Voluntary Report - Public distribution

**Date:** 3/5/2009

**GAIN Report Number:** RS9010

RS9010

**Russian Federation**

**Livestock and Products**

**Meat and Poultry Prices Update**

**2009**

**Approved by:**

![](media/image1.wmf)Mary Ellen Smith

U.S. Embassy

**Prepared by:**

Erik Hansen, Mikhail Maksimenko

**Report Highlights:**

Average retail prices for meat and poultry in Russia increased by more
than 23 percent in 2008 while the increase in overall food prices jumped
nearly 18 percent. Meat market analysts expect this trend to continue in
2009 as the Russian government continues to take protectionist measures
to limit imports of meat and poultry.

Includes PSD Changes: No

Includes Trade Matrix: No

Trade Report

Moscow \[RS1\]

\[RS\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Incomes Falling, Prices Rising 3](#incomes-falling-prices-rising)

[Table 1: Dynamics of food prices in November and December 2008
3](#table-1-dynamics-of-food-prices-in-november-and-december-2008)

[Poultry Wholesale Prices 4](#poultry-wholesale-prices)

[Poultry Retail Prices 4](#poultry-retail-prices)

[Table 2. Russia: Wholesale Poultry Prices in Moscow, Apr 03 -- January
08 (Rubles/KG)
5](#table-2.-russia-wholesale-poultry-prices-in-moscow-apr-03-january-08-rubleskg)

[Table 3. Russia: Poultry Retail Prices, Moscow, (Rubles/kg)
5](#table-3.-russia-poultry-retail-prices-moscow-rubleskg)

[Red Meat Wholesale Prices 5](#red-meat-wholesale-prices)

[Table 4. Russia: Beef and Pork Wholesale Prices, Half Carcass, Dec 2003
-- Dec 08 (Rubles/kg)
6](#table-4.-russia-beef-and-pork-wholesale-prices-half-carcass-dec-2003-dec-08-rubleskg)

[Red Meat Retail Prices 6](#red-meat-retail-prices)

[Table 5. Russia: Beef and Pork Retail Prices, Dec 2007 and Dec 2008
(RUR/Kg)
6](#table-5.-russia-beef-and-pork-retail-prices-dec-2007-and-dec-2008-rurkg)

[Meat Prices Expected to Rise in 2009
6](#meat-prices-expected-to-rise-in-2009)

[Other Reports 7](#other-reports)

# Executive Summary

According to the Russian State Statistic Service (Rosstat) average
retail prices for meat and poultry increased in Russia by more than 23
percent in 2008 while the overall growth of food prices in general
jumped by nearly 18 percent. Demand for beef and pork is expected to
decrease due to higher prices as Russian consumers begin substituting
them for cheaper proteins such as chicken meat and eggs.

The Russian government continues to implement protectionist measures
against imported agricultural products such as increasing import duties
on butter, soybean meal and dry milk powder, using tariff rate quotas to
limit meat and poultry imports, delisting U.S. and European Union meat
and poultry plants ostensibly for not meeting Russian requirements and
other such actions. Alongside the protectionist climate in Russia, the
Russian Ruble decreased by 35% against the U.S. Dollar during the last 6
months making imported agricultural products much more expensive. All of
these factors are leading to higher prices throughout the
production/import/wholesale trade/retail trade chain.

# Incomes Falling, Prices Rising 

Rosstat figures demonstrate that disposable income grew just 2.7% in
2008 after jumping 12.1% in 2007. In addition, Rosstat reported that
inflation in January 2009 reached 2% with much of it attributed to the
rise in meat and poultry prices. 2008 poultry and meat price growth were
the most significant compared to other food products (table 1).

