Despite economic challenges, FAS/Moscow forecasts 3.4 MMT of broiler production in Russia in 2015 as a result of continued demand given its competitive price when compared to other meats, and Russian meat processors increasingly using poultry meat as a raw material. FAS/Moscow has slightly decreased its import estimate for Russian broiler imports in 2015 (to 320,000 MT) given ongoing trade restrictions and the current economic situation. Russian broiler exports are also increased given 2014 trade data, and the industry's ability to offer competitive prices with the reduced value of the Russian ruble.

General Information

NOTE: USDA unofficial data excludes Crimean production and exports. However, 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: Broiler Production, Supply & Demand, 1,000 MT (ready-to-cook)

Poultry, Meat, Broiler

2013

2014

2015

Jan 2013

Jan 2014

Jan 2015

Russia

USDA Official

New post

USDA Official

New post

USDA Official

New post

Production

3,010

3,010

3,200

3,250

3,400

3,400

Total Imports

540

540

385

450

340

320

Total Supply

3,550

3,550

3,585

3,700

3,740

3,720

Total Exports

30

30

25

42

15

40

Human Consumption

3,520

3,520

3,560

3,658

3,725

3,680

Total Dom. Consumption

3,520

3,520

3,560

3,658

3,725

3,680

Total Use

3,550

3,550

3,585

3,700

3,740

3,720

Total Distribution

3,550

3,550

3,585

3,700

3,740

3,720

Broiler Production

FAS/Moscow continues to forecast Russian poultry production to total 3.4 MMT in 2015, a nearly 4.5% increase in broiler meat production when compared to revised production estimates for 2014. Previous investments and modernization projects have come to fruition and demand for broiler meat remains relatively strong when compared to other meats. Several large-scale agricultural establishments, which had already invested in facility improvement projects, are expected to increase production of broiler meat in 2015 -- e.g., "Belgrankorm" (Belgorod region), "Bryansky Broiler" (Miratorg/ Bryansk Region), Poultry plant "Bars" (Tatarstan), "Akashevskaya" (Republic of Mari El), Poultry plant "Reftinskaya" (Sverdlovsk region), "Ural Meat Company" (Chelyabinsk Region), and Poultry plant "Novosibirskaya" (Novosibirsk). However, industry sources do not anticipate any major industry investments in the short-term, given the country's economic situation. In fact, bankruptcies of some inefficient and indebted businesses are possible due to limited access to bank credit and operating funds. As such, acquisitions of financially unstable businesses by fiscally stronger establishments are possible during 2015 resulting in continued consolidation of the industry.

Intensive modernization of the Russian poultry industry began in 2006 as part of the National Program of Agricultural Development, which attracted investment to the sector and, according to the Russian National Union of Poultry Producers (Rosptitsesoyuz), led to a nearly 2.6 MMT increase in annual production (on a slaughter weight basis) in nine years. According to Rosstat, 80 percent of Russian poultry inventories are located at large-scale agricultural establishments (compared to only 44 percent of Russia's cattle inventories). In part, because the industry has consolidated in recent years, the Russian Ministry of Agriculture has indicated it expects the country to reach its self-sufficiency target in poultry meat production in 2015 by producing domestically over 90 percent of the poultry meat that is consumed in Russia.

Major Russian poultry producers (e.g. Miratorg Agribusiness Holding, the Cherkizovo Group, etc.) reported increased year-on-year sales volumes in 2014 and elevated margins as a result of increased poultry prices.

Average 2014 prices through the third quarter were influenced by even higher pork prices and increased poultry consumption stemming from processed meat manufacturers increasingly turning to poultry as a raw material in their production in lieu of more expensive red meats. Processed meat manufacturers are expected to continue the recent trend of increasingly utilizing poultry as a raw material given its cost advantages compared to other meats and their ability to pass these reduced costs through to consumer prices.

However, the market situation changed in the fourth quarter of 2014 as industry profitability declined, in part, due to the Russian rubles' depreciation. The ruble's volatility had a direct impact on production costs as expenses increased for imported hatching eggs and day old chicks, production equipment, veterinary drugs and vaccines. In addition, dramatic changes in the currency exchange rate in November and December 2014 – resulting in a much weaker ruble versus the U.S. dollar and Euro -- resulted in an increase in Russian grain exports in the fourth quarter of 2014, and, in turn, increased feed prices (see, e.g., RS1504). Given the economic volatility in the market, industry sources are unsure about the cost of feed over the course of 2015.

According to the Russian Ministry of Economic Development, "{Russian} GDP {in 2015} is expected to contract by 3 percent amid persistently strong geopolitical risks and the presumption that average annual oil prices will equal $50 per barrel. Forecasts show that the Russian economy will enter a phase of a prolonged decline in 2015." However, despite the economic challenges, as previously noted, demand for poultry meat, as the most affordable source of protein, is expected to remain relatively strong when compared to other meats in Russia, and should help to provide some support to production in the coming year. Continued increases in feed prices and the regional epizootic situation may also impact the Russian broiler industry's strength this year. For example, some producers are concerned about the impact that highly pathogenic avian influenza might have on Russian production and supplies of day-old chicks and hatching eggs from other regions {e.g., Europe} to the Russian industry.

