Required Report - public distribution

**Date:** 1/29/2004

**GAIN Report Number:** RS4005

RS4000

**Russian Federation**

**Livestock and Products**

**Poor Feed Situation Hampers Sector in Early 2004**

**2004**

**Approved by:**

![](media/image1.wmf)Allan Mustard

U.S. Embassy

**Prepared by:**

Mark Petry and Mikhail Maximenko

**Report Highlights:**

A deteriorating feed situation following the 2003 grain harvest is
forecast to increase slaughter rates and decrease the beef and swine
herds in 2004 compared to previous expectations. The grain situation
will hold down swine industry growth for the short term, while
prolonging the downward spiral of beef production. Russian imports in
2004 will also be higher than previously forecast due to increased
Ukrainian beef exports and slightly higher tariff rate quotas (TRQs) on
beef and pork.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Moscow \[RS1\]

\[RS\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#production)

[Feed Supplies 3](#feed-supplies)

[Table 1. Available Feed at Agricultural Organizations in December 2002
and 2003.
4](#table-1.-available-feed-at-agricultural-organizations-in-december-2002-and-2003.)

[Consumption 4](#consumption)

[Prices 4](#prices)

[Table 2. Wholesale Prices (Offer Price), January -- January 2004.
4](#table-2.-wholesale-prices-offer-price-january-january-2004.)

[Trade 4](#trade)

[Table 3. Russian Beef Imports, 2001-2002, January -- October 2003.
5](#table-3.-russian-beef-imports-2001-2002-january-october-2003.)

[Table 4. Russian Pork Imports By Country of Origin, 2001-2002, January
-- October 2003.
5](#table-4.-russian-pork-imports-by-country-of-origin-2001-2002-january-october-2003.)

[Policy 5](#policy)

[Table 5. Russian Pork Imports - Market Share of Major Exporters,
2001-2002, January -- October 2003.
6](#table-5.-russian-pork-imports---market-share-of-major-exporters-2001-2002-january-october-2003.)

[Table 6. Russian Beef Imports - Market Share of Major Exporters,
2001-2002, January -- October 2003.
6](#table-6.-russian-beef-imports---market-share-of-major-exporters-2001-2002-january-october-2003.)

[BSE and U.S. Exports 7](#bse-and-u.s.-exports)

[Government Support to the Livestock Sector
7](#government-support-to-the-livestock-sector)

# Executive Summary

A deteriorating feed situation following the 2003 grain harvest is
forecast to increase slaughter rates and decrease the beef and swine
herds in Russia compared to previous expectations. Beginning stocks and
the pig/calf crop were also both lowered from previous forecasts. The
grain situation is expected to hold down what had been consistent growth
in the swine industry. Additionally, instead of possibly reaching a
production floor, the beef industry is heading for further decline.
Russian imports in 2004 will also be higher than previously forecast due
to higher Ukrainian beef exports and slightly higher tariff rate quotas
(TRQs) on beef and pork. Higher imports will permit slight growth,
though less than in a free market, in consumption in 2004.

# Production

Unfortunately, the difficult feed situation will force an even larger
drop in the forecast cattle herd in 2003 and 2004. Cattle ending
inventories in both years were reduced from the previous forecasts.
Similarly, the forecast calf crop in Russia in 2004 was reduced from the
previous forecast and is set at six percent lower than 2003. Despite the
higher slaughter rate, production forecasts for 2003 and 2004 were both
lowered due to the decrease in slaughter weights.

The Russian swine herd is forecast to begin 2004 at roughly 17.2 million
head, a three percent decline from the previous forecast. The 2004 pig
crop and slaughter are also expected to be lower than previously
forecast due to the worsening feed situation. The feed situation caused
producers to increase slaughter rates in late 2003, which led to an
increase in the estimated pork production in 2003 and to the reduced
2004 pig crop. However, a return to normal feed production in 2004
should herald a stabilization of the swine herd and a rise in swine
ending stocks going into 2005.

There are 120 historic pork producers in Russia, which had a total swine
herd of 2.58 million pigs in 2003. These producers actually have
capacity to raise 7.5 million head. To illustrate the excess capacity
still existing in the industry, only seven farms are currently utilizing
their capacity in full, 20 plants are at 50 percent capacity, and 52
plants are at less than 50 percent capacity. Forty-one of these farms
were out of operation in 2003.

