MOSCOW: Ukraine is still active on Russian market of meat, though its role in Ukrainian agrisector has declined considerably. Exports of poultry meat to Russia dropped from 4.6% to 0.4%. At the same time, supplies of beef and pork increased during the first six months of 2015, despite all the statements and prohibitions.
There are several reasons for this. Russia is intensively developing the program of import substitution in the market of foodstuffs, in particular, meat products.
Summarizing the results of the first half of 2015 (January-June) overall production of basic kinds of meat (pork, beef, poultry, lamb, and goat meat) in all types of farming enterprises of Russia amounted to 4068.7 KMT in slaughter weight. This is 5.2% or 202.7 KMT more compared with the same time period in 2014.
Nevertheless, the deficit of meat is still observed in Russian market. While it is possible to increase poultry meat production and reduce its import significantly in a short time, it is quite problematic to do the same way with other kinds of meat due to long production cycle.
During January-June 2015 Russian market faced the deficit of about 21.1 KMT of commodity pork. This deficit was met by imports, including from Ukraine, as Russia failed to quickly increase supply of pork to the required level from countries such as Brazil.
In opinion of UkrAgroConsult’s experts, subsidies offered in Russia in 2013 contributed to explosive growth of cattle inventory in 2014. Nevertheless, after the devaluation of national currency in 2014-2015 the stimulating role of subsidies has declined essentially that provoked the slowdown of livestock number growth rates. The problem of ASF spread should also be noted, primarily in Russia, Ukraine and Belarus.
What will happen next? How long will Ukrainian meat products enter the Russian market?
From January 01, 2016 a complete embargo on imports of Ukrainian goods to Russian Federation is likely to be introduced. But there can be several scenarios.
The first and the worst for Ukraine – complete ban on meat exports. The second one – official ban with ongoing grey imports (for example, through the Crimea). Continuation of goods exports from the EU is a striking example of a quasi-legal scheme, despite the introduction of sanctions by Russia.
The third scenario – a ban on foodstuffs, but with exceptions regarding meat products.
The fourth one is the most optimistic – refusal of Russia to introduce embargo on Ukrainian products. Although this scenario is the least realistic.
