Poultry and Products Annual 2012

An Expert's View about Poultry in Russia

Posted on: 31 Aug 2012

FAS/Moscow’s import forecast for broiler meat in CY 2012 was increased by 3.0% to 515,000 MTs.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 8/15/2012 GAIN Report Number: RS1251 Russian Federation Poultry and Products Annual Russia Increases Broiler Production and Imports (January-June 2012) Approved By: Christopher Riker Prepared By: Mikhail Maksimenko Report Highlights: FAS/Moscow’s import forecast for broiler meat in CY 2012 was increased by 3.0% to 515,000 MTs due to a significant increase in imports from Ukraine. Moreover, FAS/Moscow forecasts Russian broiler imports to grow another 3.0% in 2013, as a result of growing duty free and quota-free imports from Ukraine and Belarus. FAS/Moscow forecasts broiler production in Russia to increase by 6.8% during 2012, to 2.750 MMT, and decreased its forecasted turkey production by 9% for 2012 to 100,000 MT due to slow implementation of State-funded assistance projects. Broiler production in 2013 is forecast to increase by an additional 7.3%, and turkey production to increase by an additional 5%, when compared to 2012. These positive trends in production are due, in large part, to favorable ongoing government support programs, coupled with growing investments from businesses. Executive Summary: In 2013, FAS/Moscow forecasts broiler production to increase by an additional 7.3%, and turkey production to increase by an additional 5%, when compared to 2012. This positive trend in production is due, in large part, to favorable ongoing government support programs. Significant agricultural establishments, the main producers of Russian broilers, increased production by 15.5%, to 2.14 MMT, on a live weight basis, in the first half of 2012. As a result, FAS/Moscow forecasts broiler imports to remain flat in 2013 after anticipated growth of 3% in 2012 (due to an increase in substitution of broiler meat for more expensive pork and beef), when compared to 2011. Nearly all of Russia’s exports of broiler products consist of chicken paws to Asia. However, Russia exported $29.2 million worth of poultry meat and offal to its Customs Union (CU) partners (i.e., $27.4 million to Kazakhstan and $1.8 million to Belarus) in January-May 2012. FAS/Moscow’s import forecast for broiler meat in 2012 was increased by 3.0% to 515,000 MTs due to a significant increase in imports from Ukraine (which grew from 5,171 MT in January-June 2011 to 7,430 MT in January-June 2012) and a higher volume 2012 broiler TRQ (which will increase from 350,000 MT in 2011 to 364,000 MT in 2012). Moreover, FAS/Moscow forecasts Russian broiler imports to grow another 3.0% in 2013, as a result of growing duty free and quota-free imports from Ukraine and Belarus. According to Global Trade Atlas (GTA), Russia imported 191,245 MT of broiler products in January- June 2012, a 17% increase over the same period in 2011 Given the increase in domestic production, it is anticipated that domestic production will satisfy the needs of the Russian consumers. In fact, it is expected that domestic production, plus imports equivalent to the Russian poultry import TRQ volume (i.e., 330,000 MT which is anticipated to be fully utilized), plus the 70,000 MT of poultry meat already imported from CU member-countries (mainly Belarus) this year, will exceed the needs of the country. The volume of poultry available in the Russian market is expected to increase price competition within the country which may, in turn, encourage poultry exports. Table 1. Russia: Broiler Production, Supply & Demand, 1,000 MT (ready-to-cook) 2011 2012 2013 Market Year Begin: Market Year Begin: Market Year Begin: Poultry, Meat, Broiler R Jan 2011 Jan 2012 Jan 2013 ussia USDA New USDA New USDA New Official Post Official