NOTE: USDA unofficial data excludes Crimean production and exports. As of June 2014, the Russian Federal State Statistics Service (Rosstat) began incorporating Crimean production and trade data into its official estimates. Where possible, data reported by FAS/Moscow is exclusive of information attributable to Crimea.

Russia: Cattle Numbers, 1,000 Head

Animal Numbers, Cattle

2013

2014

2015

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

Russia

USDA Official

New post

USDA Official

New post

USDA Official

New post

Total Cattle Beg. Stks

19,930

19,930

19,564

19,564

19,000

19,132

Dairy Cows Beg. Stocks

8,469

8,469

8,201

8,201

8,000

7,952

Beef Cows Beg. Stocks

390

390

460

460

500

490

Production (Calf Crop)

6,820

6,820

6,670

6,670

6,545

6,500

Total Imports

97

97

100

74

100

70

Total Supply

26,847

26,847

26,334

26,308

25,645

25,702

Total Exports

17

17

15

26

15

20

Cow Slaughter

0

0

0

0

0

0

Calf Slaughter

0

0

0

0

0

0

Other Slaughter

6,800

6,800

6,850

6,750

6,900

6,740

Total Slaughter

6,800

6,800

6,850

6,750

6,900

6,740

Loss

466

466

469

400

430

392

Ending Inventories

19,564

19,564

19,000

19,132

18,300

18,550

Total Distribution

26,847

26,847

26,334

26,308

25,645

25,702

Russia: Beef and Veal Production, Supply & Distribution (1,000 MT CWE)

Meat, Beef and Veal

2013

2014

2015

Market Begin Year

Jan 2013

Jan 2014

Jan 2015

Russia

USDA Official

New post

USDA Official

New post

USDA Official

New post

Slaughter (Reference)

6,800

6,800

6,850

6,750

6,900

6,740

Beginning Stocks

0

0

0

0

0

0

Production

1,380

1,380

1,390

1,370

1,400

1,370

Total Imports

1,018

1,018

825

919

825

750

Total Supply

2,398

2,398

2,215

2,289

2,225

2,120

Total Exports

12

12

10

10

10

8

Human Dom. Consumption

2,386

2,386

2,205

2,279

2,215

2,112

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

2,386

2,386

2,205

2,279

2,215

2,112

Ending Stocks

0

0

0

0

0

0

Total Distribution

2,398

2,398

2,215

2,289

2,225

2,120

Production

Cattle

The long-term trend of decreasing Russian cattle inventories is anticipated to continue in 2015, with inventories forecast to decline by approximately 3 percent to 18.55 million head. Many agricultural producers in Russia are experiencing financial challenges due to the current economic situation, including difficulty in acquiring bank credit, particularly for those already carrying debt, and, in many cases, reduced operating funds. While Russian dairies (which still account for the lion's share of the national herd) will most likely continue to slaughter less productive cattle, particularly if feed costs remain high for a prolonged period of time, the majority of beef-cattle producers are still at the implementation stages of their long-term investment projects. As a number of operations have still not achieved profitability, most are unlikely to significantly increase the size of their herds in the near-term.

According to industry sources, the share of beef cattle as a percentage of total Russian cattle grew in 2014 and is expected to continue to grow in 2015. According to Rosstat, 2014 cattle inventories at agricultural establishments, both beef and dairy, increased in only a few regions (e.g., Bryansk, Voronezh, Leningrad, Dagestan, Kaliningrad, and Tambov), where large agricultural holdings continue to implement their beef-production projects (e.g. ABH Miratorg has invested $500 million to increase beef production in the Bryansk region, Zarechnoe Group opened a processing plant in Voronezh in the summer of 2014, etc.).

