Russia is the ‘sleeping giant’ of global beef trade

By Oscar Rousseau

- Last updated on GMT

The impact of Russia re-entering the beef import trade could be massive, claim Rabobank
The impact of Russia re-entering the beef import trade could be massive, claim Rabobank

Related tags Vladimir putin Russia Beef

Geopolitical acrimony has seen Russia’s role in the global beef trade decline, but a supply shortage and a price hike means there is potential it will re-enter the market, according to Rabobank.

Russia’s beef import bans on the EU, US, Canada​ and Australia​ - leading players on the global beef stage – have put pressure on its already struggling sector. Heightened global competitiveness and a nosediving Russian rouble has seen beef supplies in Russia tighten. Imports of Brazilian beef, for example, dropped by 57% in value and 45% in volume in 2015, while lower imports, plus falling production, have seen beef prices rise.

Now, only Russians with above-average incomes can afford to buy beef. As such, Rabobank​ is expecting beef consumption to drop by 3.3% to 1.9m tonnes in 2016 – nearly 30% below 2007’s level, which crested at a buoyant 2.7m tonnes.

At the turn of the century, Russia grew to become one of the world’s leading beef importers and the nation was responsible for 16% of the global beef trade. But due to renewed tensions on the global stage with a string of economic sanctions driven by the US and the EU, the nation’s beef imports have tailed off.

Key player

Despite the myriad problems besetting Russia’s once-mighty beef sector, Rabobank’s Q3 Beef Report suggests the country still has the capacity to be a key beef player again.

Russian beef imports have the potential to return to pre-2015 levels, if import bans are removed, the oil price recovers, and the rouble regains strength,​” said Angus Gidley-Baird, senior analyst of animal proteins at Rabobank.

However, with import bans recently extended to the end of 2017, and with the continuing bleak economic outlook, beef imports into Russia are not expected to change in the coming years.​”

The Kremlin has committed a RUB5.5bn investment to modernise its beef sector, with Russian president Vladimir Putin keen to ensure the country can be a self-sufficient meat producer. But this is likely to take some years and domestic supplies right now only have the ability to meet around 60% of the nation’s beef demand.

With a clear gap in supply, Rabobank predict the “sleeping giant​” of Russia could re-establish itself as a leading beef importer one day.

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