Post Official Post Production 2 575 2 575 2 725 2 750 2 950 Total Imports 500 500 510 515 520 Total Supply 3 075 3 075 3 235 3 265 3 470 Total Exports 35 35 50 50 55 Human 3 040 3 040 3 185 3 215 3 415 Consumption Other Use, Losses 0 0 0 0 0 Total Dom. 3 040 3 040 3 185 3 215 3 415 Consumption Total Use 3 075 3 075 3 235 3 265 3 470 Total Distribution 3 075 3 075 3 235 3 265 3 470 Data included in this report is not official USDA data. Official USDA data is available at http://www.fas.usda.gov/psdonlineonline. Production Broiler production FAS/Moscow forecasts broiler production in Russia to increase by 6.8% during 2012, from 2.575 MMT in 2011 to 2.750 MMT in 2012. Agricultural establishments, the main producers of Russian broilers, increased production by 15.5%, to 2.14 MMT, on a live weight basis, in the first half of 2012. In 2013, FAS/Moscow forecasts broiler production to increase by an additional 7.3%. This positive trend in production is due, in large part, to favorable ongoing government support programs. Russia’s continued support of domestic poultry production has yielded consistent growth in the broiler production sector. The Largest Broiler Producers More than half of Russian poultry is produced by 20 specialized integrated establishments such as ZAO Prioskoliye (14%), OAO Cherkizovo (10%), OAO Severnaya (6.0%), GAP Resurs ((6.0%), OAO Belgrankorm (6.0%), Prodo-trade (5.0%), Belaya Ptitsa (3.0%), OOO LiskoBroiler (2.0%), OAO Chelni Broiler (2.0%), and Agroholding Alpi (2.0%). Poultry production Poultry Flock Results at the end of 2011 According to Russia’s State Statistical Service (Rosstat), the total domestic poultry flock totaled 471 million head at the beginning of 2012, 4.8% higher than the previous year. Of this, Agricultural establishments held 370 million head, 6.3% higher than the previous year. FAS/Moscow estimates 82% of the Russian flock to be broilers, excluding those which are held on private household plots and which are unlikely to enter the commercial chain. The increases in flock sizes are attributable to favorable ongoing government support programs, coupled with growing investments from businesses. Table 2. Poultry flock inventories, end of the year, million head Calendar year Year-to-date 2009 012 %Δ 2010 2011 Jan-Jun 2011 Jan-Jun 2 12/11 All type of farms 434 449 471 473.7 504.8 106.6 Including: Agricultural establishments 331 348 370 347.9 378.2 108,7 Private household farms 119.8 99 96 96 120.2 99.7 Private farms 3.9 4.7 5.5 5.6 6.7 119.3 Source: Rosstat Poultry Meat Production Russia continues to increase its domestic poultry production, the most developed branch of Russian agriculture. The Russian Union of Poultry Producers (RUPP) estimates 2012 domestic poultry production, at 3.420 MMT, slightly higher when compared to 2011 when poultry production accounted for 3.563 MMT. Graph 1. Poultry meat production at agricultural establishments, 1,000 MT, by month, Source: Rosstat, Social and Economic Situation Production Results in 2011 Russia increased poultry production by 326,000 MT to 3.173 MMT in slaughter weight in 2011. FAS/Moscow estimates, in 2011, that 89% of Russian poultry production was broiler meat, 6.0% was from spent hens and 5% from turkey, geese and ducks. Poultry Production in 2012 Agricultural establishments increased poultry production to 2,139,200 MT, on a live weight basis, or by 15.5% in January -June 2012 from 1,852,500 MT in January -June 2011. RUPP reports that the 20 largest poultry producers in Russia are expected to be operating at full capacity in 2012, and estimates 2012 production to equal 3.420 MMT (given that all of the 2011 State-funded assistance projects have been accomplished). Share of Poultry Meat Increases in Total Meat and Poultry Supply The share of domestically produced poultry meat consumption