## Feed Supplies

The low 2003 grain harvest, increased grain export volumes, and
increased feed consumption by some livestock producers created feed
shortages in the Russian Federation at the end of 2003 that will
continue through the first half of 2004. The price of one metric ton of
feed wheat has reached about \$160, barley \$130, and corn \$175. The
data presented in Table 1 shows significant feed stock reduction in 2003
in comparison with 2002. However, despite the very high prices, the feed
price effect has been mitigated to some degree by the very high
profitability (per kilo of meat) of leading producers, increasing
efficiency of feed utilization, and that small farmers use
non-traditional feeds and/or feed not accounted for by national
statistics. Nonetheless, producers are experiencing difficulties in
obtaining the volume and quality of grain (mostly wheat) necessary in
some regions due to the poor inter-regional transportation of grains.
Artificial administrative or other barriers to free transit of grain
inside Russia have forced many producers to shift from the traditional
predominately wheat ration to other components, including imported soy
and other feed ingredients. While cattle depend on grain to a lesser
degree than swine, the feed shortage is more severe for these producers
because of the very weak financial situation of such a large portion of
the industry.

## 

## Table 1. Available Feed at Agricultural Organizations in December 2002 and 2003. 

  ----------------------- ----------------------- -----------------------
                          2003                    2002

  Available feeds,        24.1                    29.1
  million tons feed units                         

  Including grain feeds   6.9                     9.2

  Tons of feed units per  1.34                    1.48
  one standard animal                             
  ----------------------- ----------------------- -----------------------

Source: Russian State Statistics Committee

# Consumption

In 2004, the forecast for consumption of beef and pork was increased
slightly. In both cases, higher forecast imports are expected to more
than make up for production fluctuations. Consumption right now is
constrained in all meat categories by the TRQs. While pork and poultry
are most constrained, Ukraine acts as a safety valve for beef because it
is not inside the TRQ and has significant exportable supplies.

## Prices

Higher rates of pig and cattle slaughter due to winter feed constraints
will prevent prices from moving higher in the winter of 2003. Higher
beef and pork TRQ volumes announced for 2004 will also have a dampening
effect on prices. (See GAIN report #RS3050) Prices are expected to
continue rising in the spring and throughout the rest of 2004 unless
another poor harvest forces high slaughter rates to continue throughout
the fall and winter of 2004.

## Table 2. Wholesale Prices (Offer Price), January -- January 2004.

  ------------ ------------ ------------ ------------ ------------ ------------
  **Date**     **Exchange   **Domestic   **Imported   **Domestic   **Imported
               rate,        beef**       beef**       pork**       pork**
               ruble/\$**                                          

  01/30/2003   31.80        50.17        48.40        48.75        45.50

  02/28/2003   31.57        51.17        49.95        44.75        46.14

  03/30/2003   31.38        48.67        48.01        40.37        44.90

  04/30/2003   31.10        48.00        46.35        40.25        44.62

  05/30/2003   30.66        48.00        48.52        41.02        48.45

  06/30/2003   30.34        47.00        49.45        42.51        49.00

  07/30/2003   30.24        49.00        49.30        42.39        49.11

  08/30/2003   30.50        49.00        49.57        43.50        51.83

  09/30/2003   30.61        58.00        52.75        51.33        61.60

  10/30/2003   29.82        51.17        54.81        52.00        60.93

  11/30/2003   29.74        52.38        52.31        50.75        55.53

  12/30/2003   29.25        51.00        54.96        52.50        53.89

  01/30/2004   28.48        64.42        63.61        54.63        54.81
  ------------ ------------ ------------ ------------ ------------ ------------

Source: Russian Institute for Agricultural Market Studies (IKAR)

Prices are in rubles per kilogram.

## 

# Trade

The 2004 Russian import forecasts for beef and pork were both revised
upward due to the announcement of slightly larger than expected TRQs for
2004. (Note: The basis for the previous 2004 forecast was a pro rated
2003 TRQ.) This move implies that the Russian Government acknowledged
that the relative 2003 TRQ volume would not have allowed consumption
growth in 2004. The beef estimate for 2003 was also increased because of
stronger than expected beef imports from Ukraine. Ukraine is also an
important factor in the 2004 import picture due to the high rate of
slaughter in Ukraine due to a similar feed grain shortage. It is
expected that Russia will be able to absorb any beef that Ukraine is
able to export in 2004 due to the price advantage that Ukrainian beef
receives from a zero tariff, being excluded from the TRQ, and strong
Russian demand.

