This report highlights opportunities for U.S. exports in Russia, and also explains the key market access changes for each key product group.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE
BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S.
GAIN Report Number: RS1215
Market Opportunities for Key U.S. Products in Russia
All FAS/Russia Staff
Russia is a huge and growing market for imported agricultural products including U.S. products. In
the past few years there has been a diversification of U.S. exports, which previously had largely
consisted of meat and poultry. In fact, in fiscal year 2011 U.S. exports of live animals, hatching
eggs, tree nuts, fresh fruits, seafood, and other consumer food products soared to new records.
While consumer trends have already resulted in greater demand for higher-value products, Russia?s
accession to the WTO in 2012 will also lead to increased market access and help boost agricultural
trade. This report highlights opportunities for U.S. exports in Russia, and also explains the key
market access changes for each key product group that will occur with WTO accession.
Market Opportunities for Key U.S. Products for Russia and Market Access Changes with
Russia is a huge and growing market for imported agricultural products including U.S. products.
In the past few years there has been a diversification of U.S. exports, which previously had
largely consisted of meat and poultry. In fact, in fiscal year 2011 U.S. exports of live animals,
hatching eggs, tree nuts, fresh fruits, seafood, and other consumer food products soared to new
records. While consumer trends have already resulted in greater demand for higher-value
products, Russia?s accession to the WTO in 2012 will also lead to increased market access and
help boost agricultural trade.
This report highlights market trends, as well as opportunities for U.S. exports and also explains
the key market access changes for each key product group that will occur with WTO accession.
For more information on export opportunities, requirements, and WTO Accession commitments,
please contact FAS/Moscow at AgMoscow@fas.usda.gov and consult the following reports:
? FAS/Moscow: FAIRS Country Report
? FAS/Moscow: FAIRS Export Certificate Report
? FAS/Moscow: Exporter Guide
? USTR Fact Sheet: ?How Russia?s Accession to the World Trade Organization Improves
Sanitary and Phytosanitary Measures and How They are Applied in the Russian
? USTR Fact Sheet: ?How Russia?s Accession to the World Trade Organization Improves
Market Access for Exports of U.S. Goods and Services?
? USTR: ?Terms and Conditions of Russia?s Accession?
As part of its WTO accession agreement, Russia has committed to reduce and bind import tariffs
to all agricultural goods, thereby providing more predictability on its duties once Russia joins
WTO. The average tariff for agricultural products will be reduced from current 13.2 percent to
10.8 percent. While a significant majority of tariff lines are subject to ad valorem (percentage)
duty, some are subject to specific duty (X euro (?) per kilogram) or mixed duty (X percent but
not less than (bnlt) Y ? per kilogram). The ?per kilogram? component receives cuts comparable
to the changes in the percentage tariffs in most cases.
(Note: Throughout this report, all data on U.S. exports to Russia is from the U.S. Census
Bureau, while data on total Russian imports from the world or other individual suppliers is from
Russia?s Federal Customs Service.)
Table of Contents
Meat and Poultry 7-10
Live Animals and Animal Genetics 11-14
Animal Feeds and Pet Food 15-17
Fresh and Dried Fruits 18-24
Tree Nuts 25-26
Prepared/Packaged Food Products and Ingredients 27-30
Non-Alcoholic Beverages 31-32
Wine and Other Alcoholic Beverages 33-35
Fish and Seafood 36-38
Forestry Products 39-40
Market Opportunity Graphs 41-48
Opportunities for U.S. Exports of Dairy Products:
Russia is the world?s largest import market for dairy products at $3.5 billion. While the United
States has been generally shut out of the Russian market since September 2010, a critical market
access barrier for U.S. dairy exports is removed upon WTO accession as lists of approved
suppliers will no longer be required. Russia imports dairy products for both processing and retail
and is expected to become a very good market for U.S. dairy. However, U.S. industry partners
will need to be active to reintroduce themselves to the market. In 2010, the GOR set a self-
sufficiency target for dairy products at 90 percent; however, modernizing Russian dairy
production is a long-term and challenging endeavor. The 2011 GOR Ag Forecast expects 2014
dairy imports to grow nearly 18 percent over 2010 ? the most of all the major commodities ? and
consumption to grow nearly 2 percent (245kg to 249-250kg per capita).
U.S. exporters face stiff price competition in the Russian market, including from Belarus and
Ukraine, neither of which are subject to Russian customs duties. All U.S. market shares have
been hit negatively as a result of being absent from the Russian market since September 2010,
and relative to world trade patterns, the United States has the most room for improvement in
non-fat dried milk and whey. Also, the large size of the Russia cheese market will present many
opportunities even at low market share levels.
Cheese: Russia is currently the world?s largest import market for cheese at $2 billion . The top
suppliers are the European Union (45 percent), Belarus (30 percent), and Ukraine (20 percent).
According to market research, in 2010, hard cheeses represented 65 percent of the Russian
consumer market, followed by cheese spreads (24 percent) and soft and cottage cheeses (11
percent). The best U.S. cheese prospects are seen for mozzarella. Russians are not large
consumers of cheddar. The Russian consumer market for mozzarella is young but understood to
be growing. Earlier market research indicates, in 2008 and 2009, mozzarella consumption
totaled 3,000 metric tons, of which 28-30 percent of the total figure was sold in-brine. Fifty
percent of the total at that time was imported, and France and Italy were primary suppliers.
According to limited trade data for fresh mozzarella, in FY 2011, Argentina exported 4,140
metric tons to Russia at $3,970/metric ton and Switzerland exported 3,562 metric tons at
Butter: Russia is currently the world?s largest import market for butter at $600 million. The top
suppliers are the European Union (40 percent), Belarus (40 percent), and New Zealand (15
percent). There have been months in recent years when U.S. butter prices were quite attractive
to Russian buyers, and imports of U.S. butter spiked for short periods.
Milk Powder: Russia is currently the world?s 7th import largest market for non-fat dry milk
(NFDM) at $275 million and the 11th largest for whole milk powder (WMP) at $150 million.
Note: Throughout this report, all data on U.S. exports to Russia is from the U.S. Census
Bureau, while data on total Russian imports from the world or other individual suppliers is from
Russia?s Federal Customs Service.
The top suppliers of milk powder are Belarus (70 percent), the European Union (25 percent), and
Ukraine (3 percent). There have been periods in recent years when Russian buyers have found
U.S. NFDM prices to be attractive, leading to a spike in purchases. All of the major dairy
processors have used U.S. milk powder, and they like to have a wide choice of suppliers.
Whey, Modified Whey, Casein, and Albumin: Russia is currently the world?s largest 13th
largest import market for whey and other dairy proteins $100 million. The European Union (50
percent) and Belarus (45 percent) are the top suppliers.
