Required Report - public distribution

**Date:** 10/29/2004

**GAIN Report Number:** RS4322

RS4322

**Russian Federation**

**Exporter Guide**

**\$11.3 Billion Food and Agriculture Import Market**

**2004**

**Approved by:**

![](media/image1.wmf)Eric Wenberg, ATO Director

AtoMoscow

**Prepared by:**

Olga Taybakhtina

**Report Highlights:**

Russia\'s food and agriculture imports grew 14 percent last year, led by
consumer-oriented products that grew 19 percent in 2003. The retail
sector is in a building frenzy, with supermarket chains cloning
themselves. Exporters wishing to introduce their products can find
willing buyers, but promotion and commitment are needed. European
competition is strong and entrenched. France will spend \$1 million on
wine promotions alone. Consumer surveys and importers suggest that
Russia wants more U.S. products as quality and product diversity become
more important.

U.S. exporters are encouraged to discuss with State Departments of
Agriculture, U.S. State and Regional Trade Groups, and the Foreign
Agricultural Service, the promotional support available.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Moscow ATO \[RS4\]

\[RS\]

Report Highlights:

Increasing consumer demand for new and better quality food products, an
expanding economy, a population of 143 million, and favorable changes in
Euro/Dollar and Ruble/Dollar exchange rates make Russia an attractive
market for U.S. exporters. With rapid growth in food retail (sales up
20% in 2003), HRI (up 6%), and food processing (up 5%), the Russian
market offers good prospects for a wide range of U.S. consumer-ready
food and beverage products, as well as food ingredients.

**TABLE OF CONTENTS**

[SECTION I. MARKET OVERVIEW 3](#section-i.-market-overview)

[KEY POINTS 3](#key-points)

[ADVANTAGES AND CHALLENGES FOR U.S. EXPORTERS
3](#advantages-and-challenges-for-u.s.-exporters)

[SECTION II. EXPORTER BUSINESS TIPS
3](#section-ii.-exporter-business-tips)

[ASSESSING THE MARKET FOR YOUR PRODUCTS
5](#assessing-the-market-for-your-products)

[WORKING WITH A RUSSIAN IMPORTER 5](#working-with-a-russian-importer)

[DISTRIBUTION CHANNELS 5](#distribution-channels)

[PRICING 6](#pricing)

[CREDIT AND PAYMENT TERMS 6](#credit-and-payment-terms)

[BRAND IDENTITY 6](#brand-identity)

[ADVERTISING AND PROMOTIONAL ACTIVITIES
7](#advertising-and-promotional-activities)

[LOGISTICS AND TRANSPORTATION 8](#__RefHeading___Toc84390547)

[SECTION III. MARKET SECTOR STRUCTURE AND TRENDS
8](#section-iii.-market-sector-structure-and-trends)

[THE RETAIL FOOD SECTOR 8](#the-retail-food-sector)

[THE HOTEL, RESTAURANT, AND INSTITUTIONAL (HRI) SECTOR
9](#__RefHeading___Toc84390550)

[THE FOOD PROCESSING SECTOR 10](#the-food-processing-sector)

[SECTION IV. BEST HIGH-VALUE PRODUCT PROSPECTS
11](#section-iv.-best-high-value-product-prospects)

[Food Retail Sector 11](#food-retail-sector)

[HRI Sector 11](#hri-sector)

[Food Processing Sector 11](#food-processing-sector)

[Table B: Best High-Value Product Prospects
12](#table-b-best-high-value-product-prospects)

[SECTION V. KEY CONTACTS AND FURTHER INFORMATION
14](#section-v.-key-contacts-and-further-information)

[USDA/FAS AND ATO SERVICES **Error! Bookmark not
defined.**](#__RefHeading___Toc84390558)

[OTHER MARKET REPORTS **Error! Bookmark not
defined.**](#__RefHeading___Toc84390559)