## Table 3. Russian Beef Imports, 2001-2002, January -- October 2003.

  ------------ -------------------- ------ ---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
                                                                 **2003**                                                                                              

               **Quantity (MT)**           **2001**   **2002**   **Jan.**   **Feb.**   **Mar**   **Apr**   **May**   **Jun**   **Jul**   **Aug**   **Sep**   **Oct**   **YTD**

  **0202**     BEEF, FROZEN                420,844    469,141    24,855     29,410     58,596    19,986    22,650    35,307    40,463    40,563    49,219    48,494    369,542

  ** **                                                                                                                                                                 

  **020230**   CUTS BONELESS               232,297    325,928    17,579     23,585     52,045    12,551    15,709    24,976    30,614    33,473    39,935    37,883    288,350

  **020210**   CARCASS,WHOLE/HALF          73,265     96,397     5,022      5,302      5,215     6,982     6,737     9,413     9,841     6,638     8,849     9,338     73,336

  **020220**   CUTS WITH BONE              115,283    46,816     2,254      523        1,336     453       203       918       9         451       435       1,274     7,857

  ** **                                                                                                                                                                 

  **0201**     BEEF FRESH, CHILLED         34,671     35,459     898        973        1,445     85        200       297       981       196       510       1,608     7,193

  ** **                                                                                                                                                                 

  **020130**   CUTS BONELESS               12,094     34,212     898        973        1,444     43        174       269       963       196       510       1,608     7,078

  **020120**   CUTS WITH BONE              22,525     1,229      0          0          0         42        26        28        18        0         0         0         115

  **020110**   CARCASS,WHOLE/HALF          53         18         0          0          0         0         0         0         0         0         0         0         0
  ------------ -------------------- ------ ---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- --------- --------- --------- ---------

Source: World Trade Atlas

## Table 4. Russian Pork Imports By Country of Origin, 2001-2002, January -- October 2003.

  ---------- ---------------- ------- --------- --------- ---------- -------- -------- ------- -------- -------- -------- -------- -------- -------- ---------
                                                          **2003**                                                                                   

  **0203**   **PORK,FR./FR.           2001      2002      Jan.       Feb.     Mar      Apr     May      Jun      Jul      Aug      Sep      Oct      YTD
             Qty. (MT)**                                                                                                                             

  **1**      Brazil                   140,766   349,799   30,034     21,801   36,703   5,947   17,078   29,414   25,842   27,656   35,162   29,461   259,099

  **2**      Poland                   22,042    17,153    3,368      5,373    13,966   3,082   3,035    5,457    3,474    5,091    7,149    8,807    58,802

  **3**      China                    10,347    67,519    3,089      3,979    10,899   4,520   874      3,042    3,514    2,062    1,377    1,375    34,729

  **4**      Germany                  25,637    29,652    818        1,218    3,546    557     1,073    703      1,071    988      1,059    1,019    12,051

  **5**      Ukraine                  1,504     1,069     324        826      1,033    1,232   1,155    2,210    889      159      302      933      9,062

  **6**      Denmark                  55,479    41,437    1,737      2,156    4,778    18      762      2,021    1,967    928      1,388    914      16,669

  **7**      France                   15,675    16,301    641        434      1,570    20      258      750      818      404      514      405      5,812

  **8**      Finland                  3,278     7,567     360        799      1,543    301     763      644      733      299      594      338      6,373

  **9**      Netherlands              4,411     7,644     204        460      661      20      184      283      206      250      425      267      2,961

  **10**     Canada           ** **   24,742    26,446    2,302      2,112    3,054    276     362      2,298    1,161    450      225      225      12,464
  ---------- ---------------- ------- --------- --------- ---------- -------- -------- ------- -------- -------- -------- -------- -------- -------- ---------

Source: World Trade Atlas

# Policy

The measures taken by the Russian Government to protect the interests of
domestic producers in 2003 created a lot of logistical complications for
importers and exporters. Namely, it is difficult for importers to get
through the complicated system of regulations and procedures prepared in
the rush to initiate the TRQs. Obtaining an import license from MEDT and
import permit from Ministry of Agriculture remains a time consuming and
onerous problem. Moreover, new importers are now effectively barred from
participating in the trade of beef and pork and supply problems are
being encountered by firms that need to find additional import volumes
but cannot increase their share of the licenses.

