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Report Highlights:

FAS/Moscow forecasts Russian broiler production to rise to 3.3 MMT in 2014 as a result of government support measures for the poultry industry and increased grain production in 2013 which should help to further reduce feed prices in 2014. Broiler imports are forecast to decrease slightly in 2014 because of increased competition from burgeoning domestic production. Despite the decrease in imports, trade from Belarus and Ukraine is anticipated to continue to account for an increasing portion of imports. FAS/Moscow forecasts a five percent increase in Russian turkey meat production in 2014 (to 105,000 MT) based on the anticipated release of State support to help bolster domestic production which, in turn, leads FAS/Moscow to forecast that turkey meat imports will remain flat next year.

Data included in this report is not official USDA data.

Executive Summary: 

FAS/Moscow forecasts Russian broiler production to reach 3.3 MMT in 2014 (3.4 percent more than FAS/Moscow’s 2013 estimate). The new State Program for the Development of Poultry Production from 2013-2015 (hereinafter, the 2013-2015 Poultry Program) conservatively envisages poultry production to grow to 4.0 MMT in 2015, compared to 3.55 MMT in 2012, and should help further boost Russian broiler production next year. In addition to forecasting an increase in domestic production in 2014, due to industry support measures implemented by the Russian government in 2013 (e.g., grain intervention sales and compensation for high feed costs), as well as an increase in domestic grain production in 2013, FAS/Moscow has raised its estimate for 2013 Russian broiler production by three percent to 3.05 MMT. 

Because of the forecasted increase in competitively priced domestic production, broiler imports are forecast to decrease slightly in 2014 (to 530,000 MT). Moreover, trade statistics show that Russian broiler imports were down nearly six percent (to 191,255 MT) during the first five months of 2013, when compared to the same period last year. This reduction in trade, coupled with FAS/Moscow’s expectation that Russian broiler production will grow at a faster pace in the second half of 2013, has led FAS/Moscow to reduce its 2013 import estimate by nearly seven percent (to 540,000 MT). 

The Russia, Kazakhstan, Belarus Customs Union (CU) continues to promote intra-CU, duty-free agricultural trade. FAS/Moscow forecasts Russia’s broiler exports in 2014 to increase by eight percent (to 65,000 MT) over revised 2013 levels as a result of increased domestic production at a lower cost of production, and favorable trade conditions between the two CU Member States. FAS/Moscow’s 2013 export forecast has been reduced by nearly 30 percent (to 60,000 MT) because of several factors. First, Customs Union trade statistics show a significant decrease in year-on-year trade. While traders believe this data is underreported, they also expect Russian broiler exports to be lower than early 2013 projections. In addition, Kazakhstan has reportedly strengthened its own domestic broiler production, and increased control over imported products. 

With the timely release of financial support earmarked in the 2013-2015 Poultry Program, FAS/Moscow forecasts a five percent increase in turkey meat production in 2014 (to 105,000 MT). Additionally, given the increase in domestic turkey meat production, it is forecasted that imports will remain flat in 2014 (i.e., equivalent to Russia’s tariff rate quota volume for turkey meat). FAS/Moscow’s turkey production estimate for 2013 has been decreased by nearly five percent (to 100,000 MT) as previously approved government support program earmarked for 2013 were not accomplished during the first half of the year due to a lack of financing. Imports of turkey meat during the first five months of 2013 decreased by 33 percent (to 4,485 MT) when compared to the same period in 2012. Given this considerable decrease in trade, FAS/Moscow has significantly lowered its import estimate for 2013 (to 14,000 MT). 

Production: 

Poultry Production 

FAS/Moscow estimates 2014 total poultry production (e.g., broilers, turkeys, geese, ducks, guinea fowl, and quail) to increase by nearly six percent to 4.06 MMT, which is already in excess of the conservative goal of the 2013-2015 Poultry Program. According to the Russian Ministry of Agriculture, subsidies should begin to be distributed among the largest Russian poultry producers in August 2013. This coupled with increases in grain production which should allow producers to be able to avail themselves of quality feeds at lower prices, should help to spur poultry production in the second half of 2013 and into 2014. In addition, the Russian Union of Poultry Producers (known as Rosptitsesoyuz, hereinafter RUPP) has stated that it believes that other poultry sources (e.g., turkeys, geese, ducks, guinea fowl, and quail) show promise for economic viability, and further development of these sectors could provide a further boost to Russian poultry production in 2014 and beyond. 