Ice Cream: Russia is currently the world?s 6th largest import market for ice cream at $35
million. The European Union (60 percent), Switzerland (20 percent), and Belarus (10 percent)
are Russia?s top suppliers.
Milk, Cream, and Other Dairy Products: Russia is currently the world?s largest import
market for fluid milk and cream at $150 million. The top suppliers of fluid milk and cream are
Belarus (75 percent) and the European Union (25 percent). Russia is also the world?s largest
import market for cultured dairy products at $75 million with the European Union (60 percent)
and Belarus (35 percent) as its top suppliers.
(For additional market share analysis please see market opportunity graph for dairy on page 42)
Dairy Product Market Access Changes due to WTO Accession
Summary: Upon WTO Accession, Russia will no longer require lists of approved dairy
suppliers, removing a critical market access barrier for U.S. dairy exports. All dairy products
will see tariffs fall or eventually be locked in at no less than current applied rates. A new tariff-
rate quota will also be established to provide better access for modified whey.
Immediate Market Access Gains due to WTO Accession
Dried Milk and Cream: Russia?s WTO Accession will bind most milk powder tariff lines at 15
percent in either 2015 or 2016 (including non-fat dried milk in 2015), providing improved access
over the current rate of 25 percent. Infant formula will be bound at the current rate of 5 percent
Whey and Modified Whey: The current applied tariff rate for all whey products of 15 percent
bnlt ?0.35 per kg will be immediately bound at 15 percent upon accession. Also, for select high-
protein lines, Russia will immediately allow 15,000 metric tons of select high-protein lines to
enter at 10 percent. By 2015, the final bound rate will be reduced to 10 percent on select low-
Ice Cream: Upon accession, Russia will bind its tariff rate at the current applied level of 15
percent and reduce it to 10 percent by 2016.
Casein and Albumins: Upon accession, Russia will bind its tariff rate at the current applied
level of 5 percent.
Other Dairy Products: All tariffs for buttermilk, curdled milk and cream, yogurt, kefir, and
other fermented or acidified milk or cream lines will be immediately bound at the current rate of
15 percent bnlt ?0.18 per kg.
Medium-term Market Access Gains due to WTO Accession
Butter, Fats, and Oils, and Spreads: By 2014-2015, Russia will reduce its current applied
tariff rates of 15 percent bnlt ?0.35 per kg to a range of 15 percent bnlt ?0.12-0.35 per kg. For
commercially important lines, the final bound rate will be 15 percent bnlt ?0.22 per kg in 2015.
? Fresh Cheese: By 2015, current applied tariff rates of 15 percent bnlt ?0.30 per kg will
be reduced to 15 percent bnlt ?0.19 per kg for cheese not exceeding 40 percent fat and
locked in at the current applied tariff rate for other types.
? Grated or Powdered Cheese: By 2015, current applied tariff rates of 15 percent bnlt
?0.30 per kg will be locked in upon accession.
? Other Cheese (including Cheddar and Mozzarella): By 2015-2017, Russia will
reduce its current applied tariff rates of 15 percent bnlt ?0.60 per kg to a range of 12-15
percent bnlt ?0.20-0.30 per kg.
MEAT AND POULTRY
Opportunities for U.S. Exports of Meat and Poultry:
Russia is the world?s 3rd largest import market for meat and poultry products at $8 billion,
including trade with Belarus. The market is highly regulated, with restrictive tariff and non-
tariff barriers. Russia has and is expected to continue using multiple tactics to restrict trade in
this area as it promotes development of local production. The GOR has set a self-sufficiency
target for meat and poultry products of 85 percent. Russia has only just met this mark for poultry
but so far fallen short in the red meat sector, which has been plagued with large challenges.
While Russia?s industrial pork sector continues to expand, it is held back by private households,
where animal disease issues now threaten the entirety of Russian agriculture. As a result of
Russia?s beef production being a derivative of dairy production, beef production is in a
downward spiral from which there is no near-term solution except for increasing imports and
shifting consumer demand for substitute proteins. In both poultry and pork, high levels of
protection enforced over the past three years have propped up inefficient operations and
maintained high retail prices. As a result, the Russian market remains very lucrative for all three
animal proteins but especially volatile for pork and poultry.
Beef: Russia is the world?s largest importer of beef on a quantity basis. On a value basis, Russia
imports nearly $4 billion of beef and offal products. Recently, the top suppliers have been Brazil
(30 percent) and Belarus (20 percent), followed by the European Union, Australia, Uruguay,
Paraguay, and the United States.
The export climate for U.S. beef is extremely positive in the near and long-term and should set a
new export record to Russia in 2012. As Russian domestic supply continues to shrink, strong
price support is expected for many years to come. Also, immediately following WTO
Accession, the United States will be able to export high-quality beef at the in-quota tariff rate (15
percent) to supplement its country-specific tariff-rate quota (TRQ) for beef of 60,000 metric
tons. U.S. beef livers compete very well in Russia; however, lower U.S. market share in other
offal, especially tongues, pulls down overall performance for the beef offal category as a whole.
The market size for both prepared/preserved beef as well as cured/salted/in brine/dried/smoked
beef is particularly small but offers additional opportunities to export without the need for TRQ.
U.S. opportunities are further limited due to the current agreed veterinary certificate.
Pork: Despite reduced imports in recent years, Russia remains the world?s 5th largest importer
of pork and offal products at $2.5 billion. The top suppliers are the European Union (50 percent)
and Brazil (30 percent), followed by Canada (10 percent) and the United States (10 percent).
The export climate for U.S. pork is mixed. While the United States will be able to compete for
the entire quota for frozen pork (430,000 metric tons) in 2012, the United States has not
demonstrated its ability to compete in Russian Free Trade Zones (Kaliningrad and Magadan).
Reoccurring SPS barriers to protect the domestic market promise to wreck havoc on the market
and deter market principles from working properly. Also, the United States is not in a position to
export chilled pork due to the absence of an agreed veterinary certificate.
Russia imports a significant amount of pork offal as well as prepared pork products, none of
which is subject to the TRQ. However, U.S. companies have not exhibited an ability to capture
significant market share in this segment.
Poultry: Reduced TRQ access has resulted in Russia falling to the 4 largest importer of
poultry and offal products at $900 million. While the United States has reclaimed its place as the
top supplier (50 percent), Brazil (25 percent) and the European Union (25 percent) remain
While the European Union was again afforded the protection of a country-specific allocation in
2012 and beyond for its primary export interest ? boneless chicken ? the United States and Brazil
will continue to battle over price and SPS barriers as they arise when supplying frozen bone-in
chicken parts. Provided stable economic and SPS conditions, trade has a chance to grow in both
value and volume terms for the first time since 2008 after TRQs are increased for select products
following WTO Accession. As the Russian market continues to evolve and the number of wet
markets for chicken-leg quarters is reduced, the United States will need to revisit its ability to
compete in non-traditional venues (e.g., free trade zones in Kaliningrad and Magadan oblasts)
and non-traditional product categories (e.g., prepared poultry products) in order to maintain and
increase market share.