in the Russian market, as a percentage of total meat consumption, increased from 18% in 1990 to 42% in 2011. The State Program of Agricultural Development for 2013-2020 envisions domestically produced poultry to account for at least 45% of meat available on the Russian market by 2020. State Support The Russian Ministry of Agriculture, at a special meeting at the beginning of August 2012, discussed the implementation of the National Poultry Development Program for 2009-2012, (see Gain Report RS1108) as well as how to further develop Russia’s poultry industry in 2013-2020 (see Table 6), considering Russia’s August 2012 membership in the World Trade Organization (WTO). The Minister of Agriculture indicated Russia reconstructed 400 poultry facilities within the last 5 years which has doubled the country’s poultry meat production by 1.8 million in slaughter weight. The Ministry’s commission on crediting agricultural projects selected 74 poultry investment projects in 2011 valued at RUR 74 billion (USD $2.3 billion). Most of the projects were presented by the Central (30 projects) and Volga regions (24 projects); where the predominance of Russian poultry production occurs. The fastest growth was reported in Belgorod, Leningrad, Voronezh, Rostov, Chelyabinsk, as well as in oblasts in Krasnodar Kray and the Republic of Tatarstan. The government also dedicated RUR 164.5 million (approximately USD $5 million) towards increased subsidies for breeder flock producers (compared to RUR 134.2 million in 2011 (USD $4.2 million)). Table 3. Investments into Construction and Reconstruction of New Poultry Farms in 2009, 2010, and 2011, million head per year 2009 2010 2011 Commercial Egg Layers 1,693.2 702.7 1,342.9 Broilers 70.8 122.5 165.6 Source: Rosstat, Bulletin “Major Production Results in Agriculture in 2011” Profitability of Poultry Production Despite increased State investment, poultry market analysts report that the profitability of Russian production is decreasing due, in large part, to burgeoning production costs (e.g., a 17% increase in 2009 and another 7% increase in 2011). According to RUPP, poultry prices are not increasing at a rate consistent with increasing production costs. However, industry analysts believe that profitability can be increased with the use of high quality breeding stock and improved poultry health protection. Russia permits the use of antibiotics for health protection, however, the most developed establishments have reduced their applications due to human health concerns. The most significant Russian poultry producers have now begun to utilize alternative feed additives such as probiotics, prebiotics, supplements, and vitamins, which have improved weight gain. Turkey production In 2013, FAS/Moscow forecasts turkey production to increase by an additional 5%, when compared to 2012. This positive trend in production is due, in large part, to favorable ongoing government support programs. FAS/Moscow forecasts turkey production to increase to 100,000 MT during 2012 from 90,000 MT in 2011. FAS/Moscow decreased its forecasted turkey production by 9% for 2012 due to slow implementation of the State-funded assistance projects. As of the summer of 2012, more than 10 different government support projects were approved for turkey production in different regions of Russia, including, but not limited to, Rostov, Penza, Sverdlovsk, Tambov, Voronezh, Ingushetia, and Bashkortostan. Each of these support projects has a goal of increasing production by 10,000-15,000 MT annually. According to the Russian National Association of Turkey Producers, the domestic turkey market is already the most profitable it has ever been (e.g., earnings are more than 40% above the reported cost of production). In fact, FAS/Moscow notes that turkey retail meat prices are nearly 2.5 