The Russian government continues to implement protectionist measures
against imported agricultural products such as increasing import duties
on butter, soybean meal and dry milk powder, using tariff rate quotas to
limit meat and poultry imports, delisting U.S. and European Union meat
and poultry plants ostensibly for not meeting Russian requirements and
other such action. Along side the protectionist climate in Russia, the
Russian ruble decreased by 35% against the U.S. dollar during the last 6
months (1 USD = 23 Rubles in Sep 08 compared to 36 Rubles in Mar 09)
making imported agricultural products much more expensive. All of these
factors are leading to higher prices throughout the production
/import/wholesale trade/retail trade chain.

## Table 1: Dynamics of food prices in November and December 2008

  --------------- ------------ ---------- ----------------- -----------------
  Food products   As                      As percentage of  As percentage of
                  percentage              Dec 08 compared   Dec 08 compared
                  of previous             to Dec 07         to Dec 07
                  month                                     

                  November     December                     

  Food products   1.3          1.0        17.6              17.1

  Meat and        1.7          1.2        22.2              8.4
  poultry                                                   

  Fish and fish   2.4          2.2        15.1              9.0
  products                                                  

  Milk and dairy  1.4          0.7        12.2              30.4
  products                                                  

  Butter 100.9    0.6          10.5       40.3              

  Vegetable oil   -1.4         -1.9       22.1              52.3

  Eggs            3            1.3        13.8              28.7
  --------------- ------------ ---------- ----------------- -----------------

Source: ROSSTAT

Ministry of Agriculture officials have publically vowed to limit meat
and poultry imports in order to protect domestic meat and poultry
producers during the global financial crisis. Outgoing Minister of
Agriculture Aleksey Gordeyev has accused imported meat shipments on
numerous occasions of driving down farmgate pork prices and expressed
the need for serious measures to limit meat imports even if it means
increasing prices for Russian consumers. A major cause of concern of
Russian government officials is the ability of new pork and poultry
producers to repay their subsidized loans financed under the National
Priority Project for Agriculture.

Increasing beef and pork prices will likely lead many Russian consumers
to substitute more expensive red meats for poultry meat and eggs. Demand
for pork is lower than for poultry and some importers are switching from
buying hams and other premium cuts to cheaper pork offals and trimmings
which are growing more popular with consumers who watch food prices rise
on a monthly basis. With rising demand for poultry in 2009, prices are
expected to go up for both domestic and imported products.

# Poultry Wholesale Prices

Domestic frozen poultry carcasses and chicken leg quarters' wholesale
prices in Moscow increased by 24% in December 2008 compared to December
2007 (table 2). Prices for imported chicken carcasses increased by 14%
while imported chicken leg quarters' prices increased by 31% during the
same time period. Such increases were the largest seen in recent years.
The price differential between wholesale domestic and imported chicken
leg quarters was always substantial and generally hovered around 10
Rubles/kg in the first half of 2008. The gap decreased in the second
half of the year and ranged between 3-6 Rubles/kg.

# Poultry Retail Prices

Retail prices for poultry also increased significantly in Moscow (table
3). The top price level increased and wealthier customers can buy more
expensive products of well known brands, and buyers with lower incomes
can still enjoy chipper products from less known produces coming from
removed regions. About 30% of total poultry and meat retail trade takes
place at open air market.

Ministry of Agriculture officials have been planning for many years to
develop a system of cooperative farmers markets to make distribution
chain shorter and thus, allow customers to buy lower priced meat and
other food items. According to this plan agricultural products would go
straight from the field/farm to farmers markets and would be traded by
farmer's representatives avoiding the retailers.