## 

## Table 5. Russian Pork Imports - Market Share of Major Exporters, 2001-2002, January -- October 2003.

  ---------- ------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
  **0203**   **Mkt. Share          2001    2002    Jan.    Feb.    Mar     Apr     May     Jun     Jul     Aug     Sep     Oct     YTD
             (% of Qty.)**                                                                                                         

  **1**      Brazil                38.3%   58.1%   68.4%   53.3%   45.2%   35.2%   64.7%   61.2%   63.6%   70.7%   71.8%   66.0%   60.2%

  **2**      Poland                6.0%    2.8%    7.7%    13.1%   17.2%   18.2%   11.5%   11.4%   8.5%    13.0%   14.6%   19.7%   13.7%

  **3**      China                 2.8%    11.2%   7.0%    9.7%    13.4%   26.7%   3.3%    6.3%    8.6%    5.3%    2.8%    3.1%    8.1%

  **4**      Germany               7.0%    4.9%    1.9%    3.0%    4.4%    3.3%    4.1%    1.5%    2.6%    2.5%    2.2%    2.3%    2.8%

  **5**      Ukraine               0.4%    0.2%    0.7%    2.0%    1.3%    7.3%    4.4%    4.6%    2.2%    0.4%    0.6%    2.1%    2.1%

  **6**      Denmark               15.1%   6.9%    4.0%    5.3%    5.9%    0.1%    2.9%    4.2%    4.8%    2.4%    2.8%    2.0%    3.9%

  **7**      France                4.3%    2.7%    1.5%    1.1%    1.9%    0.1%    1.0%    1.6%    2.0%    1.0%    1.0%    0.9%    1.3%

  **8**      Finland               0.9%    1.3%    0.8%    2.0%    1.9%    1.8%    2.9%    1.3%    1.8%    0.8%    1.2%    0.8%    1.5%

  **9**      Netherlands           1.2%    1.3%    0.5%    1.1%    0.8%    0.1%    0.7%    0.6%    0.5%    0.6%    0.9%    0.6%    0.7%

  **10**     Canada        ** **   6.7%    4.4%    5.2%    5.2%    3.8%    1.6%    1.4%    4.8%    2.9%    1.1%    0.5%    0.5%    2.9%
  ---------- ------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------

Source: World Trade Atlas

The Russian government established the rules for 2004 beef and pork
imports on November 29, 2003. The chilled beef resolution sets the TRQ
at 27,500 MT. For 2004, the EU and future EU countries (Poland, the
Czech Republic, Hungary, Slovakia, Slovenia, Lithuania, Latvia, Estonia,
Cyprus and Malta) received 27,000 tons and other countries 500 tons. The
frozen beef resolution sets the TRQ at 420,000 MT. The EU and future EU
countries were allotted 331,800 tons, the United States 17,200 MT,
Paraguay 3,000 MT, and other countries 68,000 tons. The pork resolution
sets the TRQ at 450,000 MT. The EU and future EU countries will get
227,300 tons, the United States 42,200 MT, Paraguay 1,000 MT, and other
countries 179,500 tons. Please reference GAIN Report RS3050 for the text
of the beef and pork import TRQ resolutions and GAIN 3018 for additional
details on the TRQs.