(For additional market share analysis please see market opportunity graph for meat and poultry
on page 42)
Meat and Poultry Market Access Changes due to WTO Accession
Summary: WTO Accession brings U.S. beef, pork, and poultry larger access to TRQ quantities
and/or reduced tariff rates that are currently applied. Russia will also immediately undertake
several SPS commitments to secure existing and new market access. Russia will be committed
to basing its SPS measures on science and risk assessments as it harmonizes to international
norms. Russia also now has a mechanism for recognizing the equivalence of food safety systems
of WTO Members and rules on inspection of establishments in third-countries, such as the
Immediate Market Access Gains due to WTO Accession
Beef, Chilled/Frozen: Upon WTO accession, Russia will lock-in the current applied TRQ
quantities of frozen beef available to the United States (60,000 metric tons) and increase access
for chilled beef from 1,000 metric tons to 11,000 metric tons, available for non-EU countries.
The in-quota rate will be bound at the current level of 15 percent, and the out-of-quota binding
will increase from the current applied level of 50 percent to 55 percent. If Russia chooses to
move to a tariff-only regime, the tariff rate will fall to 27.5 percent. Russia will respect the U.S.
definition of high-quality beef, all of which will be permitted to enter at 15 percent and are
outside of TRQ quantities. Currently, only beef valued at no less than ?8 per kg has such quota
exempt access. This access will not be impacted by a change to a tariff-only regime.
Pork, Chilled/Frozen: Russia?s WTO Accession will lock-in the current applied TRQ
quantities for pork available to the United States ? 400,000 metric tons available to all countries
and an additional 30,000 metric tons reserved for pork trimmings and also available to all
countries. Immediately upon accession, Russia will reform its tariff rates ? lowering the in-quota
rate from the current 15 percent to a bound 0 percent and lowering the out-of-quota rate from the
current 75 percent bnlt ?1.50 per kg to just 65 percent. By 2020, Russia will eliminate its TRQ
regime altogether and the rate will be bound to a flat 25 percent tariff for all pork.
Other Meat, Chilled/Frozen: Immediately, Russia will lower its tariff on all horse meat, all
sheep meat, and goat carcasses from the current applied rate of 25 percent bnlt ?0.35 per kg to 15
percent bnlt ?0.15 per kg. Russia will bind all other goat meat at this rate by 2014.
Edible Meat Offal, Chilled/Frozen: Tariffs on offal for pharmaceutical uses will be bound at
current rates of 0 percent and 5 percent depending on the product. The current tariff rates for all
other products are 25 percent bnlt ?0.35 per kg and will be bound upon accession, as follows:
? Beef Offal:
o Chilled beef offal tariffs will be bound at 20 percent bnlt ?0.20 per kg and will be
lowered to 15 percent bnlt ?0.15 per kg by 2015.
o Frozen tongues rates will be bound at 20 percent bnlt ?0.80 per kg and then will
be dropped to 15 percent bnlt ?0.60 per kg by 2014.
o All other frozen offal rates, including for livers and skirt, will be bound at 15
percent bnlt ?0.15 per kg and will be lowered to 12.5 percent bnlt ?0.13 per kg by
? Pork Offal: The tariff rates will be immediately bound at 15 percent bnlt ?0.15 per kg
and select offal the rates will be lowered to 12.5 percent bnlt ?0.13 per kg by 2014.
? Other Offal: The tariff rates for other offal will be immediately bound at 15 percent bnlt
?0.15 per kg.
Poultry, Chilled/Frozen: Russia?s WTO Accession will lock-in the current applied TRQ
quantities for frozen bone-in chicken cuts (250,000 metric tons global) and increase access for
both frozen boneless chicken (from 14,000 to 20,000 metric tons for non-EU) and turkey (from
10,000 to 14,000 metric tons global). WTO accession will also allow additional turkey products
access to the TRQ quantity. The current in-quota rate for these products will be simplified from
25 percent bnlt ?0.20 per kg to just 25 percent and the out-of-quota rate will be simplified from
80 percent bnlt ?0.70 per kg to just 80 percent for the above mentioned TRQs. All other tariffs
for poultry will be simplified from 80 percent bnlt ?0.70 per kg to 80 percent. At any time, if
Russia chooses to transition to a tariff only regime, the in-quota and out-of-quota rates will be
replaced with a flat 37.5 percent tariff.
Swine and Poultry Fat: Current applied tariffs of 15 percent bnlt ?0.15 per kg will be locked in
either upon accession or at latest, by 2014.
Meat and Edible Offal, Salted/In-Brine/Dried/Smoked: Current applied tariffs (ranging from
15 percent to 15 percent bnlt ?0.40 per kg) for most products will be locked in by either 2014 or
Prepared or Preserved Meat:
? Sausages: Current applied rates of 25 percent bnlt ?0.40 per kg will be reduced
immediately to 20 percent bnlt ?0.40 per kg and then to a specific tariff of ?0.25 per kg
? Extracts and Juices: Current applied rates of 15 percent will be locked in at accession
and reduced to 14 percent by 2013.
? Other: Applied rates of 25 percent bnlt ?0.40 per kg for other prepared and preserved
meat products will be bound at 20 percent bnlt ?0.50 per kg by 2015. [Note: Historical
unit value for these products are all above ?2.00 per kg on average]
LIVE ANIMALS AND GENETICS
Opportunities for U.S. Exports of Live Animals and Genetics:
Russia?s live animal sector is one of the hottest markets around the world. Trade has been and
will continue to be supported by increasing state domestic support programs. Active promotion
in Russia to increase awareness and commercial adaptation in transportation are lessening the
two key constraints to increase U.S. exports, but more attention educating Russians on the
quality of U.S. genetics is needed in order to overcome high price sensitivity of the Russian
In general, market access conditions are very good for U.S. live animals and genetics, featuring
low tariffs and a good U.S.-Russian relationship on related veterinary issues. The Russian
veterinary service and U.S. authorities have routinely found common ground to facilitate trade
when problems have arisen.
The United States has a strong foothold in the horse market and is relatively well-established in
the bovine semen market. However, U.S. livestock exporters have not captured their full
potential in Russia?s infant beef industry and modernizing dairy, pork, and poultry industries.
Unfortunately, EU transit barriers remain a significant handicap, especially for U.S. live breeding
swine exports to Russia. Increased transparency for exports of U.S. hatching eggs at the
beginning of 2011 has strongly assisted total export growth to-date and future promise of
increasing market share.