FAS/Moscow also estimates 2013 total poultry production to increase by seven percent over 2012 levels (to 3.8 MMT). Despite anticipated calendar year production increases, according to the Russian State Statistics Service (Rosstat), January-June year-on-year growth slowed in 2013 when compared to recent years (i.e., a 145,400 MT increase in live weight during the first six months of 2013 compared to a 286,400 MT increase during the same period in 2012). In addition, Russian poultry inventories only increased by 2.1 percent over 2012 levels, to 515.1 million head, as of July 2013. The slowdown in production and inventory growth is attributable to the negative impact that high feed prices had on producers during the first quarter of the year, as well as delays by federal and regional governments in issuing subsidies to compensate for those high feed prices. Despite the slowdown in growth in the first half of 2013, the release of federal subsidies in August coupled with the decrease in domestic feed prices should encourage production during the second half of the year. 

Broilers 

Broiler Production 

FAS/Moscow forecasts Russian broiler production to reach 3.3 MMT in 2014 (3.4 percent more than FAS/Moscow’s 2013 estimate) because of favorable feed prices and an influx of federal financial support for the industry. The Russian Ministry of Agriculture approved the RUR 55.2 billion ($1.7 billion) 2013-2015 Poultry Program in March 2013. The program aims to improve the national food security situation by implementing a package of priority measures to ensure the sustainable and competitive development of the domestic Russian poultry industry. 

The program’s objectives are to: 

• increase the production of poultry meat and eggs using highly productive and technological breeds and hybrids of different poultry species; 

• create modern breeding and genetic centers; 

• improve the poultry production base via the construction of new enterprises, and reconstruction and modernization of existing enterprises; 

• improve the quality and range of products available to consumers; 

• implement innovative and resource-saving modern technologies; 

• improve training programs offered for the industry; and, 

• increase poultry production at farms of all categories from 3.55 MMT in 2012 to 4.0 million tons, in carcass weight, in 2015. 

FAS/Moscow also has increased its broiler production estimate for 2013 to 3.05 MMT (3.3 percent more than its previous forecast). While FAS/Moscow previously forecast 2013 broiler production levels to be slightly higher than they were in 2012, increased grain production in 2013, which has significantly reduced feed prices, coupled with the late distribution of federal support, is expected to stimulate domestic production. The ex-works price for feed wheat has fallen nearly 50 percent in 2013, as of mid-July, while the prices for feed corn and feed barley fell approximately 15 and 30 percent, respectively (see, e.g., RS1347). FAS/Moscow now estimates seven percent year-on-year growth in domestic broiler production.

This continued growth is attributable to several factors, including some measures taken by the Russian government to support the industry’s development: 

• grain intervention sales led to the stabilization and lowering of feed prices beginning in early 2013 (see, e.g., RS1332); 

• compensation for increased feed prices for major broiler producers were approved for distribution beginning in August. While this will benefit production during the second half of 2013, leading to further increases in annual production levels, the late distribution of support funds should also help encourage production in 2014; and, 

• a larger grain crop in 2013 - FAS/Moscow forecasts a notable increase in Russia’s grain production in 2013, with the total grain crop forecasted to increase to 91 MMT compared to 71 MMT in 2012, which should help to further reduce the price of feeds. 

Final 2012 Data on Russian Broiler Production 

Data published by RUPP in late Spring 2013 shows that 57 Russian oblasts increased poultry production in 2012, including: Tambov oblast – by 94,100 MT (more than eight times), Chelyabinsk oblast – by 43,500 MT (22.1 percent), Leningrad oblast by 37,400 MT (17 percent), Penza by 29.200 MT (34.8 percent), Belgorod oblast – by 23,200 MT (3.3 percent), Bryansk oblast by 21,800 MT (26.9 percent), Krasnodar Kray – by 30,600 MT (13.8 percent), Stavropol Kray – by 22,300 MT (13.1 percent) and Republic of Tatarstan – by 24,100 MT (17.1 percent). 

The Commission of the Russian Ministry of Agriculture for the Coordination of Agricultural Credit selected 52 investment projects in 2012 (with a total cost of RUR 23.5 billion {$734.3 million}) to support the construction, reconstruction and modernization of poultry establishments. The data published by RUPP demonstrates that production at Russia’s largest broilers increased at almost all of the major establishments in 2012. In fact, nearly 70 percent of Russian broilers were produced at Russia’s 19 largest poultry establishments.