## Table 6. Russian Beef Imports - Market Share of Major Exporters, 2001-2002, January -- October 2003.

  ---------- ------------- -- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
  **0202**   **Mkt. Share     2001    2002    Jan.    Feb.    Mar     Apr     May     Jun     Jul     Aug     Sep     Oct     YTD
             (% of Qty.)**                                                                                                    

  **1**      Ukraine          21.4%   27.4%   29.3%   27.9%   14.8%   54.6%   50.2%   41.7%   38.3%   27.3%   28.4%   28.7%   31.3%

  **2**      Brazil           0.5%    5.8%    24.2%   12.2%   30.9%   18.7%   8.9%    12.6%   6.8%    19.8%   23.2%   18.2%   18.7%

  **3**      Ireland          7.2%    13.2%   12.3%   13.6%   9.6%    6.6%    12.9%   11.0%   11.6%   11.0%   12.0%   13.8%   11.5%

  **4**      Spain            6.9%    6.8%    5.3%    9.2%    9.4%    4.1%    8.7%    9.7%    11.7%   11.6%   8.1%    8.6%    9.0%

  **5**      Germany          39.9%   16.2%   7.5%    12.5%   11.3%   4.3%    6.7%    8.8%    10.0%   8.0%    8.2%    8.3%    8.9%

  **0201**                                                                                                                     

  **1**      Germany          79.8%   90.8%   95.6%   93.0%   99.2%   22.5%   75.1%   75.7%   97.5%   75.1%   95.1%   87.0%   91.5%

  **2**      Netherlands      0.9%    0.8%    2.2%    2.1%    0.0%    0.0%    0.0%    0.0%    0.0%    0.4%    0.0%    7.4%    2.2%

  **3**      Denmark          16.7%   4.2%    0.0%    2.4%    0.0%    0.0%    0.0%    0.0%    0.0%    0.0%    0.0%    4.0%    1.2%

  **4**      Belgium          0.7%    0.7%    0.0%    0.0%    0.0%    0.0%    0.0%    6.6%    0.0%    0.0%    0.0%    1.2%    0.5%

  **5**      United States    0.0%    0.0%    0.2%    0.2%    0.3%    2.7%    0.8%    0.002   0       0.007   0.001   0.002   0.2%
  ---------- ------------- -- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------

Source: World Trade Atlas

In particular, Brazilian suppliers were dissatisfied that there was no
separate allotment on meat imports to Russia, but that its imports fall
under the category \"Other Countries." Following a visit by top
Brazilian officials in January 2004, the Russian Government stated that
it will consider submitting a proposal to allocate a separate allocation
for Brazilian meat supplies to Russia, which may be subtracted from the
"Other Countries" category.

  ---------------- -------------- ---------- ---------- ---------- ---------- ---------- ---------
  **PSD Table**                                                                          

  **Country**      **Russian                                                             
                   Federation**                                                          

  **Commodity**    **Animal                                        (1000                 
                   Number,                                         HEAD)                 
                   Cattle**                                                              

                   2002           Revised    2003       Estimate   2004       Forecast   UOM

                   USDA Official  Post       USDA       Post       USDA       Post       
                   \[Old\]        Estimate   Official   Estimate   Official   Estimate   
                                  \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  **Market Year                   01/2002               01/2003               01/2004    MM/YYYY
  Begin**                                                                                

  Total Cattle     24510          24510      23500      23500      22345      22285      (1000
  Beg. Stks                                                                              HEAD)

  Dairy Cows Beg.  12200          12200      11700      11700      11000      10970      (1000
  Stks                                                                                   HEAD)

  Beef Cows Beg.   0              0          0          0          0          0          (1000
  Stocks                                                                                 HEAD)

  Production (Calf 9220           9220       8845       8845       8350       8330       (1000
  Crop)                                                                                  HEAD)

  Intra EC Imports 0              0          0          0          0          0          (1000
                                                                                         HEAD)

  Total Imports    10             12         14         14         15         15         (1000
                                                                                         HEAD)

  TOTAL Imports    10             12         14         14         15         15         (1000
                                                                                         HEAD)

  TOTAL SUPPLY     33740          33742      32359      32359      30710      30630      (1000
                                                                                         HEAD)

  Intra EC Exports 0              0          0          0          0          0          (1000
                                                                                         HEAD)

  Total Exports    4              4          4          4          5          5          (1000
                                                                                         HEAD)

  TOTAL Exports    4              4          4          4          5          5          (1000
                                                                                         HEAD)

  Cow Slaughter    1800           1800       1700       1720       1620       1630       (1000
                                                                                         HEAD)

  Calf Slaughter   0              0          0          0          0          0          (1000
                                                                                         HEAD)

  Other Slaughter  8050           8050       7960       8000       7700       7750       (1000
                                                                                         HEAD)