times higher than poultry meat, but with nearly identical production costs. Table 4. Russia: Turkey Production, Supply & Demand, 1,000 MT (ready-to-cook) 2011 2012 2013 Poultry, Meat, Market Year Begin: Jan Market Year Begin: Jan Market Year Begin: Jan Turkey 2011 2012 2013 Russia USDA New USDA New USDA New Official Post Official Post Official Post Production 90 90 110 100 105 Total Imports 33 27 30 20 20 Total Supply 123 117 140 120 125 Human 123 117 140 120 125 Consumption Total Dom. 123 117 140 120 125 Consumption Total Use 123 117 140 120 125 Total Distribution 123 117 140 120 125 Consumption: Broiler Consumption FAS/Moscow forecasts domestic broiler consumption will continue to grow in 2012 and 2013 as increased domestic production, coupled with imports, keep broiler retail prices more stable than the rest of the consumer basket. The Russian President, Vladimir Putin, told members of the State Duma this spring that Russia cannot completely halt imports of poultry meat because food prices must be controlled in Russia’s big cities. On average, Russian broiler wholesale prices were stable for the last three years. Nationally, prices averaged RUR 73.80/kilogram (USD $2.54/kilogram) in 2009, RUR72.82 (USD $2.51/kilogram.) in 2010, and RUR74.90/kilogram (USD $ 2.58/kilogram.) in 2011. Of course, prices vary from region to region depending on the incomes of the local populations. Broilers were marketed at a price higher than RUR70/kilogram (USD $2.41/kilogram) in 58% of Russia’s regions, from RUR60/kilogram (USD $2.41/kilogram.) to RUR70/kilogram (USD $2.41/kilogram) in 29% of Russia’s regions, and less than RUR60/kilogram (USD $2.41/kilogram) in 13% of the regions. Although processor and retail prices began their traditional seasonal climb at the end of 2011, only the price for domestic chicken leg quarters surpassed the previous record high prices experienced in 2010, as a result of Russia’s decision to reduce 2011 TRQ volume for broiler cuts that reduced imports from 586,630 MT in 2010 to 370,277 MT in 2011. Chart 2. Broiler prices, by month, RUR/kilogram Source: The Russian Ministry of Agriculture www.mcx.ru Turkey Consumption Although turkey production is increasing in Russia, turkey meat it is not traditionally consumed in Russia, with per capita annual consumption of turkey meat equivalent to less than 1.0 kilogram. In order to increase sales, large turkey producers have begun to advertise turkey meat as healthier than poultry and other meat products, as well as a viable option for barbeques. These efforts are slowly increasing turkey consumption, but at a pace consistent with production increases which has allowed prices to remain high. Trade: Broiler Imports FAS/Moscow’s import forecast for broiler meat in 2012 was increased by 3.0% to 515,000 MTs due to a significant increase in imports from Ukraine (which grew from 5,171 MT in January-June 2011 to 7,430 MT in January-June 2012) and a higher volume 2012 broiler TRQ (which will increase from 350,000 MT in 2011 to 364,000 MT in 2012). Moreover, FAS/Moscow forecasts Russian broiler imports to grow another 3.0% in 2013, as a result of growing duty free and quota-free imports from Ukraine and Belarus. According to Global Trade Atlas (GTA), Russia imported 191,245 MT of broiler products in January- June 2012, a 17% increase over the same period in 2011. According to Belarus’ Statistic Committee (Belstat), Belarus additionally exported 44,024 MT of broiler products to Russia during the same time. [1] Broiler Imports from Belarus Belarus exported 74,000 MT of poultry meat in 2011, significantly more than the 15,000 MTs that were agreed upon between Russia and Belarus at the end of 2010. Moreover, deliveries continued to grow in 2012. For example, from January-April 2012, Belarus reportedly exported approximately 35,000 