A few Russian poultry producers, such as the “Group of Companies OGO,” disappeared from the market in 2012 after filing for bankruptcy. Additionally, “OOO PK Optifood” was forced to temporarily cease production in the second half of 2012 due to a shortage of financial resources to support production. Only a few companies decreased production in 2012 because of financial challenges which began during the 2009 financial crises and which were exacerbated by high feed costs in 2012-2013. For example, Agroholding “ALPY” from Siberia (Krasnoyarsk kray) decreased production from 52,000 MT in 2011 to 44,000 MT in 2012, and the Rubezh Group of companies decreased production at the same time from 41,000 MT in 2011 to 36,700 MT in 2012. 

RUPP has added that the growing Russian broiler sector requires an increased number of hatching eggs, which Russian suppliers are unable to provide because of production limitations. Accordingly, RUPP has estimated that the share of imported hatching eggs is expected to increase from nearly 12 percent in 2013 to nearly 14 percent of the industry’s total hatching egg consumption in 2015. 

Consumption 

FAS/Moscow forecasts Russian broiler meat consumption to continue to grow in 2014 (increasing by slightly more than six percent) due to rising incomes and competitive prices for broiler meat when compared to red meats. FAS/Moscow previously forecasted that consumption growth in the second half of 2013 would be slower than it was during the same period in 2012 because of anticipated price increases due to feed shortages. However, after sharp increases in retail prices for broiler meat from August 2012– January 2013, prices began a sustained decline in 2013 after feed costs began to fall. Therefore, FAS/Moscow has increased its 2013 consumption estimate by an additional two percent.

Retail prices for domestically produced broilers and leg quarters have fallen approximately seven and five percent, respectively, thus far in 2013. Moreover, as of July 2013, retail prices for beef were nearly 150 percent higher than for broiler meat, and retail prices for pork were approximately 90 percent higher than for broiler meat (the normal price difference for this time of year). Given the favorable change in retail broiler prices, and the fact that broiler meat accounts for a larger percentage of Russian meat consumption than beef or pork, FAS/Moscow has increased its consumption estimate for 2013. 

In addition, Russian broiler meat consumption also continues to grow, in part, due to increasing production of a greater variety of products (e.g., sausages, cutlets, etc). As previously reported, the Russian broiler industry increasingly makes use of the entire bird for a variety of products, including producing and marketing more semi-ready food products. For example, natural semi-ready poultry products only accounted for 27.5 percent of production in 2005, but, according to RUPP, these products accounted for 40 percent of production in 2012. The 2013-2015 Poultry Program envisions additional growth in variety products and expects this to help further stimulate consumption of domestically produced poultry to 27.2 kilograms per person. 

Trade 

As a result of increased domestic production and falling domestic broiler prices, FAS/Moscow forecasts broiler imports to fall slightly in 2014 (to 530,000 MT). In addition, FAS/Moscow is decreasing its 2013 broiler import estimate by nearly seven percent (to 540,000 MT) because of a reduction in trade during the first five months of 2013 and FAS/Moscow’s expectation that Russian broiler production will grow at a faster pace in the second half of 2013. According to Global Trade Atlas, Russia imported 190,871 MT of broiler meat from January-May 2013, nearly six percent less than during the same period in 2012. Despite the decrease in total imports, trade from Belarus and Ukraine continues to account for an increasing portion of imports.

The largest broiler exporters to Russia between January and May 2013 were the United States (88,748 MT), Belarus (42,194 MT), Brazil (17,075 MT), and Ukraine (15,476 MT). During this period 83 percent of Russia’s imported broiler meat were frozen chicken cuts and offal, 17 percent were fresh/chilled cuts and offal (almost entirely from Belarus), and less than one percent were prepared or preserved chicken meat or offal. 

FAS/Moscow forecasts Russia’s broiler exports in 2014 to increase by 5,000 MT (to 65,000 MT) over revised 2013 levels. The Russia, Kazakhstan, Belarus Customs Union (CU) continues to promote intra-CU, duty-free agricultural trade, and the Russian industry is expected to continue to work to take advantage of the preferential trade conditions within the CU to reach new end-users and processors for their products.