## Table 2. Russia: Wholesale Poultry Prices in Moscow, Apr 03 -- January 08 (Rubles/KG) 

+---------+-----+--------+--------+--------+--------+--------+--------+
| *       | *   | **Do   |        |        | **Im   |        |        |
| *Date** | *Ex | mestic |        |        | ported |        |        |
|         | ch. | Chi    |        |        | Chi    |        |        |
|         | Ra  | cken** |        |        | cken** |        |        |
|         | te, |        |        |        |        |        |        |
|         | R   |        |        |        |        |        |        |
|         | U/\ |        |        |        |        |        |        |
|         | $** |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
|         |     | **     | **     | **     | **     | **     | **     |
|         |     | Frozen | Frozen | Frozen | Frozen | Frozen | Frozen |
|         |     | carca  | b      | leg    | carca  | b      | leg**  |
|         |     | sses** | reast, | quar   | sses** | reast, |        |
|         |     |        | bone   | ters** |        | bone   | **Quar |
|         |     |        | less** |        |        | less** | ters** |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 04/     | 31  | 41.77  | 55.67  | 44.50  | 41.90  | 56.38  | 34.42  |
| 30/2003 | .10 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 03/     | 28  | 54.07  | 84.50  | 52.50  | 52.51  | 80.30  | 44.96  |
| 31/2004 | .49 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 03/     | 27  | 61.42  | 85.00  | 56.10  | 63.17  | 87.33  | 54.66  |
| 30/2005 | .83 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 03/     | 27  | 48.56  | 91.82  | 53.42  | 52.54  | 102.38 | 43.23  |
| 30/2006 | .76 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 12/     | 24  | 65.65  | 119.80 | 58.53  | 68.25  | 125.15 | 53.08  |
| 29/2007 | .70 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 01/     | 24  | 65.60  | 117.62 | 56.28  | 69.24  | 119.60 | 52.30  |
| 29/2008 | .48 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 02/     | 24  | 66.83  | 114.26 | 61.33  | 69.00  | 120.09 | 52.60  |
| 28/2008 | .20 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 03/     | 23  | 66.84  | 117.84 | 62.82  | 68.00  | 119.03 | 55.56  |
| 27/2008 | .52 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 04/     | 23  | 67.99  | 118.99 | 69.17  | 68.31  | 120.67 | 55.88  |
| 30/2008 | .66 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 05/     | 23  | 65.04  | 121.79 | 67.92  | 70.08  | 116.79 | 56.31  |
| 29/2008 | .58 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 06/     | 23  | 67.17  | 117.83 | 66.28  | 68.59  | 120.49 | 58.54  |
| 26/2008 | .61 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 07/     | 23  | 66.40  | 111.50 | 66.00  | 68.40  | 117.56 | 59.82  |
| 31/2008 | .45 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 08/     | 24  | 65.70  | 115.67 | 68.93  | 66.62  | 117.70 | 62.97  |
| 28/2008 | .60 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 09/     | 25  | 69.61  | 122.63 | 74.50  | 75.37  | 119.27 | 69.07  |
| 25/2008 | .07 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 10/     | 27  | 75.63  | 121.56 | 76.21  | 76.27  | 120.78 | 70.96  |
| 30/2008 | .10 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 11/     | 27  | 79.78  | 120.17 | 73.87  | 76.08  | 120.03 | 70.82  |
| 27/2008 | .36 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+
| 12/     | 28  | 81.63  | 120.89 | 72.66  | 77.50  | 119.02 | 69.54  |
| 25/2008 | .61 |        |        |        |        |        |        |
+---------+-----+--------+--------+--------+--------+--------+--------+

Source: Institute of Agrarian Market Research (IKAR)

## Table 3. Russia: Poultry Retail Prices, Moscow, (Rubles/kg)

  ---------- ---------- -------- --------- -------- -------- ------------- -------- -------- --------- --------
             Moscow                                          Moscow                                    
             open-air                                        hypermarket                               
             market                                          (Auchan)                                  

             Dec 2007            Dec 2008                    Dec 2007                        Dec 2008  

             Chilled    Frozen   Chilled   Frozen            Chilled                Frozen   Chilled   Frozen

  Chicken                                                                                              

  Whole      69-80      60-75    80-120             90-100                 69-85    60-80    75-120    75-100
  birds                                                                                                

  Leg        70-95      60-70    95-105             85-90                  70-80    60-65    90-110    85-100
  quarters                                                                                             
  ---------- ---------- -------- --------- -------- -------- ------------- -------- -------- --------- --------

Source: Post market survey, January 23, 2009

## 

# Red Meat Wholesale Prices 

Domestic beef wholesale prices increased by 34% in December 2008 over a
12-month period while imported beef prices jumped 36%. Domestic pork
prices increased 33.5% while imported pork increased by only 26%. Most
of growth occurred in the second half of 2008. High than usual over
quota pork and beef imports in 2008 did not stop prices from growing at
tremendous rates.