  Total Slaughter  9850           9850       9660       9720       9320       9380       (1000
                                                                                         HEAD)

  Loss             386            388        350        350        250        250        (1000
                                                                                         HEAD)

  Ending           23500          23500      22345      22285      21135      20995      (1000
  Inventories                                                                            HEAD)
  ---------------- -------------- ---------- ---------- ---------- ---------- ---------- ---------

## BSE and U.S. Exports 

The overall Russian reaction to the detection of a BSE positive cow in
the United States has been subdued. The media immediately announced the
news of the BSE case in major newspapers, television, and on the
Internet. News coverage was balanced and mainly relied on published
(newswire) sources. Due to a swift public announcement of a ban by the
Russian Ministry of Agriculture and the relatively small role of U.S.
beef on the Russian market, the consumer reaction was hardly registered.
In reaction to other BSE outbreaks, measures taken by the Ministry of
Agriculture have reassured the public and Russia continues to import
from countries with histories of BSE with certain restrictions based on
the type of outbreak and a regionalization approach. For example, Russia
only buys boneless beef from EU regions with a history of past BSE cases
in addition to other safety guarantees.

In response to the U.S. BSE case, the Russian Federation banned all the
following products, shipped after December 23: live cattle, beef, beef
containing products, and feed, feed additives, collagen, and pet food of
bovine or ruminant origin. The ban does not cover dairy products, milk,
semen, hides, skins, or embryos.

## Government Support to the Livestock Sector

As mentioned above, 2003 and 2004 will be difficult years for the
livestock sector due to the grain shortage. However, the beef industry
has been in decline (herd size and financially) since the fall of the
Soviet Union. Pork production, though growing for several years prior to
2003, is profitable among a relatively small group of companies.
Livestock producers (though not processors) now stand out even more than
the grain sector as in dire need of a coordinated policy approach.
Russian policy specialists and political leaders have long recognized
this, but are only now are ideas coalescing about the best way to
construct and implement a coordinated strategy.

  --------------- -------------- ---------- ---------- ---------- ---------- ---------- ---------
  **PSD Table**                                                                         

  **Country**     **Russian                                                             
                  Federation**                                                          

  **Commodity**   **Animal                                        (1000                 
                  Numbers,                                        HEAD)                 
                  Swine**                                                               

                  2002           Revised    2003       Estimate   2004       Forecast   UOM

                  USDA Official  Post       USDA       Post       USDA       Post       
                  \[Old\]        Estimate   Official   Estimate   Official   Estimate   
                                 \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  **Market Year                  01/2002               01/2003               01/2004    MM/YYYY
  Begin**                                                                               

  TOTAL Beginning 16570          16570      17000      17000      17800      17200      (1000
  Stocks                                                                                HEAD)

  Sow Beginning   3200           3200       3300       3300       3410       3340       (1000
  Stocks                                                                                HEAD)

  Production (Pig 34200          34200      35300      35000      36300      35800      (1000
  Crop)                                                                                 HEAD)

  Intra EC        0              0          0          0          0          0          (1000
  Imports                                                                               HEAD)

  Total Imports   35             35         35         35         35         35         (1000
                                                                                        HEAD)

  TOTAL Imports   35             35         35         35         35         35         (1000
                                                                                        HEAD)

  TOTAL SUPPLY    50805          50805      52335      52035      54135      53035      (1000
                                                                                        HEAD)

  Intra EC        0              0          0          0          0          0          (1000
  Exports                                                                               HEAD)

  Total Exports   1              1          1          1          1          1          (1000
                                                                                        HEAD)

  TOTAL Exports   1              1          1          1          1          1          (1000
                                                                                        HEAD)

  Sow Slaughter   0              0          0          0          0          0          (1000
                                                                                        HEAD)

  OTHER SLAUGHTER 29000          29000      30300      30600      31300      30200      (1000
                                                                                        HEAD)

  Total Slaughter 29000          29000      30300      30600      31300      30200      (1000
                                                                                        HEAD)

  Loss            4804           4804       4234       4234       4234       4234       (1000
                                                                                        HEAD)

  Ending          17000          17000      17800      17200      18600      18600      (1000
  Inventories                                                                           HEAD)

  TOTAL           50805          50805      52335      52035      54135      53035      (1000
  DISTRIBUTION                                                                          HEAD)