Despite the challenging economic environment, 2014 was a relatively strong year for Russian broiler production. FAS/Moscow has therefore increased its production estimate by 1.5 percent to 3.25 MMT (a nearly 8 percent increase over 2013 production levels) based on year-end production data.

Consumption

FAS/Moscow forecasts 3.68 MMT of broiler meat consumption in Russia in 2015, nearly one half percent more than revised estimates for 2014 (i.e., 3.66 MMT). The share of poultry in domestic meat consumption is expected to continue to grow in 2015. Despite a nearly 25 percent increase in in the average consumer price for broiler carcasses in 2014, and a nearly 17 percent increase in the average consumer price for quarters, broiler meat remains competitively priced compared to red meats. For example, the average consumer price for broiler carcasses and quarters, as of December 1, 2014, was nearly 230 rubles/kg lower than the average price of bone in and boneless beef, and nearly 175 rubles/kg lower than the average price of bone in and boneless pork.

Average per-capita consumption of broiler meat in Russia has increased nearly 180 percent over the past fifteen years. While FAS/Moscow continues to forecast a slight increase in per-capita broiler consumption in 2015, this increase in broiler consumption is anticipated to come at the expense of other meats (namely pork).

Trade

Russian imports of broiler meat in 2015 are forecasted to total 320,000 MT, roughly 130,000 MT lower than 2014 broiler import levels (i.e., 450,000 MT). Imports are forecast to decrease by nearly 30 percent in 2015 due to continued restrictions placed on certain foreign suppliers (namely the United States and the European Union {see, e.g., RS1455}), reduced market opportunities for foreign products due to the ruble's depreciation, and increased domestic production.

In 2014, Russia significantly increased broiler imports from Belarus (up nearly 30 percent), Brazil (up almost 150 percent), Argentina (up nearly 165 percent), Turkey (which first appeared in 2014) and Serbia (up nearly 140 percent). Despite the increase in imports from these suppliers, total broiler imports were 17 percent lower, by volume, in 2014 than they were in 2013. However, 2014 import volumes were higher than originally forecast (particularly given the increased volume supplied by Brazil in the latter portion of the year), and, in turn, FAS/Moscow has increased its import estimate for 2014 by nearly 17 percent, from 385,000 MT to 450,000 MT.

Russian broiler meat exports in 2015 are forecast to total 40,000 MT, significantly more than initially forecast by FAS/Moscow, given the volume of exports in 2014. While a small decline in broiler meat exports is anticipated in 2015, when compared to 2014, due to demand for domestic broiler meat, Russian exporters are also expected to potentially avail themselves of new export opportunities given the attractive prices they may be able to offer for Russian poultry in the international market.

While a significant portion of Russian broiler exports to Asia continued to be comprised of sub-products in 2014, FAS/Moscow estimates that Russia will export nearly 20,000 MT of broiler meat to non-CU member countries in 2014. In addition, EAEU trade data indicates Russia exported roughly 16,000 MT to Kazakhstan and another 3,000 MT to Belarus through November 2014. Accordingly, FAS/Moscow has revised its broiler export estimate for 2014 to 42,000 MT.

Volume of Russian Imports of Broiler Meat, 2009 – 2013 & Year To Date: 04/2013 & 04/2014, MT (020711, 020712, 020713, 020714, 160232)

2009

2010

2011

2012

2013

2014

2013/14

% Change

World

913,216

618,445

389,989

456,610

424,771

346,675

-18.39%

United States

694,357

294,920

239,306

262,882

263,244

137,713

-47.69%

Brazil

66,147

137,468

64,446

61,847

47,771

117,759

146.51%

EU-28

144,307

173,912

724,82

76,997

63,969

45,437

-28.97%

Netherlands

7,474

14,708

1,342

10,013

8,791

11,975

36.22%

France

40,482

24,984

23,430

32,107

16,053

9,931

-38.14%

Denmark

6,187

19,568

5,778

2,148

4,528

4,809

6.21%

Belgium

1,444

6,310

3,795

7,601

9,076

4,616

-49.14%

Argentina

4,727

6,821

4,745

14,026

8,161

21,699

165.89%

Turkey

0

41

52

341

0

16,040

N/A

Ukraine

0

75

5,171

30,440

39,284

7,036

-82.09%

All Others

3,678

5,708

3,787

10,077

2,342

991

-57.69%

NOTE: Excludes Data for Belarus and Kazakhstan Source: Federal Customs Service of Russia

Volume of Russian Imports of Broiler Meat from Belarus and Kazakhstan, 2011 – 2014, MT (HS Code 0207)

Partner Country

Calendar Year

2013/2014 % Change

2011

2012

2013

2014

Total

74,147

105,343

107,612

118,873

10.46%

Belarus

74,137

103,924

104,992

113,578

8.18%

Kazakhstan

10

1,419

2,620

5,295

102.10%

NOTE: Includes data attributable to some products which are not reported in the PSD

Source: Eurasian Economic Commission