The Russian import restrictions placed on EU and US meat imports is reportedly putting the country’s meat processors under severe financial pressure. If unresolved, dozens of processors are expected to go out of business.
Industry sources have indicated that the lack of imported meat, especially pork and poultry, has increased the led to an increase in the purchase price of the limited supplies of raw meat in Russia.
Since the enforcement of trade restrictions on 6 August, pork and poultry producers have seen selling prices rise by 12% to 14%. This is on top of price rises earlier in the year. The price of raw meat in Russia is now over 60% higher on 2013 levels.
The problem for meat processors is that while commodity prices have increased, the government has prohibited any increase in retail prices to avoid social unrest. Reports outline that processors would require a 15% increase in retail price to cover the rising production costs.
The National Union of Meat Processors (NUMP) has now sent a letter to President Putin outlining the financial difficulties that the processing sector now faces stating that almost all processors are currently unprofitable.
Eastern Russia appears to be most severely affected with almost no raw meat supplies left in the region. Government authorities are now looking to South American imports to alleviate the problem. Exports of pig meat from Argentina are set to increase. It is unlikely that Argentina can fill the void left by the ban on US poultry, estimated at 200,000 tonnes per annum. Argentina’s beef exports to Russia are set to double this year to 30,000 tonnes.