  Calendar Yr.    0              0          0          0          0          0          (1000
  Imp. from U.S.                                                                        HEAD)
  --------------- -------------- ---------- ---------- ---------- ---------- ---------- ---------

The key strategy gaining widespread credence is that the livestock
sector needs both price support and production support. Price support
comes in the form of protection from imports, which has already been
implemented. Initiated in 2003, the TRQs act as a mechanism to boost
prices and effectively to maintain a floor price that provides producers
additional revenues for investment and a captive, secure market for
their products. The second leg is production supports. While some
production and breeding sector supports exist, they are not available or
used by the majority of producers. In discussions surrounding the
creation of a new overall farm program (analagous in intent but not
similar to the U.S. Farm Bill), direct producer supports have strong
backing and will likely be included, especially for the hard-hit sheep
and goat sector.

In addition to the possible expansion of federal support programs, many
regional governments have forged ahead in creating regional support
programs for livestock producers. At the current time, estimates place
combined regional direct and indirect production supports as much as two
times greater than federal outlays. In the near term, it appears that
Russian producers can expect increasing regional and federal government
production support. However, as always in Russian agricultural programs,
the key will be efficient program operation and implementation and
ensuring that the right people receive the benefits of the program.

The government and in particular the Duma have come to realize that
roughly half of Russia\'s livestock product output comes from
smallholders, who hitherto have received little to no support. New
policies are under consideration for adoption this spring which would
improve services to smallholders, especially marketing infrastructure.
The volume of investment needed is massive, however, and funds from
federal coffers are unlikely to be forthcoming in greater volumes than
in the current budget.

  --------------- -------------- ---------- ---------- ---------- ---------- ---------- -----------
  **PSD Table**                                                                         

  **Country**     **Russian                                                             
                  Federation**                                                          

  **Commodity**   **Meat,                                         (1000 MT              
                  Swine**                                         CWE) (1000            
                                                                  HEAD)                 

                  2002           Revised    2003       Estimate   2004       Forecast   UOM

                  USDA Official  Post       USDA       Post       USDA       Post       
                  \[Old\]        Estimate   Official   Estimate   Official   Estimate   
                                 \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  **Market Year                  01/2002               01/2003               01/2004    MM/YYYY
  Begin**                                                                               

  Slaughter       29000          29000      30300      30600      31300      30200      (1000 HEAD)
  (Reference)                                                                           

  Beginning       0              0          0          0          0          0          (1000 MT
  Stocks                                                                                CWE)

  Production      1630           1630       1705       1710       1760       1760       (1000 MT
                                                                                        CWE)

  Intra EC        0              0          0          0          0          0          (1000 MT
  Imports                                                                               CWE)

  Total Imports   800            800        600        600        530        560        (1000 MT
                                                                                        CWE)

  TOTAL Imports   800            800        600        600        530        560        (1000 MT
                                                                                        CWE)

  TOTAL SUPPLY    2430           2430       2305       2310       2290       2320       (1000 MT
                                                                                        CWE)

  Intra EC        0              0          0          0          0          0          (1000 MT
  Exports                                                                               CWE)

  Total Exports   1              1          1          1          1          1          (1000 MT
                                                                                        CWE)

  TOTAL Exports   1              1          1          1          1          1          (1000 MT
                                                                                        CWE)

  Human Dom.      2340           2340       2220       2225       2205       2235       (1000 MT
  Consumption                                                                           CWE)

  Other Use,      89             89         84         84         84         84         (1000 MT
  Losses                                                                                CWE)

  TOTAL Dom.      2429           2429       2304       2309       2289       2319       (1000 MT
  Consumption                                                                           CWE)

  Ending Stocks   0              0          0          0          0          0          (1000 MT
                                                                                        CWE)

  TOTAL           2430           2430       2305       2310       2290       2320       (1000 MT
  DISTRIBUTION                                                                          CWE)

  Calendar Yr.    0              0          0          0          0          0          (1000 MT
  Imp. from U.S.                                                                        CWE)

  Calendar Yr.    0              0          0          0          0          0          (1000 MT
  Exp. to U.S.                                                                          CWE)
  --------------- -------------- ---------- ---------- ---------- ---------- ---------- -----------