Cattle: Russia is the world?s 3 largest import market for purebred cattle at roughly $200
million annually, and recent development projects, especially for beef, are likely to cause imports
to double in the current fiscal year. The United States holds a 15 percent market share and
competes with Australia, the European Union, and Canada. Opportunities exist for both dairy
and beef cattle. Russia remains in a long decline of the total cattle inventory as it modernizes its
dairy sector (50 percent of Russian milk is still produced in backyard farms). Also, as the dairy
inventory continues to contract, there is continually less inventory available each year for beef
production. This impact is considerable, as beef breeds still only represent 2-3 percent of
domestic beef production.
Bovine Semen: Russia remains a great market for bovine semen, and U.S. product is readily
available, especially in the dairy industry. The market size is $3 million and growing 10-20
percent annually. Relative to Russia?s herd size, there is room for considerable expansion in
sales. Sexed semen has become highly sought after to accelerate herd development. The United
States and Canada have split market share at 40 percent, followed by the European Union at 20
Bovine Embryos: Strong potential exists for new trade in both beef and dairy embryos. While
statistics are unavailable, the total imports are likely under $500,000 per year. However, embryo
market potential is supported by the difficulty and cost associated with import demand for live
cattle. If accompanied by further training and educational activities for Russian specialists, sales
of U.S. embryos can increase.
Swine: Russia is the world?s largest import market for purebred swine, more than doubling in
FY 2011 to $35 million. Further growth is likely as commercial production continues to increase
and replace the shrinking 40 percent of the domestic production currently located in backyards,
production which is being phased out for economic and disease reasons, specifically African
Swine Fever. Import market share is controlled by the European Union (75 percent) and Canada
(25 percent), as the United States is not permitted to transit via Europe. Nonetheless, in 2011,
U.S. exporters found ways to bypass Europe, culminating in the first U.S. exports in recent
history. Russia operates a number of certified pedigree genetic centers for Large White (nearly
70 percent of breeding sows in Russia are Large White), Landrace, Yorkshire, and Duroc.
Poultry and Hatching Eggs: Russia is the world?s largest importer of hatching eggs (primarily
for broiler production) at $130 million in FY 2011 and has maintained growth by 40 percent in
each of the past two fiscal years. During that time, the United States and the European Union
have more or less maintained static market shares of 15% and 80%, respectively. Russia is also
the world?s 2 largest importer of live chicks, totaling an additional $60 million, and serviced
almost exclusively by hatcheries located in the European Union. Continued planned expansion
of the Russian poultry industry and an absence of quality local genetics will increase trading
opportunities in the coming years.
Russian imports of turkey eggs total $5 million annually, and Canada and the European Union
have historically fully serviced the still small but rapidly growing Russian turkey industry.
Future prospects for sales are clouded by the decision of Russia?s largest producer to begin
producing eggs locally. However, the Russian Turkey Association has reached out to
FAS/Moscow seeking cooperation and noted the absence of U.S. turkey eggs available to
Mil Eggs Mil Eggs
Sheep and Goats: Historically, Russia has been an insignificant market for sheep and goats.
However, in partial response to Russia?s ongoing battle with African Swine Fever, the Ministry
of Agriculture is attempting to get small scale pig producers to switch to alternative forms of
In September 2011, the Russian Ministry of Agriculture issued Order No. 294 ?Development of
Sheep and Goat Breeding in the Russian Federation for 2012-2014 and until 2020.? The plan set
targets for sheep and goat inventories to grow from 21.8 and 2.2 million head in 2011 to 25.4 and
2.6 million, respectively, in 2020. The program includes federal and regional budget outlays of
RUR1.2 billion to support the industry, including subsidies for the purchase of livestock.
Horses: Russia horse imports total roughly $3 million annually. The United States currently
holds roughly a 45-percent market share.
(For additional market share analysis please see market opportunity graph for live animals and
genetics on page 41)
Live Animals and Genetics Market Access Changes due to WTO Accession
Summary: Live animal and genetic products already enjoy open market access, especially for
purebred breeding animals for which the current tariff is already zero. However, with accession
all of these current low tariffs will be bound for the future.
Immediate Market Access Gains due to WTO Accession
Cattle: Following WTO accession, purebred breeding cattle will maintain its duty-free access.
Other cattle will be subject to a 5 percent tariff, the same as the pre-accession applied rate.
Swine: The tariff on purebred breeding swine will immediately be bound at the pre-accession
applied rate of 0 percent. The tariff on other swine will fall from the current applied rate of 40
percent bnlt ?0.5 per kg to only 5 percent.
Poultry: Following WTO accession, the tariff on live poultry will be immediately bound at
currently applied 5 percent. Upon WTO Accession, the Russian-approved supplier lists will be
eliminated and full access will extend to all participants of the National Poultry Improvement
Sheep and Goats: Purebred breeding sheep and goats will maintain its duty-free access while
the tariff for other live sheep and goats will be bound at the pre-accession bound rate of 5
Horses: The tariff on purebred breeding horses will be bound at the current applied rate of 0
percent while live horses for any other purpose will be bound at 5 percent.
Semen: Immediately following accession the tariff on semen of all species will be bound at the
pre-accession applied rate of 5 percent.
Medium-term Market Access Gains due to WTO Accession
Embryos: Following WTO accession, the tariff on bovine embryos will be initially bound at 10
percent and lowered to the currently applied 5 percent by 2015. Embryos of all other species
will be immediately bound at the pre-accession applied rate of 5 percent.
Hatching Eggs: Upon accession the tariff on turkey and goose eggs will be initially bound at 20
percent and for all other species at 25 percent. By 2015 all tariffs will be lowered to 15 percent.
ANIMAL FEED AND PET FOOD
Opportunities for U.S. Exports of Animal Feed and Pet Food
Animal Feed: The Government of Russia has as a key priority the development of the poultry
and livestock sector in Russia, and as a result there is dramatic growth in this sector. This has
boosted demand for animal feed and feed ingredients. In 2011, Russia imported $560 million of
feeds and fodder- a 17 percent increase in value from 2010. The top suppliers of feeds and fodder
to Russia are the Netherlands, Germany, France and Belgium. 90 percent of the total imports of
feeds and fodders consist of prepared animal feeds, followed by starch residues. The United
States accounts for just 3 percent of Russia?s imports of feeds and fodders and in 2011 totaled
just $17 million. U.S. suppliers have potential to increase sales of feeds to Russia as a result of
continued demand for feeds in agricultural sector. Demand for other feeds, such as bran sharps
and other residue derived from milling wheat and forage products will continue to be strong, as a
result of insufficient domestic production, particularly of oilseeds, corn and soybean meal, and
major sources of proteins.
