Strategy of the Russian Food Industry Development

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Posted on: 28 Jun 2012

The Russian Government issued Resolution #559R on April 17, 2012 which approved the Strategy for Development of the Russian Food Industry until 2020.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 6/6/2012 GAIN Report Number: RSATO 1205 Russian Federation Post: Vladivostok Strategy of the Russian Food Industry Development until 2020 Report Categories: Agricultural Situation Agriculture in the Economy National Plan Policy and Program Announcements Approved By: Deanna Ayala, ATO Director, U.S. Embassy Moscow Prepared By: Oksana Lubentsova, Marketing Specialist, ATO Vladivostok Report Highlights: The Russian Government issued Resolution #559R on April 17, 2012 which approved the Strategy for Development of the Russian Food Industry until 2020. The document contains production targets for 2020, confirms the need to modernize the industry, and estimates necessary investments in the amount of 777.8 billion Rubles (USD 26 billion) in order to reach the targets. General Information: The Russian Government issued resolution #559R on April 17, 2012 which approved the Strategy for Development of the Russian Food Industry until 2020. The strategy is aimed at modernizing food processing production facilities and increasing their capacity through innovation and technologies. As a result, the industry would be able to manufacture more competitive products, decrease power consumption and be more environmentally friendly. The strategy is aimed at increasing production of flour, grains, bakery products, sugar, dairy products, butter, cheese and cheese products, fruit and vegetable preserves, oil, confectionary products, fish and fish preserves. In addition, the strategy aims to develop infrastructure and logistics for the food products distribution system. The Current Status of the Food Processing Industry The Russian food processing industry is a relatively strong sector in Russia, representing 11.5%of Russian industrial production, and is considered to be among the leaders in industrial production along with iron and steel production and the fossil fuel industry. The index (percentage change) of food production in 2000-2007 averaged 106107% and totaled 105.4% in 2010 and 101% in 2011. Production volume totaled 3,555 billion Rubles (USD 121 bln) in 2011 showing 12.3% growth compared to the previous year. The industry includes more than 30 sectors, bringing together 43,000 active organizations which employ about 1.3 million people. The following product sectors are considered “socially important”: meat, dairy, sugar, baking, oil, milling and salt. The share of these food products in retail turnover is 48.9% or 8 billion Rubles. Despite the increase in the production of processed food in recent years, Russia remains highly import dependent on certain types of agricultural products and foodstuffs. The value of imported agricultural products and foodstuffs was $42.5 billion in 2011. Major Issues As Defined by the Strategy Factors constraining development: weak physical infrastructure of many food processing industry organizations which reduces the safety and quality and leads to additional losses in transportation, storage, processing and higher prices; low-level technology decreases profitability and competitiveness; the physical deterioration and obsolescence of fixed assets which are the main causes of the unacceptably high levels of waste production, discharge of untreated industrial effluents into surface waters and emissions of industrial pollutants in the atmosphere. Major systemic problems in the food processing industry: lack of locally sourced raw materials with specific quality characteristics for industrial processing; technological and physical deterioration of equipment, lack of capacity for certain types of agricultural raw materials; low level of competitiveness of Russian food product producers in domestic and international food markets; insufficient infrastructure for storage, transportation and logistics; lack of compliance with environmental requirements in the industrial areas of food industry organizations. Main Targets of the Strategy The GOR Strategy is an attempt to address these constraints and shortcomings. In addition, there is a social welfare interest insofar as the GOR Strategy is expected to enhance the economic well being of the industry and therefore also improve the quality of life of different social groups. Main targets of the Strategy: 1. Increase food production 2. Modernize facilities and expand their capacity 3. Increasing competitiveness, create conditions for import replacement and potentially fuel exports 4. Develop infrastructure and logistics for food products 5. Address ecological problems in industrial zones Major measures of the Strategy: Develop vertical integration, infrastructure and logistics of agro-food market; Improve quality and safety of raw materials and food products; Replace Imported food and stimulate exports to existing and new markets; Defend geographical names of food products; Modernize and foster technological innovation Train qualified manufacturing personnel in modern technologies. Production Targets for the Food Processing Industry 2013-2020: Unit 2013 2014 2015 2016 2017 2018 2019 2020 Flour production Thousand 10,020 10,060 10,080 10,100 10,150 10,200 10,250 10,300 tons Cereals production Thousand 1,295 1,340 1,350 1,360 1,370 1,380 1,390 1,400 tons Bakery products Thousand enriched with tons dietary and 105 110 120 130 150 200 250 300 micronutrient production Sugar production Million tons 4.4 4.5 4.6 4.7 4.8 5.2 5.3 5.4 Cheese and cheese Thousand products tons 522 522 527 529 531 536 541 546 production Butter production Thousand 264 264 265 267 270 273 276 280 tons Slaughter and Thousand primary meat tons 266 301 364 259 259 259 249 210 processing capacity increase Canned fruits and Million cans vegetables (standard 9,485 9,773 10,064 10,372 10,659 10,963 11,276 11,597 production can=335 grams Sunflower oil Thousand 3,000 3,040 3,080 3,120 3,170 3,200 3,260 3,300 production tons Confectionery Thousand 2,995 2,965 2,974 3,005 3,040 3,065 3,100 3,175 production tons Fish and fish Thousand products, processed tons 3,886 4,032 4,200 4,345 4,450 4,590 4,826 5,255 and canned production Production of % prepared meals and semi-finished 100 175 250 300 350 400 450 500 products for organized groups Food production Percentage Index change from 103 103.1 103.5 104.1 104 104.1 104.3 104.3 previous year The financial part of the Strategy is very short and only mentions that currently state support for the food processing industry is carried out in accordance with the State Program for 2008-2012, through subsidies from the federal budget to agricultural organizations via reimbursement on loan interest for certain activities including the purchase of raw materials and some kinds of equipment. Also, the Strategy states that financial resources for the implementation of the Strategy will consist of private investments and bank loans. That means that the document doesn’t stipulate any government investments into the Strategy, and that financing will depend only on private companies’ resources. Targeted Investments in the Food Processing Sector 2013-2020, in mil Rubles Total 2013 2014 2015 2016 2017 2018 2019 2020 2013- 2020 Total investments in socially 86,847 90,884 92,037 92,000 92,836 93,332 96,189 96,847 740,970 important sectors including investments in Sectors: Flour and cereals 1,628 1,978 2,399 2,448 2,779 2,186 2,489 2,455 18,360 Baking industry 10,608 10,800 11,016 11,304 12,672 13,128 14,328 14,376 98,232 Sugar industry 17,600 18,600 20,300 18,800 13,100 15,800 15,900 16,600 136,700 Dairy industry 12,078 12,141 11,688 11,585 12,672 12,788 13,172 13,576 99,700 Meat industry 14,300 14,200 14,900 11,000 11,350 11,100 11,500 10,800 99.150 Fruit and vegetable 3,200 3,260 3,300 3,500 3,250 3,430 3,530 3,640 27,110 canning industry Fat industry 13,060 13,660 8,860 12,000 14,800 12,000 12,020 11,600 98,000 Confectionary 8,500 8,900 9,200 9,700 10,400 10,900 11,000 11,300 79,900 Production of prepared m 1,873 2,745 5,374 6,363 6,363 6,400 6,400 6,400 41,918 eals and semi- finished products for organized groups The text of the original document: Attachment: Google translation of the Strategy for Development of the Russian Food Industry until 2020
Posted: 28 June 2012

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