+--------------------+----------+-------+------+------+-------+------+
| ###### PSD Table   |          |       |      |      |       |      |
+--------------------+----------+-------+------+------+-------+------+
| **Country:**       | *        |       |      | 1.42 | \<-   |      |
|                    | *Russian |       |      |      | Conve |      |
|                    | Fede     |       |      |      | rsion |      |
|                    | ration** |       |      |      | f     |      |
|                    |          |       |      |      | actor |      |
|                    |          |       |      |      | for   |      |
|                    |          |       |      |      | CWE   |      |
+--------------------+----------+-------+------+------+-------+------+
| **Commodity:**     | **       | **    |      |      |       |      |
|                    | Cattle** | Meat, |      |      |       |      |
|                    |          | Beef  |      |      |       |      |
|                    |          | &     |      |      |       |      |
|                    |          | V     |      |      |       |      |
|                    |          | eal** |      |      |       |      |
+--------------------+----------+-------+------+------+-------+------+
|                    |          | 2002  |      | 2003 |       | 2004 |
+--------------------+----------+-------+------+------+-------+------+
|                    | Old      | New   | Old  | New  | Old   | New  |
+--------------------+----------+-------+------+------+-------+------+
| Calendar Year      |          | Jan   |      | 01/  |       | 01/  |
| Begin              |          | -2001 |      | 2002 |       | 2003 |
+--------------------+----------+-------+------+------+-------+------+
| Slaughter          | 9970     | 9970  | 9660 | 9350 | 9490  | 9660 |
| (Reference)        |          |       |      |      |       |      |
+--------------------+----------+-------+------+------+-------+------+
| Beginning Stocks   | 0        | 0     | 0    | 0    | 0     | 0    |
+--------------------+----------+-------+------+------+-------+------+
| Production         | 1760     | 1760  | 1730 | 1740 | 1670  | 1700 |
+--------------------+----------+-------+------+------+-------+------+
| Intra EC Imports   | 0        | 0     | 0    | 0    | 0     | 0    |
+--------------------+----------+-------+------+------+-------+------+
| Other Imports      | 650      | 650   | 700  | 760  | 740   | 750  |
+--------------------+----------+-------+------+------+-------+------+
| TOTAL Imports      | 650      | 650   | 700  | 760  | 740   | 750  |
+--------------------+----------+-------+------+------+-------+------+
| TOTAL SUPPLY       | 2410     | 2410  | 2430 | 2500 | 2410  | 2450 |
+--------------------+----------+-------+------+------+-------+------+
| Intra EC Exports   | 0        | 0     | 0    | 0    | 0     | 0    |
+--------------------+----------+-------+------+------+-------+------+
| Other Exports      | 6        | 6     | 5    | 5    | 5     | 5    |
+--------------------+----------+-------+------+------+-------+------+
| TOTAL Exports      | 6        | 6     | 5    | 5    | 5     | 5    |
+--------------------+----------+-------+------+------+-------+------+
| Human Dom.         | 2339     | 2339  | 2365 | 2435 | 2350  | 2395 |
| Consumption        |          |       |      |      |       |      |
+--------------------+----------+-------+------+------+-------+------+
| Other Use, Losses  | 65       | 65    | 60   | 60   | 55    | 50   |
+--------------------+----------+-------+------+------+-------+------+
| TOTAL Dom.         | 2404     | 2404  | 2425 | 2495 | 2405  | 2445 |
| Consumption        |          |       |      |      |       |      |
+--------------------+----------+-------+------+------+-------+------+
| Ending Stocks      | 0        | 0     | 0    | 0    | 0     | 0    |
+--------------------+----------+-------+------+------+-------+------+
| TOTAL DISTRIBUTION | 2410     | 2410  | 2430 | 2500 | 2410  | 2450 |
+--------------------+----------+-------+------+------+-------+------+
| Calendar Yr. Imp.  | 0        |       | 0    | 0    |       |      |
| from U.S.          |          |       |      |      |       |      |
+--------------------+----------+-------+------+------+-------+------+
| Calendar Yr. Exp.  | 0        |       | 0    | 0    | 0     |      |
| to U.S.            |          |       |      |      |       |      |
+--------------------+----------+-------+------+------+-------+------+