[OTHER USEFUL CONTACTS: **Error! Bookmark not
defined.**](#__RefHeading___Toc84390560)

[APPENDIX I. STATISTICS 19](#appendix-i.-statistics)

[Table A: Key Trade & Demographic Information ^1/^ ^2/^
19](#table-a-key-trade-demographic-information-1-2)

[Table B: Consumer Food & Edible Fishery Product Imports
20](#table-b-consumer-food-edible-fishery-product-imports)

[Table C: Top 15 Suppliers of Consumer Foods & Edible Fishery Products
21](#table-c-top-15-suppliers-of-consumer-foods-edible-fishery-products)

[APPENDIX II. OTHER ECONOMIC AND DEMOGRAPHIC DATA
22](#appendix-ii.-other-economic-and-demographic-data)

[Table A: GDP Growth (%), 1997-2004 22](#table-a-gdp-growth-1997-2004)

[Table B: Resident Population 22](#table-b-resident-population)

[Table C: Resident Population (by age/gender)
22](#table-c-resident-population-by-agegender)

[APPENDIX III. IMPORT DUTIES/VAT FOR SELECTED PRODUCTS ^1/^
23](#appendix-iii.-import-dutiesvat-for-selected-products-1)

[APPENDIX IV. RUSSIAN IMPORT REGULATIONS
24](#appendix-iv.-russian-import-regulations)

# SECTION I. MARKET OVERVIEW

## KEY POINTS

-   Russia offers U.S. exporters a potentially huge market -- 143
    million consumers ...

-   ... although physical size (double the U.S. area, 10 time zones!)
    presents a challenge

-   Population is 70 percent urban - 13 cities with population of 1
    million or more

-   Bulk of the population is west of the Ural Mountains (European
    Russia) ...

-   ... but the Russian Far East (RFE) offers a natural market from U.S.
    West Coast

-   Moscow is the engine of growth...

    -   Nearly 20 million consumers in the region

    -   Accounts for more than 30 percent of total retail trade

    -   Attracts about 40 percent of foreign investment

    -   Per capita income is three times the national average

-   However, economic prosperity is spreading quickly to St. Petersburg
    and other cities

-   Per capita GDP was \$3,018 in 2003 - Purchasing Power Parity was
    \$8,900 ('CIA - The World Factbook' estimation)

-   GDP increased by 7.3 percent in 2003 - fifth straight year of strong
    economic growth

-   Consumer incomes have grown even faster, topped off by an estimated
    14 percent jump in 2003

-   Growing consumer demand has encouraged rapid expansion in food
    retail (up 20% in 2003), HRI (up 6%), and food processing (up 5%)

-   As a result, imports of intermediate and consumer-oriented food
    products in 2003 increased 7 percent and 19 percent, respectively

-   Recent favorable changes in Euro/Dollar and Ruble/Dollar exchange
    rates have improved price competitiveness of many U.S. food products