In addition, U.S. suppliers have potential to export amino acids and lysine to Russia since
domestic production is very low. Potential shipments may include lysine, methionine, and
tryptophane. According to the Russian Feed Union, there is only one facility in Russia that
produces lysine, however, 70 percent of its shares belong to the Chinese. As a result, high
quality natural lysine is being exported to China while demand in Russia continues to be very
high. According to the head of the Feed Union, Russia imports almost 100 percent of lower
quality synthetic lysine.
Pet Food: Russia has the world?s second largest pet population after the United States with an
estimated 60 million pets. According to official statistics, the average annual value of pet food
sales is $1.2 billion, although independent market research agencies estimate annual sales over
$1.5 billion. The share of cat and dog food in overall imports of pet food in Russia is estimated at
74 percent, or $140 million.
According to recent research, there are about 30 million cats and 21 million dogs in Russia. In
Moscow alone, there are 5 million dogs and 2.5 million cats. Over 54 percent of Russian
families own at least one pet, of which 75 percent own a cat and 35 percent a dog. The number
of families that own both a cat and a dog has recently increased.
Pet food is still a relatively young industry in Russia with only a 20 year history. In the Soviet
Union, commercially prepared pet products were not available, and nearly all consumers used
table scraps and leftovers to feed their pets. Therefore, a strong tradition of using home-made
food was formed which still exists today, especially in rural areas. Russia?s pet food market is
still developing and is very concentrated around big cities such as Moscow, St. Petersburg and
Yekaterinburg. Experts forecast continued growth and demand in the local pet food market as
household incomes increase and old stereotypes are dismantled. According to the International
Pet Food Institute (PFI), expansive advertising conducted by multinational companies has led to
significant changes in the perception of pet food as a product category. However, lack of
information in the regions on the benefits of commercially prepared pet food remains the biggest
constraint for the development of the pet food market.
The market for commercial pet food has strong growth potential. The growth is related to a
greater demand for specific types of pet food. Currently products include both wet and dry food,
economic and premium products, and products that meet very specific needs related to the age
(for young, adult and older animals), lifestyle (high-energy or light diets), and health condition
(for diets that prevent allergies or address certain diseases) of pets. Experts believe that such
market segmentation is at a relatively early stage. The number of consumers that are interested in
healthy pet snacks and treats is gradually increasing. Interest is also high in those products that
are preservative free and contain healthy ingredients, such as fruit and cereals.
Russian imports of pet food reached a climax in 2008, but then began shrinking in 2009 and
2010. This was in part a result of the economic downturn and additional registration
requirements which were implemented. However, imports of pet food rebounded in 2011 as a
result of renewed economic growth, higher household incomes, an increase in the number of
pets within Russian families and higher demand for new flavors and premium products. Pet
food imports reached a record of nearly $200 million in 2011, a 40 percent increase on value and
29 percent on volume from 2010. And although a relatively small share at only 4 percent,
imports from the U.S. nearly doubled to $8.7 million. The Netherlands is the leading supplier of
pet food to Russia with 24 percent of all imports followed by France at 20 percent. According to
trade sources, the share of dry food for cats and dogs in total imports accounts for 57 percent,
while 41 percent is accounted for by canned food and 2 percent comes from other types of food.
Last year, experts observed an increased interest in professional pet food, as well as dietary and
highly specialized products. Pet owners with higher incomes will prefer to buy higher quality
products, mostly guided by health nutrition values and sources of vitamins and minerals.
(For additional market share analysis please see market opportunity graph for
grains/oilseeds/feeds on page 48)
Animal Feed and Pet Food Market Access Changes due to WTO Accession
Summary: Pet food especially will see a sharp decline in tariffs as a result of WTO accession,
although these changes will take place in the medium-term.
Medium-term Market Access Gains due to WTO Accession
Dog or Cat Food for Retail: The pre-accession applied rate/post-accession bound rate for dog
or cat food is 20 percent (bnlt ?0.16 per kg) which by 2016 will be cut by half to 10 percent bnlt
?0.08 per kg.
Animal Feed Preparations: Upon accession, Russia will bind its tariff rate at the current
applied level of 5 percent.
Legumes for Animal Feed: Upon accession, Russia will bind its tariff rate for legumes at the
current applied level of 15 percent and reduce to zero by 2015.
Soybean Meal: The tariff on soybean meal will fall from currently applied 5 percent to 2.5
percent by 2013.
FRESH AND DRIED FRUITS
Opportunities for U.S. Exports of Fresh and Dried Fruit
Russia is the world?s 3 largest importer of fresh fruit and is the largest import market for apples
and pears. U.S. exports of fruit reached a record in FY 2011, but the United States still has less
than 1 percent market share, and extensive opportunities exist for expansion.
Russia is heavily dependent on imported fruits, and of Russia?s estimated 7.3 million metric ton
fruit market in 2010, 5.4 million (or about 75 percent) were imported fruits. Domestically grown
fruits cover only a quarter of consumption, and only 500,000 metric tons were produced by
agricultural enterprises and actually marketed, with the rest grown on household plots, typically
for personal consumption. Efficient commercial production of fruits in Russia is limited by the
climate, and the lack of affordable capital for old orchard replanting and new cultivation and
storage technologies. The only fruit Russia produces commercially is apples, but Russia is still
sorely lacking in domestic supplies. Russia is expected to remain heavily dependent on imports
of fruits and berries for the foreseeable future.
Consumption of fruits is increasing in Russia, and this is driving import growth. Consumers are
eating more fruit and diversifying the types of fruit they consume due to increasing disposable
incomes and a trend toward more healthy diets. According to the Russian Statistics Service, in
2010 real disposable income of the Russian population increased by 10 percent, while spending
for fruit increased by 19 percent. In 2010, consumption of fruit in Russia increased to 71 kg per
capita, up 10 percent compared with 2009 (based on the Russian Federation Statistic Committee
data) but still significantly lower than consumption levels in European countries, the United
States, Japan, and China. For example, according to USDA?s Economic Research Service, the
typical American consumes 270 pounds (122.5 kg) of fruit and tree nuts (fresh and processed,
fresh-weight basis) each year. As the demand for fruits rises, there will be a concomitant rise in
imports; Russia?s fruit market is far from being saturated.
Another factor supporting the growth of fruit imports is the rapid development of organized food
retail. Retail food sales grew to $250 billion in 2010, and are estimated to have surpassed $300
million in 2011. Food retailers contributed to about half of total retail market turnover last year.
That said, buying fresh produce in retail outlets is getting more popular with Russian consumers.
The retail chains have improved their assortment of fresh produce and quality as a result of better
handling. Retailers are offering fresh produce at different price points for various income levels
based on quality and packaging. Key retail outlets and hypermarkets continue to expand in big
cities and to Russian provinces.
