Russian drought may drive up meat prices
Russia’s Ministry of Agriculture had predicted a harvest of 95 million tonnes this year, but with the harvest almost over, farmers have only collected 71.4mt. Around 12.1mt of this will be exported on signed contracts, leaving a significant deficit when compared to Russia’s domestic demand of 72mt.
The Russian National Meat Association and Ministry of Agriculture have already announced increases in the price of meat. In August this year, the price of poultry meat reached a record high of RUB 95-98 (US$ 2.98-3.06) per kg, compared to RUB72-75 (US$2.26- 2.35) per kg in August 2011. Pork prices are also predicted to rise.
Head of the National Meat Association, Sergey Yushin, said: “In the second half of the year it will be 30% more expensive to feed a pig. This does not mean that pork will be 30% more expensive, but it will certainly be more expensive. At the same time, I would not blame the grain producers for wanting take advantage of high world prices and make money. We just need to learn how to regulate the market, while our meat producers have to learn to give less feed to the animals and get more meat.”
Russian authorities said that they will not let the price of meat rise by more than 10-15%. “The Federal Anti-monopoly Service (FAS) will carefully monitor retail prices and thus combat abuse and unjustified price increases throughout the entire chain,” said Anton Safonov at Russian analytical agency Investcafé.
However, experts at analytical agency Agrorucom warned that this could have a negative impact on the meat industry. “If Russian producers lose the opportunity to increase the price for meat production they will have to work at lower rates of profitability. Many of them will suffer financial losses, the exact amount of which is currently hard to predict.”