## Table 4. Russia: Beef and Pork Wholesale Prices, Half Carcass, Dec 2003 -- Dec 08 (Rubles/kg)

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

  12/30/2003   29.25        51.00        54.96       52.50        53.89

  12/29/2004   27.78        72.00        81.17       83.50        84.12

  12/30/2005   28.75        81.00        85.41       85.00        88.10

  12/30/2006   26.38        85.00        91.83       74.50        88.89

  12/30/2007   24.54        101.00       105.00      92.50        99.50

  01/30/2008   24.48        106.25       108.25      92.50        117.49

  02/29/2008   24.12        107.33       107.88      88.75        107.04

  03/31/2008   23.25        105.67       104.25      86.33        105.03

  04/30/2008   23.65        100.00       111.23      86.50        116.07

  05/31/2008   23.67        115.94       117.44      90.00        115.12

  06/30/2008   23.41        120.48       123.98      98.00        115.66

  07/30/2008   23.33        122.50       125.00      103.00       119.68

  08/30/2008   24.58        125.87       129.87      113.67       119.00

  09/30/2008   25.25        129.75       139.25      123.40       125.37

  10/30/2008   27.10        132.21       145.20      127.68       127.54

  11/30/2008   27.61        134.00       146.67      129.33       127.20

  12/30/2008   29.23        135.00       143.30      123.50       125.00
  ------------ ------------ ------------ ----------- ------------ ------------

Source: Institute of Agrarian Market Research (IKAR)

# Red Meat Retail Prices 

Retail prices for beef and pork increased even higher in comparison with
wholesale prices in 2008. The prices for frozen pork and frozen beef
jumped by 30% and 35% respectively in 2008 in Moscow region open air
markets and hypermarkets. Price increases of chilled pork and beef
jumped about the same level during 2008 as well.