Since 2005, fruit imports to Russian have seen steady rapid growth, except during 2009 as a
result of the financial crisis. Imports have grown from 3.8 million metric tons in 2005 to 5.8 in
2011, and value in this time period nearly tripled to percent to $5.5 billion in 2011. This was a
nearly 20 percent increase in value, and 8 percent increase in volume from 2010.
The largest overall fruit suppliers to Russia are Ecuador (bananas), Poland (apples), Turkey
(citrus, grapes, and stone fruits), China (apples, citrus, stone fruits), Argentina (apples, pears, and
citrus), and Chile (grapes). Russia is the priority export market for former Soviet republic
countries, European, Turkish and North African producers due to the close proximity to Russia
and long term relations with Russian buyers.
Apples: In 2011, Russia was the largest importer of apples in the world with import volumes
valued at $747 million. The major suppliers of apples to Russia are Poland, China, Moldova and
In FY 2011 U.S. apple exports to Russia rebounded to a near record of $16 million. American
apples are typically more expensive and compete with Italy, Belgium, Germany, and the
Netherlands in the higher-cost and quality segment. The total share of these higher-quality apples
in Russia is around 18 percent. With decreasing tariffs as a result of WTO accession, these
quality apples can be somewhat more affordable in Russia. American apples have the potential
for increased sales to Russia, especially considering that Russian consumers like large, richly
colored apples, which are characteristics that U.S. suppliers can normally provide.
Pears: Pears are one of the most popular fruits in Russia following apples, citrus, and bananas
and consumption is growing. Russia doesn?t produce this fruit commercially and is the world?s
largest importer. In 2011, pear imports rose to $450 million by value (a 5 percent increase in
volume and almost by 20 percent increase in value terms). The largest suppliers of pears to
Russia were Belgium, Argentina, and the Netherlands.
American pears have seen remarkable growth in recent years, rising from $1 million in FY 2004
to over $11 million worth in FY 2011. Despite this growth, U.S. market share remains low in
Russia at 2 percent of the pear market. American pears are known for long shelf life and
juiciness. American pears will always face strong competition from European pears, but despite
this the huge Russian market allows for ample opportunity for expansion. In order to have a
large assortment, importers have strong demand for American Anjou pears, which are not a
typical European variety. American pears continue to have good sales potential to Russia,
including to the Russian Far East where the European product is more expensive and less
Grapes: Russia remains one of the top importers of grapes in the world. Russia does not
produce grapes commercially and so relies entirely on imports of these fruits for consumption.
Grapes are one of the most popular fruits in Russia, on par with pears but below apples, bananas,
and citrus. In 2010 the per capita grape consumption in Russia reached 2.8 kg, up 8 percent
compared to 2009 data. The upward trend continued in 2011 supported by healthier diets and
recognition of fruits as one of the basic elements of a healthy diet. Russia?s grape imports have
grown steadily in the past decade. In 2011, Russian imports were worth $523 million, down
slightly from the previous year. Turkey is the largest exporter to Russia, followed by Chile and
U.S. grape sales have also grown steadily, and in FY 2011 reached a new record of $7.8 million,
up 70 percent from the previous year. California grapes sales to Russia peak in November and
December before the South American product arrives to Russia. Potential certainly exists in
Russia for expanding exports of California grapes, as well as for the other niche grapes in Russia.
Prunes and other Dried Fruit: Russian is the biggest importer of prunes in the word and
import demand has doubled during the past 5 years. Prunes are one of the most popular dried
fruits in Russia, often used in home cooking. The food manufacturing and snack packing
industries are as well big consumers of plums, and the demand is expected to grow following the
trend for healthy eating in Russia. One can even buy prune-flavored yogurt regularly in Russian
The Unites States is among three largest suppliers of prunes to Russia, along with Chile and
Argentina. In FY 2011, the value of U.S. prune exports reached a new record of $12 million, up
10 percent from the previous year. Also, in 2011 the share of U.S. product rose to 20 percent
due to the stable prices and good product quality. There are opportunities for increased U.S.
sales, as California prunes may successfully compete with South American, Moldovan and
U.S. sales of other dried fruit have also experienced rapid growth although volumes still remain
far below prunes. Exports of raisins and mixed dried fruit reached new records in FY 2011, with
the value of raisins increasing 25 percent to nearly $1.8 million, and the value of mixed dried
fruit more than tripling to nearly $1.2 million.
Citrus: Russia does not grow citrus and therefore is entirely dependent on imports of oranges,
grapefruits, mandarins, lemons, and limes. In 2011, citrus imports showed 21 percent growth in
value and 9 percent in volume and reached a new record. Consumer demand for tangerines,
oranges, grapefruit and limes is growing, driven by increasing popularity and revitalized
consumer spending. The U.S. share of Russian citrus imports is under 1 percent. Citrus from
Turkey, Morocco, Egypt, and South America dominate in Western Russian markets. However,
U.S. oranges, lemons, and mandarins are exported to the Russian Far East and have developed a
niche market there that is relatively stable. Most U.S. product is shipped from West Coast states,
primarily from California, and has potential for increased sales.
For grapefruit, Russia imports all of its supplies and imports have doubled since 2005. Turkey,
China, South Africa, and Israel supply 93 percent of grapefruits to Russia, where Turkey alone
captures up to 38 percent of the market. U.S. grapefruit exports had reached as high as $1
million in FY 2009, but have since largely disappeared. Given consumers? preference for deep
orange-colored grapefruit, American yellow grapefruit exporters would need to educate
consumers and build demand for their product based on its sweet taste and juiciness or carve out
a special niche for the yellow grapefruit.
Berries: According to the Russian Statistics Committee, in 2010 Russia produced 670,000 tons
of berries (primarily strawberries, raspberries, and currants), 98 percent of which were grown by
households for family consumption or for sale in farmers markets during the season. The
commercial production of berries in Russia is negligible and Russia imports the majority of
berries necessary to satisfy its growing demand. From 2005-2010, berry imports nearly tripled,
and have continued to experience a double digit growth through 2011. Nearly 88 percent of all
berry imports are strawberries, with raspberries at 6 percent, and other berries at 6 percent.
In 2011, the United States? share of the Russian berry market was less than one percent and as a
result there is a great deal of room for expansion. U.S. strawberries, raspberries, and blueberries,
in particular, have an opportunity to capture more of the Russian berry market given their
relative competitiveness with European and South American berries.
For fresh strawberries, in 2011 Russia imported nearly $100 million worth, a 10 percent increase
on 2011. In 2011 Russia was the world?s 6 largest fresh strawberry market on volume. The
strong positive trend for strawberries is expected to continue, driven by growing consumption
particularly during the off season (when local strawberries are not available) and retailers
stocking strawberries nearly year-round.
Currently the main strawberry suppliers to Russia are Greece and Turkey as well as other EU
suppliers and 85 percent of fresh strawberries to Russia are imported in April-July, the season for
fresh strawberries in Russia.
