announced, based on this support. Beef producers will definitely react badly to the news, as the situation in the industry was already projected to be especially tough, even with this major support,” said Russian agricultural analyst Eugene Gerden.
