Executive Summary: 

FAS/Moscow forecasts Russian broiler production to reach 3.4 MMT in 2015 (six percent more than FAS/Moscow’s revised 2014 estimate because of favorable feed prices as a result of a strong grain crop forecast, reduced competition in the domestic market as a result of a forecasted decrease in broiler imports, and the Russian Ministry of Agriculture’s reported intent to extend poultry production support programs until 2018. While FAS/Moscow previously forecasted 2014 broiler production levels to be slightly higher than they were in 2013, an improved grain crop, which has significantly reduced feed prices, is expected to help encourage domestic production. Accordingly, FAS/Moscow now estimates slightly more than six percent year-on-year growth in domestic broiler production. 

Because of the forecasted increase in domestic production, and the August 2014 trade restrictions placed on several traditional foreign suppliers (including the United States and European Union), broiler imports are forecast to decrease nearly 12 percent in 2015 (to 340,000 MT). Moreover, trade statistics show that Russian broiler imports were down nearly 20 percent (to 126,831 MT) during the first four months of 2014, when compared to the same period last year. This reduction in trade, coupled with the aforementioned restrictions placed on foreign suppliers in early August – countries which accounted for nearly 60 percent of imports during 2013 and the first third of 2014 - has led FAS/Moscow to reduce its 2014 import estimate by nearly 30 percent (to 385,000 MT). 

FAS/Moscow forecasts Russia’s broiler exports in 2015 to be 40 percent lower than revised 2014 levels (15,000 MT) as more Russian broilers are expected to be consumed domestically, both in 2014 and in 2015, given the ban on U.S. and EU imports. In addition, unlike in 2013, Kazakhstan released its 2014 poultry quota in a more timely manner than it did in 2013, allowing foreign suppliers to better compete with CIS suppliers, like Russia, for a greater portion of the year. 

Broiler Production

FAS/Moscow forecasts Russian broiler production to reach 3.4 MMT in 2015 (six percent more than FAS/Moscow’s revised 2014 estimate) because of favorable feed prices as a result of a strong grain crop forecast. In addition, the Russian Ministry of Agriculture (the Ministry) has stated that it has proposed to extend poultry (and pork) production support programs until 2018. The Minister noted that, with additional support, these industries can further increase production and replace imports. 

As previously noted, the Ministry approved a RUR 55.2 billion (nearly $1.5 billion) 2013-2015 Poultry Program in March 2013. The program aimed to improve the domestic food security situation by implementing a package of priority measures to ensure the sustainable and competitive development of the Russian poultry industry. According to the Ministry, domestically produced meat and meat products (not just poultry) accounted for 77.4 percent of the overall sales volume in the Russian market in 2013. Although this is still nine percent less than the target level outlined in the Food Security Doctrine of the Russian Federation, the Ministry reported that several regions fulfilled their collective livestock and poultry production commitments to the Ministry of Agriculture in 2013 – e.g., Belgorod Region exceeded its undertaken commitments by 11.7 percent (by 156.9 thousand tons), Kursk Region – 41.5 percent (85.2 thousand tons), Penza Region – 26.4 percent (46.5 thousand tons), Lipetsk Region – 17.5 percent (38.7 thousand tons), Sverdlov Region – 12.4 percent (27.7 thousand tons), Stavropol Krai – 12.4 percent (42.1 thousand tons), Republic of Tatarstan – 8.5 percent (37.2 thousand tons) and Mordovia - by 21.8 percent (30.8 thousand tons). 

Moreover, several of the largest Russian broiler producers have publicly announced their intentions to expand production. For example, the Cherkizovo Group, Russia’s largest meat producer, will reportedly expand poultry production in Voronezh Oblast (with plans to increase production by 15,000 tons in 2015, and another 10,000 tons in 2016). In addition, GAP Resurs is investing nearly 7 billion rubles (nearly $185 million) to increase its production capacity, Prodo-Trade is reportedly investing to increase production capacity at its facilities in Siberia and the Urals, and Belaya Ptitsa is investing 9 billion rubles (nearly $230 million) to restore production at facilities that previously belonged to Optifood before it went bankrupt.

Based on the increase in domestic poultry production reported in mid-year 2014 by the Russian government, FAS/Moscow has increased its broiler production estimate for 2014 to 3.2 MMT (nearly three percent more than its previous forecast). While FAS/Moscow previously forecasted 2014 broiler production levels to be slightly higher than they were in 2013, an improved grain crop, which has significantly reduced feed prices, is expected to help encourage domestic production. FAS/Moscow now estimates slightly more than six percent year-on-year growth in domestic broiler production.

Final 2013 Data on Russian Broiler Production 

According to Rosstat, the largest regional increases in poultry production in 2013 occurred in Kursk Oblast (43.5 thousand tons (109 percent increase), Chelyabinsk Oblast – by 43 thousand tons (18 percent), Belgorod Region – 31.2 thousand tons (4 percent), Republic of Mordovia – 30.8 thousand tons (48 percent), Republic of Mari El – 29.1 thousand tons (45 percent), Leningrad Oblast – 28.4 thousand tons (11 percent), Krasnodar Krai – 28 thousand tons (11 percent), and Stavropol Krai – 26.8 thousand tons (14 percent). 