The year-round availability of California strawberries together with their quality and long shelf
life gives them good potential for expanding sales to Russia. This is particularly true around the
New Year holidays in Russia, when the demand for ?exotic? fruits is higher.
For fresh raspberries, in 2011 Russia imported $7.6 million worth, a 5-fold jump from just 2009
and imports from the U.S. doubled to $1.2 million. The largest suppliers are Mexico, Spain,
Netherlands, and Portugal. With consumption and imports increasing rapidly, and negligible
commercial production of raspberries in Russia, U.S. exports of fresh raspberries could continue
For cranberries, Russian ingredient suppliers have remarked that sweet dried cranberries have
high market potential. The sphere of cranberry application is very wide, with use in production
of jams, fruit drinks, juices, as well as for fillers or decoration in the manufacturing of various
confectionary products. Sweet dried cranberries are often added to ice cream and yoghurt as
well as in salads, sauces, and jellies. Due to large production of cranberries in the U.S. and the
fact that domestic production in Russia is not processed in large quantities, opportunities exist
for increased sales of U.S. cranberries.
(For additional market share analysis please see market opportunity graph for fresh and dried
fruits on page 44)
Fresh and Dried Fruits Market Access Changes due to WTO Accession
Summary: Apples, which are currently the largest U.S. fruit export to Russia, will enjoy greater
market access and reduced tariffs immediately after Russia?s WTO accession. For many of the
other fruit products, market access gains will occur in the medium-term.
Immediate Market Access Gains after WTO Accession
Apples: Apple duties will vary both by variety of apples, as well as the timing of imports.
Please see table below for the different tariff rates at accession and by 2017.
Bound rate at Final bound rate by
Description date of accession 2017
- - cider apples, in bulk, from 16 ?0.2 per kg ?0.06 per kg
September to 15 December
- - other:
- - - from 1 January to 31 March ?0.06 per kg ?0.03 per kg
- - - from 1 April to 30 June ?0.06 per kg ?0.015 per kg
- - - from 1 July to 31 July ?0.06 per kg ?0.03 per kg
- - - from 1 August to 30 November:
- - - - of variety Golden Delicious or ?0.2 per kg ?0.06 per kg
- - - - other ?0.1 per kg ?0.06 per kg
- - - from 1 December to 31 December:
- - - - of variety Golden Delicious or ?0.2 per kg ?0.03 per kg
- - - - other ?0.1 per kg ?0.03 per kg
Lemons/Limes: Lemons will see an immediate benefit as the applied rate is currently 5 percent
bnlt ?0.035 per kg and at accession this will fall to 5 percent bnlt ?0.02 per kg. It will fall
further to 5 percent bnlt ?0.015 per kg by 2013. For limes, the current applied rate is 5 percent
bnlt ?0.035 per kg and immediately at accession it will be bound at just 5 percent.
Medium-term Market Access Gains due to WTO Accession
Grapes (table grapes and raisins): By 2014, for table grapes and raisins the tariff rate will be
reduced from 10 percent to current applied rate of 5 percent.
Oranges: The current applied and WTO bound rate for oranges will be 5 percent bnlt ?0.02 per
kg, and by 2013 will fall to 5 percent bnlt ?0.017 per kg.
Other Citrus: For clementines, mandarins and tangerines, the current applied and WTO bound
rate is 5 percent bnlt ?0.03 per kilogram and by 2013 it will fall to 5 percent bnlt ?0.015 per
kilogram. For grapefruit, tariff rate is currently 5 percent bnlt ?0.02 per kilogram and by 2013
the bound rate will fall to 5 percent bnlt ?0.015 per kilogram.
Pears: By 2015, for pears the pre-accession applied rate/post accession bound rate of 10 percent
will fall to 5 percent.
Apricots: By 2014, for apricots the tariff rate will be reduced from 10 percent to the current
applied rate of 5 percent.
Cherries: By 2014, for cherries the tariff rate will be reduced from 10 percent to the current
applied rate of 5 percent.
Plums: By 2015, for plums the tariff rate will be reduced from 10 percent to the current applied
rate of 5 percent.
Berries: By 2015, for strawberries the pre-accession applied rate/post accession bound rate of
10 percent will fall to 5 percent. For raspberries/blackberries the same rate cut will occur but, by
Prunes: By 2014, for prunes the tariff rate will be reduced from 10 percent to the current
applied rate of 5 percent.
Opportunities for U.S. Exports of Tree Nuts
Russia?s commercial nut production is limited to pine nuts and therefore Russia is entirely
dependent on imports for consumption of most other tree nuts. Imports of tree nuts reached a
new record of $391 million in 2011, a 16 percent increase in both volume and value over 2010.
This growth is being driven by rising incomes throughout most of the period and heightened
consumer awareness of the health benefits of eating nuts. Despite this significant growth, the
Russian tree nut market is far from saturated and has good potential for further expansion. Per
capita tree nut consumption is only around 0.67 kg (including imported sweetened nuts and
seeds), which is significantly lower than consumption levels in European countries, the United
States, Japan, and China.
The major suppliers of tree nuts to Russia are: Ukraine (walnuts), Turkey (hazelnuts), the United
States (almonds), Iran (pistachios), Azerbaijan (hazelnuts), Indonesia (coconuts), and Vietnam
In 2011, the United States? was the largest supplier of tree nuts to Russia with a 29 percent
market share of which the U.S. had a 90 percent share of almonds and 17 percent of pistachios.
U.S. sales in FY 2011 jumped by 63 percent to a new record of $87 million.
The best prospects in American tree nuts exports to Russia are:
Almonds: Russia imported 90 percent of its almonds from the United States in 2011. In FY
2011, U.S. almond volumes continued to soar and the trend is expected to continue driven by
growing demand from confectionary, bakery, and other food processing industries (consuming
65 percent of shelled almonds) and growing consumption of nuts as a healthy snack leading to
sales of high grades of shelled and in-shell almonds.
Pistachios: Russia is one of the largest importers of pistachios in the world in 2011, with market
volume at 12,000 metric tons worth $112 million, a 40 percent increase in volume and value.
Iran is the main suppliers in pistachios, followed by the United States. The popularity of
pistachios as a snack product and rising incomes in Russia drive the demand for quality
pistachios and opportunity of American pistachios. U.S. sales in FY 2011 increased in value
terms by over 20 percent and growth in this market is expected to continue. However, American
pistachios sales are directly affected by the crop situation in Iran, the main supplier of pistachios
Pecans: In 2010, Russian imports of pecans increased by 246 percent to 111 metric tons
although demand is somewhat unstable and imports fell in 2011. This is due to high prices for
this nut compared to other nuts, as well as insufficient knowledge about nutrition and application
options for pecans in the confectionary industry. However, taking into account growing interest
in high quality natural ingredients in Russia, increased pecan exports are possible, especially
with greater informational outreach to the confectionary industry and consumers.