FAS/Moscow has increased its 2015 year-end cattle inventories forecast to 18.55 million head as a result of 2014 year-end data published by Rosstat (i.e., a nearly 3 percent year-on-year decline in the size of the national herd). Cattle slaughter in the latter half of 2014 was reportedly lower than expected, in part, because foreign suppliers who had Russian market access (e.g., South American producers) were able to supply a sufficient volume of frozen beef to meet shrinking consumer demand. In turn, according to Rosstat, private (peasant) farms, which account for 11 percent of the country's cattle herd, increased their cattle inventories by nearly 2.5 percent in 2014. Data supporting increasing inventories at private (peasant) farms, however, may be slightly misleading as industry sources report some small backyard farms took the time to register themselves as private (peasant) farms in order to make themselves qualify for government support. Cattle on these farms were, in turn, re-classified as private (peasant) farm inventories in 2014.

Beef

FAS/Moscow forecasts Russian beef production in 2015 to remain flat when compared to revised 2014 production estimates (i.e., 1.37 MMT). FAS/Moscow has decreased its 2015 beef production forecast by roughly two percent from its previous estimate of 1.4 MMT, due to the impact of the poor overall economic situation. The Russian Ministry of Economic Development (MED) has indicated that the Russian economy will decline in 2015. With a presumption that average annual oil prices will equal $50 per barrel, MED expects Russian GDP to contract by 3 percent, consumer prices to rise 12.2 percent, and real wages to decline by 9.6 percent over the course of 2015. MED also forecasts disposable income to decline 6.3 percent over 2015. Given the economic volatility in the market, and the fact that food prices as of March 1, 2015, have increased 23.2 percent year-on-year, it is likely that consumption of beef (traditionally the most expensive commodity in the meats category) will continue to decline in 2015.

FAS/Moscow has also decreased the 2014 beef production estimate by 1.5 percent (from 1.39 MMT to 1.37 MMT) based on year-end data published by Rosstat. Despite the expectation that industry-wide production will remain flat this year (with some establishments struggling to handle the current economic challenges), a handful of large-scale agricultural establishments are expected to increase their production of beef in 2015. For example, the "Bryansk Meat Company," a subsidiary of ABH "Miratorg," took out a $425.8 million, 15-year loan from Vnesheconombank in December of last year to expand beef production. The project's goal is to produce 1.3 MMT of high quality beef per year by 2029/2030. In addition, Zarechnoe Group reportedly intends to continue to build its herd as well as broaden distribution of its beef sold as "Prime Beef" and "Zarechnoe" which is produced in the Voronezh region.

Consumption

FAS/Moscow forecasts Russia will consume 2.11 MMT of beef in 2015, a decrease in consumption of slightly more than 7 percent, compared to 2.28 MMTs of beef consumed in 2014. In addition, according to FAS/Moscow estimates, the share of beef in overall Russian meat consumption (i.e., beef, pork, and broiler meat) fell from 40 percent in 2000 to 25 percent in 2014 at the expense of increased pork and broiler meat consumption – a trend anticipated to continue in 2015 as beef is anticipated to account for 24 percent of the aforementioned meat consumption this year Industry sources report that they anticipate total Russian consumption of beef, pork, and broiler meats to decline by 4-6 percent in 2015 due to the negative economic situation in Russia. Average retail prices for grades 1 and 2 beef in February 2015 were 15 and 17 percent higher than they were in February 2014, mostly due to increased price for imported goods resulting from the weakened ruble. Taking into consideration Russia's dependence on beef imports (ranging from 35 to 45 percent import dependence according to industry sources), and that the Russian production only accounts for approximately 60 percent of consumption, beef prices are expected to remain high in 2015.

FAS/Moscow has revised the 2014 beef domestic consumption estimate to 2.28 MMT. This estimate is slightly more than previous approximations given higher import levels than previously predicted, but remains nearly 4.5 percent lower than 2013 consumption levels.

Trade

Cattle

Russian imports of cattle in 2015 are forecasted to total 70,000 head, roughly 4,000 head lower than revised 2014 import levels (i.e., 74,000). Imports are forecast to decrease by nearly five percent in 2015 due to a weaker ruble versus the U.S. dollar and Euro.

