Russia targets huge growth in meat exports
Speaking at the President’s Council for Strategic Development and Priority Projects, he suggested that a rise in exports could bring Russia’s agriculture industry at least US$10 billion in additional revenue per year.
“Russian meat has much more export potential than other agricultural products, including grain,” Tkachev suggested.
Expert market observers in Russia agree that the country has good potential to develop meat exports, but believe the target set by the minister seems too ambitious.
Rouble stands in the way of exports
Dmitry Rylko, general director of Russia’s Institute for Agricultural Market Studies (IKAR), told GlobalMeatNews that it might be possible to achieve a goal of 1 million tonnes of meat exports in the period between 2020 and 2025, but noted that this would be extremely complex to achieve.
“For poultry we are getting to the stage where massive exports are becoming possible, but in recent months the problem has deteriorated sharply, due to the strengthening of the rouble [exchange rate], so we again ceased to be competitive compared to the main exporting countries,” said Rylko.
“In terms of pork, apart from the rouble exchange rate already mentioned, the situation looks ‘moderately pessimistic’, due to our epizootic situation," Rylko added. "As for beef, our country is a large net importer. However, I would not rule out the possibility of developing ‘complementary trade’, where we import something in exchange for exports.
“Complementary trade would be most beneficial for the Russian meat industry, but, unfortunately, it is not in yet on the radar of the industry or politicians.”
New sales channels vital
Meanwhile, developing exports in 2017 could become vitally important for Russia’s meat industry as, according to forecasts from Meat Council of the Eurasian Economic Union, this will be the first year when domestic meat production in Russia will equal domestic demand.
According to Meat Council president Musheg Mamikonyan, the first signs of this are already evident in the market. For instance in 2015, with inflation of 12.5%, the average price of meat in Russia dropped more than 10%, he noted.
“If we are not able to export our products, the entire investment capital [of the industry], including companies’ private and borrowed investments, will come under huge risk," Mamikonyan explained. "It will put the balance sheets of banks, lenders and investors in a precarious position.”
Lack of political will a problem
However, the main problem is that Russian meat so far has not yet achieved certification in the key and most promising markets. According to Russia’s veterinary body Rosselkhoznadzor, on average it takes seven years of negotiation to open any foreign market for meat exports.
Konstantin Karamishev, head of Rosselkhoznadzor’s export department, explained that most countries demand reverse preferences to allow Russian meat on their domestic markets. As a result, most negotiations on the issue over the past few years have not been very successful.