(For additional market share analysis see market opportunity graph for tree nuts on page 44)
Tree Nut Market Access Changes due to WTO Accession
Summary: There will be almost no change to the tariffs on tree nuts as the bound rates for nearly
all of these will remain at 5 percent.
PREPARED/PACKAGED FOOD AND INGREDIENTS
Opportunities for U.S. Exports of Prepared/Packaged Food Products and Ingredients
Prepared/Packaged Food Products: Russia?s packaged food market is among the fastest
growing in the world, reaching $100 billion by some estimates. In 2011 the market was boosted
by steady growth in almost all categories of packaged food. Sales in this sector are expected to
increase 16 percent in 2011 supported by rising incomes as well as the availability of imported
products on the market. Premiumization, health and wellness consciousness, and curiosity
regarding novel products have become important for Russians again, in line with growth in
consumer confidence, and the economic stabilization of the country. This growth of packaged
products follows overall growth of retail food sales, which grew to $250 billion in 2010 and is
estimated to have surpassed $300 million in 2011.
A number of retail products are especially experiencing strong growth. In January ? September
2011 the most significant value growth in packaged food retail sales was shown by such
products as baby food (27 percent), snack bars (27 percent ), soup (23 percent) spreads (20
percent), dairy (19 percent), frozen processed food (19 percent), ready-to-eat meals (17 percent),
and ice-cream (16 percent).
The economic downturn prompted manufacturers to introduce more packaging varieties to the
Russian market. Alongside multi-portion packaging, single portion packaging has been offered
by manufacturers of both frozen and dry processed food. Retailers are keen to offer a wide
variety of packaging, as this helps to maintain profitability. The major retailers focus on offering
lower prices per unit weight for value and family packaging and higher prices per unit weight for
single portion varieties.
Health is also expected to be a major focus for packaged food manufacturers during the coming
years. With consumers leading busier and more stressful lifestyles, many have become reluctant
to invest time in cooking healthy meals or exercising. Consequently, many are seeking shortcuts
in packaged food. Companies are expected to launch health and wellness products across
packaged food with these launches likely to be focused on categories with an unhealthy image.
Indulgent products, such as sweet and savory snacks, confectionery and ice cream, and
convenient packaged food products, such as ready meals and snack bars, are expected to see a
proliferation of better-for-you low-fat, low-salt and/or low-sugar products. There will also be a
growing focus on naturally healthy ingredients, such as fruit, vegetables and whole grains.
With growing demand, Russia is increasingly dependent on imports of retail and packaged food
products, and this presents opportunities for U.S. suppliers. In 2011, the most dynamic growth
of U.S. products in the high-value sector was food preparations, pastry and cakes, vinegar and
soy sauces, pasta, tomato ketchup and other tomato sauces, mustard, and nonalcoholic beverages
such as waters (including mineral). Given the potential of the Russian agricultural market, U.S.
high value products can penetrate some niche markets, especially for those products which are
not produced in Russia or are produced in limited quantities. In many cases, Russian agriculture
is not yet producing products of consistently high quality (e.g. high quality beef steaks). There
are markets for baby food or for specialty products including low-fat, low-salt and sugar-free
products, cake and bread mixes, corn meal, and chocolate chips. U.S. exporters could also
supply new market segments that are just beginning to develop. This includes organics,
microwaveable and semi-prepared food as well as TV-dinners.
Ingredients: The majority of raw materials and ingredients used by Russian food
processors/manufacturers are imported. This leaves ample opportunities for U.S. exports to
Russia. European food ingredient suppliers are the major competitors of U.S. exporters in the
sub-sector of specialized ingredients. The leading countries are Germany (13 percent), Lithuania
(10 percent), Poland, Estonia and Finland. Apart from competition on price, European suppliers
have an advantage over U.S. suppliers due to the proximity i.e. quick delivery and low
transportation costs. However, as the Russian distribution network improves and U.S.
ingredients gain a reputation, U.S. suppliers can more easily compete with European suppliers.
Demand for food processing ingredients is growing dramatically compared to the other sectors
of the food processing industry. The Russian food processing ingredient market is widening its
assortment and local processors increasingly must meet international quality standards. As a
result they pay more attention to the quality of the ingredients they use and local ingredients
often do not meet their needs. In addition, Russian food processing companies continue to
expand and modernize their production facilities. This increases their demand for high quality
ingredients. The share of imported ingredients is 86-90 percent against 10-14 percent of locally
produced. Growing demand for healthy food leads to increasing consumer demand for better
quality and innovative/functional products, forcing processors to use high quality ingredients.
Ingredients that are present in Russia and have good sales potential for U.S. exporters include:
meat, fish, nuts, dried fruits (see individual section for more details on each of these products),
as well as flavor enhancers, natural sweeteners and colorings, functional soy concentrates and
isolates, quality textured vegetable protein, gluten powder, dextrin and other modified starches,
complex ingredients including colorings, sweeteners, emulsifiers and preservatives,
seasoning/spices/flavorings, and frozen or soft pasteurized fruits (for yogurt and ice cream
Ingredients that are not yet present in substantial quantities in Russia but also have good sales
potential include: specialized food ingredients, including carrageenan, emulsifiers, enzymes,
pectin, starter cultures, and functional systems (integrated blends of emulsifiers and thickeners),
certified organic/natural ingredients (while many local processors are advertising ?natural? or
?ecologically-clean? food and beverage products, there are no official organic standards and
such claims cannot be substantiated. USDA Certified Organic can be used in Russia), and
kosher and halal-certified ingredients (sizable Jewish population with growing interest in kosher
products; also large Muslim consumer base in Russia and CIS counties).
(For additional market share analysis please see market opportunity graphs for bakers
wares/preparations and preserved/packaged fruits, nuts and vegetables as well as sugar on page
Prepared/Packaged Food and Ingredients Market Access Changes due to WTO Accession
Summary: Nearly all prepared/packaged food products and ingredients will see some
improvement in market access with WTO accession. Because of the variety of products, the
information below is not all inclusive of products in this category.
Immediate Market Access Gains after WTO Accession
Chocolate: Chocolate bars and other products will see the tariff fall immediately from 20
percent bnlt ?0.6 per kg to just ?0.6 per kg. The tariff rate will then be reduced to just ?0.2 per
kg or ?0.28 per kg depending on the product by 2016.
Margarine: Most margarine products will see tariffs fall immediately from 20 percent bnlt ?0.2
per kg to 15 percent bnlt ?0.12 per kg.
Medium-term Market Access Gains due to WTO Accession
Prepared Meat: Most prepared meat products have a pre-accession applied/