Rosstat reports that 90.4 percent of 2013 poultry production occurred at large-scale agricultural establishments, a slight increase over 2012 (when it was 89.9 percent). Backyard production fell slightly in 2013 (i.e., less than one percent), while production on private farms increased nearly nine percent (but only accounted for 0.9 percent of total Russian poultry production). The Russian Ministry of Agriculture stated in its June 2014 “National Report on the Progress and Results of the Implementation in 2013 of the State Program for the Development of Agriculture and Regulation of Markets of Agricultural Products, Raw Materials, and Foodstuffs for 2013-2020” that the State supported the development of 10 new production facilities and the renovation or upgrade of 21 production facilities in 2013, which collectively led to an annual increase of 154.2 thousand tons (on a live-weight basis) of poultry. 

Consumption 

Despite price increases, FAS/Moscow forecasts Russian broiler meat consumption to continue to grow (increasing by nearly four percent over revised 2014 levels) due to rising wages (albeit at a slower pace) and competitive prices for broiler meat when compared to red meats. Although FAS/Moscow previously forecasted that consumption growth in 2014 would be higher, imports during the first third of the year were nearly 20 percent lower than they were during the same period in 2013, and the Russian government subsequently imposed trade restrictions on several suppliers in early August 2014. 

Although broiler prices had been relatively flat during the early part of 2014, regional political events appear to have had an effect on prices. Retail prices rose for both domestically produced broilers (8 percent) and quarters (up nearly 4 percent) from April through July. In August, after instituting a ban on many agricultural imports from certain countries, Russian press (i.e., ITAR-TASS) reported nearly 43 percent of the 200 complaints received by the government over food price hikes shortly after the ban was instituted were related to the price of chicken meat in Russia.

Despite the increase in retail broiler prices, broiler meat still remains competitively priced when compared to other protein sources and is expected to continue to account for a larger percentage of domestic meat consumption than beef or pork. For comparison, as of July 2014, the average retail price for beef was nearly 130 percent higher than the average retail price for broilers and leg quarters, and the average retail price for pork was approximately 110 percent higher. However, with the estimated decline in 2014 broiler imports, FAS/Moscow has slightly decreased its consumption estimate for 2014 (i.e., by less than one percent). 

Trade 

As a result of an anticipated increase in domestic production, as well as restrictions placed on certain foreign suppliers, FAS/Moscow is forecasting an almost 12 percent decrease in Russian broiler imports in 2015, over a significantly decreased revised forecast for 2014. If the Russian ruble further weakens, however, it could yield reduced market opportunities for foreign product. 

In August 2014, the Russian Government instituted a one-year ban on the supply of poultry (HS code 0207), among other products, from the United States (which shipped roughly 260,000 tons of broiler meat in 2013 and 50,000 tons from January to April 2014) and the European Union (which shipped nearly 65,000 tons of broiler meat in 2013 and 20,000 tons from January to April 2014) in retaliation to sanctions placed on Russia. Note: Canada, Australia and Norway were also included in the restrictions, but did not export broiler meat to Russia in 2013 or during the first third of 2014. The restrictions eliminated roughly 60 percent of the volume of broiler imports in 2013 and during the first four months of 2014.

Although Russia has announced that it is seeking increased broiler exports from some foreign suppliers during the ban (e.g., Brazil), total Russian broiler imports from January-April 2014 were nearly 20 percent lower than they were during the first third of 2013 (and this was before the ban on U.S. and EU product was introduced). Brazil accounted for nearly nine percent of Russian broiler imports in 2013 and during the first-third of 2014. Moreover, Brazil’s exports to Russia were down nearly 23 and 20 percent from their respective levels in 2012 and during the same period in 2013. On the other hand, Belarus’ share of Russian imports has grown in recent years, despite a decline in total import volumes.

Although, Brazil and Belarus jointly accounted for nearly 30 percent of total Russian broiler imports in 2013, it is unlikely these countries can increase exports to fully backfill absent supplies from the United States and EU. FAS/Moscow is therefore decreasing its 2014 broiler import estimate by nearly thirty percent (to 385,000 MT). 

The largest broiler exporters to Russia between January and April 2014 were from the United States (52,332 MT), Belarus (38,055 MT), the EU (20,571 MT), and Brazil (11,686 MT). During this period, 76 percent of Russia’s imported broiler meat was frozen chicken cuts and offal, 23 percent was fresh/chilled cuts and offal (almost entirely from Belarus), and only one percent was prepared or preserved chicken meat or offal. 

FAS/Moscow forecasts Russia’s broiler exports in 2015 to fall to 15,000 MT. While the Russia, Kazakhstan, Belarus Customs Union (CU) continues to promote intra-CU, duty-free agricultural trade, and the Russian poultry industry had been working to take advantage of the preferential trade conditions within the CU to reach new end-users and processors for their products, FAS/Moscow believes more broiler meat produced in Russia will be consumed in-country given the restrictions on some supplies from abroad (namely the United States and EU). 

Despite previously forecasting an increase in broiler exports to the other CU Member States (namely Kazakhstan) in 2014, Russia’s major broiler export market, FAS/Moscow has reduced its 2014 Russian broiler estimate (by nearly 40 percent to 25,000 MT) for a variety of factors. First, given the ban on U.S. and EU broilers, it is likely that more Russian broilers will remain in Russia, both in 2014 and in 2015. In addition, unlike in 2013, Kazakhstan released its 2014 poultry quota in a more timely manner, allowing foreign suppliers to better compete with CIS suppliers, like Russia, for a greater portion of the year. 

Russian broiler exports to other countries during the first four months of 2014, the vast majority of which were comprised of sub-products (e.g., chicken paws) to Asian and African markets, increased by almost 60 percent (to 24,819 MT)