Despite previously forecasting an increase in broiler exports to Kazakhstan in 2013, Russia’s major broiler export market, FAS/Moscow has reduced its 2013 Russian broiler estimate (by nearly 30 percent to 60,000 MT) for a variety of factors. First, intra-Customs Union trade statistics show a significant decrease in year-on-year trade (i.e., Russian exports to Kazakhstan reportedly totaled 9,106 MT from January-May 2013, a 33 percent decrease from the same period in 2012). While industry analysts believe this data is significantly underreporting trade because many exporters are not believed to be reporting data to the Customs Union statistics committee, they also have noted that January-May trade (which they believe realistically totaled approximately 30,000 MT) was lower than previous forecasts. The decrease in exports may be attributable, in part, to the Ministry of Agriculture of Kazakhstan’s decision to increase control over imported products (e.g., because of reported inaccuracies on labels with regard to the declared water content, coliform bacterial contamination, and instances of lead and arsenic contamination). In addition, despite its relative small volume when compared to Russia, Kazakhstan’s Union of Poultry Producers has forecasted an increase in 2013 domestic poultry production by almost 35 percent, to 156,000 MT. 

Russian exports to other countries during the first five months of 2013, the vast majority of which is comprised of chicken paws to Asian markets, increased by almost 20 percent (to 9,398 MT). 

Turkey 

Turkey Production 

With the timely release of financial support earmarked in the 2013-2015 Poultry Program, FAS/Moscow forecasts a five percent increase in turkey meat production in 2014 (i.e., 105,000 MT). FAS/Moscow’s turkey production estimate for 2013, however, has been decreased by nearly five percent (to 100,000 MT) as previously approved government support programs for 2013 were not funded during the first half of the year due to a lack of financing.

According to RUPP there are currently 19 turkey establishments operating in Russia. Despite the limited number, increased domestic production has had a direct impact on turkey imports. Production of turkey meat, while still nowhere near that of broiler meat, has increased by 170 percent in the last ten years, while imports have fallen by nearly 150 percent.

The five largest producers of turkey meat in Russia are: “Evrodon” in Rostov oblast (30,900 MT produced in 2012), JSC “Krasnobor” in Tula oblast (16,500 MT), JSC “PF Indyushkino” (Yenisei) in Krasnoyarsk Kray (9,110 MT), OJSC “Siberian Province” in Kemerovo oblast (9,000 MT) and “Egoryevsk Poultry Farm” in Moscow oblast (5,000 MT). 

RUPP reports that nine large turkey establishments are currently under construction in Russia. For example, Kurgan oblast, the largest Russian producer of meat from geese, plans to build a turkey establishment with an annual capacity of 33,000 MT. In addition, regional governments overseeing areas reporting African Swine Fever infections among backyard and/or private hog farms are encouraging these farmers to shift from hog farming to raising turkeys or other forms of livestock (e.g., sheep, rabbits, and other fowl), but, at present, the majority of these farmers do not seem particularly interested in making the switch given expected reductions in profitability. 

Consumption 

Russian turkey meat consumption is forecast to increase by roughly five percent in 2014 and keep pace with the anticipated increase in domestic production, including at new establishments which are expected to come online next year. As previously reported, large turkey producers continue to advertise turkey meat as a healthier alternative to broiler meat and other meat products, as well as a viable option for barbeques, and have demonstrated increasing success in marketing fresh turkey to Russian consumers. 

Although turkey production remained flat in 2013, FAS/Moscow has decreased its consumption estimate by almost nine percent due to reduced imports, almost all of which is frozen. Russian producers of processed products are the major consumers of frozen turkey, but they have increasingly opted to utilize low-cost broiler products as their input of choice (which remain significantly cheaper than turkey).

Trade 

Given the increase in domestic turkey meat production, it is forecasted that Russian turkey imports will remain flat in 2014 (i.e., equivalent to Russia’s tariff rate quota volume for turkey meat of 14,000 MT). During the first five months of 2013, turkey imports decreased by 33 percent (to 4,485 MT) when compared to the same period in 2012. Given this considerable decrease in trade, FAS/Moscow has significantly lowered its import estimate for 2013. 

The most significant turkey exporters to Russia from January–May 2013 were Brazil (1,957 MT, down 24 percent from the same period in 2012), France (548 MT, up 3 percent), Turkey (531 MT, up 605 percent) and Germany (527, down 71 percent). In February 2013, Russia instituted a ban on the importation of U.S. turkey until such time as the United States provides guarantees that these products are ractopamine-free. Because of this measure, U.S. exports of turkey totaled 240 MT during the first five months of 2013, down 70 percent from the previous year

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