Despite the European Union shipping nearly 25,000 head of breeding cattle in 2014 (up almost 175 percent from 2013 levels), and increasing its share of Russian imports from nine to 34 percent, imports from both Australia (nearly 32,000 head of non-purebred breeding cattle) and the United States (slightly more than 16,000 head of purebred breeding cattle) – the two largest suppliers by volume in recent years -- were down last year. In fact, total cattle imports in 2014 were nearly 25 percent less than they were in 2013 and 46 percent lower than they were in 2012.

FAS/Moscow forecasts Russian cattle exports to total 20,000 head in 2015, predominantly non-purebred breeding cattle, a 23 percent decrease from revised estimates for 2014 (i.e., 26,000 head). Russian exports of cattle to Azerbaijan were 101 percent higher in 2014 than they were in 2013, and 322 percent higher than they were in 2012. However, Azerbaijan, which accounted for more than 90 percent of Russian cattle exports in 2014, is also experiencing an economic slowdown (e.g., oil prices have fallen, the Azerbaijani manat was recently devalued, etc.) which may slow the recent trend in Russian export growth.

As noted, Russian cattle exports in 2014 were higher than previously forecast and, in turn, FAS/Moscow has increased the Russian cattle export estimate.

Beef

Russian imports of beef in 2015 are forecasted to total 750,000 MT, roughly 18 percent lower than revised 2014 import levels (i.e., 919,000 MT). Industry sources indicate the current economic situation is causing consumers to re-evaluate their purchasing practices and increasingly move towards cheaper sources of protein (e.g., poultry meat). In fact, 2014 imports of beef were roughly 11 percent lower than 2013 levels. This decline in imports was a result of restrictions imposed on certain foreign suppliers during 2014 (e.g., Belarus, the European Union, Ukraine, Australia, etc.), but trade was also impacted by the volatility of the Russian ruble exchange rate, particularly late in the year, which reportedly made imports of foreign produced meats unprofitable for some traders. Given the current economic situation in Russia, it is likely that imports of beef in 2015 will continue their downward trend of 2014.

Policy

Despite the reduced value of State support, given the weakened ruble, government subsidies remain a significant factor in the livestock industry's performance. The Russian government remains committed to the goal of increasing domestic beef production and reducing the country's dependence on beef imports. For example, in 2014, the government reportedly paid1:

  • 3.703 billion rubles for cattle breeding support (both beef and dairy cattle);
  • 2.370 billion rubles for livestock farming projects of regional importance (a portion of which was for beef cattle development); and,
  • 3.094 billion rubles for subsidies for the interest rate associated with long-term loans for investment purposes for the reconstruction and modernization of beef cattle facilities.

There are a number of factors that could impact the Russian government's final distribution of funds in 2015. For example, regional authorities need to be proactive in requesting federal support, regional authorities must allocate their own funds to supplement federal support, and federal authorities may re-allocate funds in response to any change in economic conditions.

Russian Imports of Beef, PWE, Annual Series: 2009 - 2014, Quantity (MT) Incl. Major Suppliers in 2014

Partner Country

Calendar Year

2009

2010

2011

2012

2013

2014

World

752,197

755,314

707,503

730,994

726,962

649,260

Brazil

322,969

282,184

224,160

248,906

308,255

309,749

Belarus*

112,735

128,547

102,478

104,748

147,534

112,695♠

Paraguay

46,663

64,089

50,478

119,470

138,611

129,807

EU-28

19,266

78,717

80,742

52,313

32,084

26,935

Lithuania

7,285

10,290

14,992

13,172

7,986

6,712

Poland

919

8,096

7,633

12,318

10,404

5,902

Germany

5,882

24,276

18,232

6,507

1,864

5,504

Uruguay

66,199

78,926

77,528

65,870

35,253

23,659

Argentina

136,991

33,933

14,899

8,933

14,834

22,975

Ukraine

18,823

12,847

12,367

14,170

17,013

13,840

Australia

16,224

41,167

65,251

34,128

26,904

2,181

*Belarusian Exports to Russia as Reported by Belstat (♠ through October 2014)

Source: Federal Customs Service of Russia