MT of poultry meat to Russia. RUPP requested that the Ministry of Agriculture restrict imports of Belarusian poultry, but officials from the Russia, Kazakhstan, Belarus CU commented that restrictions in mutual CU trade are destructive and contrary not only to the basic agreements on the establishment of a common economic space, but also to the principles of fair competition. RUPP has also complained that production costs for imported poultry are approximately 30 percent lower compared to those of the domestic Russian industry. The reported wholesale price for whole broilers from Belarus is approximately RUR 85/kg (roughly USD $2.60); while domestic broilers prices vary from RUR 90/kg to RUR 92/kg (approximately $2.76 to $2.82) respectively. In addition to their lower price, Belorussian whole broilers are popular with Russian meat processors because of their reported quality. Poultry Imports According to the Russian Custom’s Service, Russia imported 221,800 MT of poultry meat (classified under HSC 0207) which includes 34,600 MTs of imports from CIS member countries. Furthermore, 6,723 MTs of imports of prepared or preserved chicken meat (HSC 160232) increases the Russian Customs Service’s total volume of poultry imports to 228,523 MTs in the first half of 2012. Broiler Exports FAS/Moscow forecasts Russian broiler exports to increase 10%, to 55,000 MT in 2013, most of which will be exported to Kazakhstan. Specifically, from January-May 2012, Russia exported USD $29.2 million worth of broiler meat and offal to CU member-countries, including $27.4 million to Kazakhstan and $1.8 million to Belarus. Exports of poultry products outside of the CIS consist almost entirely of chicken paws to Asia. From January-June 2012, Russia’s share of chicken paw exports from CIS countries was 95 percent. Last year, 18,323 MT of Russia’s 19,102 MT exports, were attributable to chicken paw exports to Hong Kong (11,128 MT), Vietnam (6,424 MT) and China (332 MT). Impact of Russia’s Accession to the WTO Russia’s WTO accession has led the Russian domestic industry to try to identify global markets to which it can export product being produced by its growing industry. According to the Association of the Operators of the Russian Poultry Market, the most likely foreign markets for Russian broilers are CIS countries, Kazakhstan, Southeast Asian countries (e.g., Vietnam, Hong Kong, and China) where chicken paws are popular. According to trade sources, African countries are also interested in buying chicken from Russia, however they prefer chicken leg quarters, which are, in reality, limited for export because Russian consumers prefer this product. Turkey Imports FAS/Moscow forecasts 2013 turkey imports to remain flat compared to 2012, for which imports were forecast to decrease by 26% based on data from the first half of the year (when they were limited by the TRQ to boneless turkey meat). [1] NOTE: Russia’s Customs Service does not report imports from Belarus in its data so Belstat’s export data represents additional imports into Russia not captured in GTA data. Production, Supply and Demand Data Statistics: Production Tables Table 5. Russian Poultry Production, Agricultural establishments, Monthly 1,000 MT 2010 2011 2012 Jan 269 297.5 341.9 Feb 260.2 287.2 340.9 March 290.1 318.2 370.5 April 287.2 309.7 362.6 May 283.9 324.4 362.5 June 267 316.2 361.2 July 271.7 304.9 N/A Aug 271.2 314 N/A Sept 289.9 321.2 N/A Oct 297.7 338.1 N/A Nov 302.3 346.4 N/A Dec 330.1 378 N/A Source: Rosstat Table 6. Estimated poultry production in 2013-2020, slaughter weight, MT 2013 2014 2015 2016 2017 2018 2019 2020 All producers 3,500 3,700 3,900 4,100 4,200 4,300 4,400 4,500 Agricultural establishments 3,180 3,380 3,570 3,770 3,860 3,960 4,050 4,150 Private household farms 320 320 330 330 340 340 350 350 Source: RUPP Trade Tables Table 7. Russia: Poultry Tariff-Rate Quotas in 2012 First half of the year Initial WTO Commitment Commodity Tariff MT Tariff MT Chicken meat, frozen, bone-in1 IQ: 25%, ≥€0.20/kg 250 IQ: 25% 250 OQ: 80%, ≥€0.70/kg OQ: 80% Chicken meat, frozen, boneless2 IQ: 25%, ≥€0.20/kg 70 IQ: 25% 100 OQ: 80%, ≥€0.70/kg OQ: 80% ----European Union 56 80 ----other countries 14 20 Turkey meat, frozen, boneless3 IQ: 25%, ≥€0.20/kg 10 - - OQ: 80%, ≥€0.70/kg Turkey meat, frozen4 - - IQ: 25% 14 OQ: 80% Other Poultry meat, chilled/frozen5 - - IQ: 75% 0 OQ: 80% 1 HS-0207.14.200 (bone-in halves and quarters), 0207.14.600 (bone-in legs and cuts thereof) 2 HS-0207.14.100 (boneless cuts) 3 HS-0207.27.100.1 (frozen boneless turkey cuts) 4 HS-0207.27.100.0 (boneless), 0207.300.0 (frozen whole wings), 0207.400.0 (backs, necks, rumps, wingtips), 0207.600.0 (drumsticks and cuts thereof), 0207.700.0 (other legs and cuts thereof) 5 HS-0207, not otherwise covered Table 8. Russia Import, BROILER MEAT, by commodities Calendar year Year to date Commodity %Δ 2009 2010 2011 June 2011 June 2012 12/11 BROILER MEAT 913,216 618,445 389,989 163,933 191,245 16.66 020714 861,592 586,630 370,277 152,937 181,757 18.84 160232 10,328 10,068 17,004 10,036 6,723 - 33.01 020712 41,282 21,729 2,690 951 2,747 188.84 Source: Global trade Atlas Table 9. Russia Import, BROILER MEAT, MT, by Countries Quantity Year to date Partner Country % 2009 2010 2011 June 2011 June 2012 Δ 12/11 World 913,216 618,445 389,989 163,933 191,245 16.66 EU [1] 144,307 173,912 72,482 30,316 34,286 13.09 United States 694,357 294,920 239,306 87,457 107,418 22.82 Brazil 66,147 137,468 64,446 41,326 30,799 - 25.48 Germany 82,832 90,586 28,585 14,491 3,721 - 74.32 France 40,482 24,984 23,430 8,674 14,862 71.35 Ukraine 0 75 5,171 586 7,430 1,168.98 Source: Global trade Atlas Table 10. Russian Export of BROILER MEAT, MT, by Commodities Commodity Description Calendar year Year to date June June %Δ 2009 2010 2011 2011 2012 12/11 BROILER T BROILER - 6,529 19,167 19,102 10,977 9,180 16.37 Chicken Cuts And Edible Offal (Inc - 020714 L 4,898 17,202 18,323 10,629 8,732 ivers), Frozen 17.85 Meat & Offal Of Chickens, 020712 No 970 1,419 481 197 345 75.21 t Cut In Pieces, Frozen - 160232 Prepared Or Preserved Chicken 660 546 298 151 102 32.38 Source: Global trade Atlas Table11. Russia Export of 020714, Chicken Cuts And Edible Offal (Incl. Livers) Frozen, MT Calendar year Year to date Commodity %Δ 2009 2010 2011 June 2011 June 2012 12/11 World 2,557 13,373 17,926 10,629 8,732 - 17.85 Hong Kong 1,236 8,420 11,128 6,553 5,857 - 10.63 Vietnam 1,101 4,521 6,424 3,604 2,432 - 32.53 China 0 46 332 N/A N/A N/A Abkhazia 38 22 41 157 301 92.39 Sourse: Global trade Atlas Table 12. Imports of Poultry Meat, Chilled and Frozen, HSC 0207; 1,000 MT Calendar year Year to Date 2010 2011 June 2011 June 2012 %Δ 12/11 Total 649.9 418.8 164.1 221.8 35.6 Excluding CIS counties 649.8 413.6 163.5 187.2 14.5 CIS countries* 0.1 5.2 0.6 34.6 5,766 Source: Russian Federal Customs Service *Excluding Belarus Table 13 Imports of TURKEY MEAT, MT Calendar year Year To Date Partner Country 2009 2010 2011 06/2011 06/2012 %Δ 12/11 World 40,993 35,121 26,468 11,625 7,731 -33.50 EU 28,868 26,787 17,907 7,881 3,917 -50.30 Brazil 5,701 8,177 7,124 3,460 2,793 - 19.29 France 15,547 11,313 11,126 5,168 682 - 86.80 Germany 6,737 9,042 5,002 1,641 2,271 38.37 United States 6,089 98 1,010 196 904 361.80 [1] Note that France and Germany are identified as significant importers, but are also included in reported EU data. Author Defined: Other relevant reports 2/21/2012 Production and Market Access Drive Consumption up 1/11/2012 GOR Distributes Meat and Poultry TRQs for 2012 8/16/2011 Consumption Recovers Strong in 2012
Posted: 31 August 2012

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