Putin puts weight behind raising of Russia's beef and offal import duties

By Vladislav Vorotnikov

- Last updated on GMT

It has been suggested the move has come after Russia is subjected to increased sanctions from abroad
It has been suggested the move has come after Russia is subjected to increased sanctions from abroad

Related tags Vladimir putin Beef

Russian President Vladimir Putin has instructed the government to prepare, before 1 October 2014, the deletion of cattle meat and beef offal from the list of goods that can be supplied to Russia and the territory of the Customs Union under the tariff preference regime.

In the opinion of most experts, this move is a continuation of the recent strategy by the Russian government to actively substitute imports of meat products. In recent months, given the growing political tension with its main trade partners, Russian authorities have strongly backed a rise in self-sufficiency for basic foodstuffs.

However, other industry observers believe the reason for this step is the desire to earn money for the Russian budget, which is now suffering from the heavy load of sanctions.

"Currently, more than 90% of beef imported into Russia comes under the regime of tariff preferences, with a duty of 11.25% instead of 15% within the quota. Duty on above-quota beef supplies is 37.5% instead of 50%. At the same time more than 75% of beef offal is imported at preferential or in fact zero tariff,"​ estimated Sergey Yushin, head of the executive committee of the National Meat Association (NMA).

"Annual budget losses from preferences for beef imports, both chilled and frozen, are about RUB2.5bn-RUB3.5bn (US$71m-US$99m). While the losses on imports of beef offal are RUB200m (US$5.68m),"​ he added.

According to official statistics, Russia remains one of the largest importers of beef - up to 30% of the total supply on the Russian market is accounted for by imports. Beef production in the country in 2013 amounted to 1.65 million tonnes (mt) in carcase weight or 2.9mt in live weight per year, and the capacity of the market, according to estimates from the Russian Ministry of Agriculture is 2.34mt in carcase weight or 16.4kg per capita per year.

"Despite a drop in consumption in the country over the last 20 years, the Ministry of Agriculture projected consumption to increase to 17kg per capita by 2020. In this case, the market capacity will rise by 5% to 2.46mt and market participants repeatedly noted that beef is one of the most promising areas of development for the meat industry, as so far it is developed poorly and there is still a large share of imports in the market,"​ said Russian agricultural analyst Eugene Gerden.

He added: "The country’s economy currently faces problems, and the government responds with such measures. They have already promised to raise current taxes within the next two years, which will also affect the meat industry."

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