## Table 5. Russia: Beef and Pork Retail Prices, Dec 2007 and Dec 2008 (RUR/Kg)

+----+-------+-------+-------+-------+-------+-------+-------+-------+
| Po | M     |       |       |       | M     |       |       |       |
| rk | oscow |       |       |       | oscow |       |       |       |
|    | Open  |       |       |       | H     |       |       |       |
|    | air   |       |       |       | yperm |       |       |       |
|    | M     |       |       |       | arket |       |       |       |
|    | arket |       |       |       | (Au   |       |       |       |
|    |       |       |       |       | shan) |       |       |       |
+----+-------+-------+-------+-------+-------+-------+-------+-------+
|    | Dec   |       | Dec   |       | Dec   |       | Dec   |       |
|    | 2007  |       | 2008  |       | 2007  |       | 2008  |       |
+----+-------+-------+-------+-------+-------+-------+-------+-------+
|    | ch    | f     | ch    | f     | ch    | f     | ch    | f     |
|    | illed | rozen | illed | rozen | illed | rozen | illed | rozen |
+----+-------+-------+-------+-------+-------+-------+-------+-------+
| Po |       |       |       |       |       |       |       |       |
| rk |       |       |       |       |       |       |       |       |
+----+-------+-------+-------+-------+-------+-------+-------+-------+
| B  | 18    | 14    | 23    | 19    | 18    | 15    | 26    | 18    |
| on | 0-200 | 0-180 | 0-280 | 0-250 | 5-295 | 0-180 | 0-350 | 0-200 |
| e- |       |       |       |       |       |       |       |       |
|    |       |       |       |       |       |       |       |       |
| le |       |       |       |       |       |       |       |       |
| ss |       |       |       |       |       |       |       |       |
+----+-------+-------+-------+-------+-------+-------+-------+-------+
| B  | 16    | 12    | 21    | 17    | 17    | 14    | 20    | 15    |
| on | 0-190 | 5-150 | 0-230 | 0-230 | 5-220 | 0-155 | 0-260 | 0-180 |
| e- |       |       |       |       |       |       |       |       |
| in |       |       |       |       |       |       |       |       |
+----+-------+-------+-------+-------+-------+-------+-------+-------+
| Be |       |       |       |       |       |       |       |       |
| ef |       |       |       |       |       |       |       |       |
+----+-------+-------+-------+-------+-------+-------+-------+-------+
| B  | 20    | 18    | 27    | 20    | 20    | 17    | 26    | 17    |
| on | 0-240 | 0-200 | 0-370 | 0-270 | 0-300 | 0-230 | 0-380 | 0-220 |
| e- |       |       |       |       |       |       |       |       |
|    |       |       |       |       |       |       |       |       |
| le |       |       |       |       |       |       |       |       |
| ss |       |       |       |       |       |       |       |       |
+----+-------+-------+-------+-------+-------+-------+-------+-------+
| B  | 17    | 15    | 20    | 18    | 16    | 13    | 19    | 15    |
| on | 0-200 | 0-180 | 0-230 | 0-200 | 0-200 | 5-170 | 0-230 | 0-185 |
| e- |       |       |       |       |       |       |       |       |
| in |       |       |       |       |       |       |       |       |
+----+-------+-------+-------+-------+-------+-------+-------+-------+

Source: Office of Agricultural Affairs market surveys

# Meat Prices Expected to Rise in 2009

Retailers and traders that attended the XIV International Summit of
Leaders of the Food Market in Moscow in early February 2008 said that
food product prices will likely grow by 25-40 percent in 2009. Minister
of Agriculture Gordeyev recently stated that he expects to see new pork
and poultry projects continue in 2009 even as market analysts predict a
major decrease in domestic production resulting from the financial
crisis. Gordeyev optimistically stated that in a couple of years, Russia
may "overproduce" poultry meat and eggs making it necessary to introduce
production quotas to help keep prices at certain appropriate levels for
producers.

# Other Reports

RS9008 Economic Crisis Update

<http://www.fas.usda.gov/gainfiles/200902/146327327.pdf>

RS8099 Chlorine Ban Postponed Until January 1, 2010

<http://www.fas.usda.gov/gainfiles/200812/146306969.pdf>

RS8096 Import Poultry and Meat Duties and Volumes changed for 2009

<http://www.fas.usda.gov/gainfiles/200902/146327314.pdf>

RS8095 Russia Changes Legislation and Structure of Animal Improvement
Industry 

<http://www.fas.usda.gov/gainfiles/200812/146306807.pdf>

RS8089 Russia: Doctrine on Food Security

<http://www.fas.usda.gov/gainfiles/200811/146306496.pdf>

RS8087 Meat and Poultry TRQ Announced for 2009

<http://www.fas.usda.gov/gainfiles/200811/146306457.pdf>

RS8071 Poultry Annual Report

<http://www.fas.usda.gov/gainfiles/200809/146295900.pdf>

RS8067 Livestock Annual Report

<http://www.fas.usda.gov/gainfiles/200809/146295694.pdf>

RS8064 New Method Proposed for Calculating 2009 Meat and Poultry Import
Quotas

<http://www.fas.usda.gov/gainfiles/200808/146295641.pdf>

RS8050 Chlorine Use in Poultry Production Banned

<http://www.fas.usda.gov/gainfiles/200807/146295041.pdf>

RS8049 Frozen Poultry for Further Processing to be Banned

<http://www.fas.usda.gov/gainfiles/200807/146295034.pdf>

#