+----------------------------------+-----------------------------------+
| ## ADVANTAGES A                  |                                   |
| ND CHALLENGES FOR U.S. EXPORTERS |                                   |
+----------------------------------+-----------------------------------+
| ***Advantages***                 | ***Challenges***                  |
+----------------------------------+-----------------------------------+
| Five consecutive years of strong | While the middle class clearly is |
| economic growth and rising       | expanding, many consumers still   |
| incomes boost demand for new and | are not benefiting fully from the |
| better quality food products     | growth of the Russian economy.    |
+----------------------------------+-----------------------------------+
| Despite steady increases in      | Some consumers are wary of        |
| domestic food production,        | imported food products,           |
| imports are growing at a strong  | frightened by misleading and      |
| pace                             | inaccurate stories in the local   |
|                                  | media                             |
+----------------------------------+-----------------------------------+
| Inconsistent availability and    | Strong competition from products  |
| quality for some local products  | supplied by nearby West European  |
| create import opportunities for  | countries and by increasingly     |
| a variety of food and beverage   | sophisticated local producers     |
| products                         |                                   |
+----------------------------------+-----------------------------------+
| Local food processors must       | Processors often lack access to   |
| source new and better quality    | cheap credit, so may be forced to |
| food ingredients to compete with | limit growth or use cheaper       |
| imports of consumer-oriented     | imported or local inputs          |
| products                         |                                   |
+----------------------------------+-----------------------------------+
| New western-style supermarkets   | About 40-50 percent of food       |
| are rapidly expanding to meet    | purchases in larger cities and 70 |
| consumer demand for variety and  | percent or more of food purchases |
| service, creating a good venue   | in the regions are still made in  |
| for imported products            | open markets or small             |
|                                  | Soviet-style stores               |
+----------------------------------+-----------------------------------+
| I                                | Longer shipping time for U.S.     |
| mporters/distributors/processors | products ties up importers' funds |
| are beginning to look beyond     | and complicates supply logistics. |
| traditional local or West        |                                   |
| European suppliers               |                                   |
+----------------------------------+-----------------------------------+

# SECTION II. EXPORTER BUSINESS TIPS

As in many markets, business relationships in Russia are usually built
through personal contact. Communication by telephone, fax and e‑mail is
reliable, but dealing with new potential business partners is still best
done face-to-face. It is imperative to meet with several
importer/distributors before choosing the right partner. Following are
general marketing tips for newcomers to the Russian market:

-   Take time to research the market for your product. The better you
    understand local conditions and opportunities, the more likely that
    you will succeed in finding a buyer.

-   Business in Russia is a contact sport. While sales can be negotiated
    by telephone, fax or e-mail, any attempt to develop a successful,
    long-term trade relationship will require direct, personal contact.

-   If/when you do travel to Russia to visit potential trade partners,
    don't expect to spend a few days and close a deal. That could
    happen, but a successful partnership may take months to develop.

-   Pay attention to business fundamentals. Business basics - knowing
    your market, putting the customer first, and offering quality
    products - are as useful and necessary in Russia as in any other
    market.

-   Don't let culture shock impair your business judgment. Sometime
    during your first six months, everything may seem hopeless. However,
    this does not mean that it is.

-   Don't expect to do everything at an American pace. While the
    business environment is improving, many things simply move at a
    different speed. A good example: Getting around by car or taxi in
    major cities, such as Moscow and St. Petersburg, can be especially
    frustrating. Build extra time into your schedule - you will probably
    need it.

There are several alternative marketing strategies that can be used to
enter the Russian market. While there may be considerable overlap among
these different types, four broad approaches can be identified:

-   Sell directly to a Russian importer/distributor/processor.

-   Use the services of an American trading or export management
    company.

-   Sell to an agent/consolidator in Western Europe.

-   Establish your own import and distribution facilities in Russia.

A U.S. company, operating on its own, will generally pay higher customs
fees, face more difficult inspection procedures, and be forced to
contend with more administrative delays than would a local importer. The
local importer may or may not also be the distributor. This entity will
serve as a conduit for products into Russia and can deal with the
numerous barriers to bringing a new product into the country. A model
employed by many successful exporters is to use a Moscow or St.
Petersburg based trading company to act as primary customer and
facilitator of imports. In fact, most imported products sold in Western
Russia pass through Moscow and/or St. Petersburg. For the Russian Far
East, Vladivostok is home to most importers and the principal import and
transshipment point.

If an exporter is willing to invest the necessary time and effort, even
to the extent of establishing a representative office, then dealing
directly with fast-growing Russian processing companies will provide
better margins and the opportunity to respond more quickly to the
clients' demands. If the decision is made to establish local
representation, this office should be located in Moscow and run by an
experienced Russian national to ensure the greatest market coverage.

Following is an overview of local business practices and other
information that could be important when considering entry into the
Russian market.

## ASSESSING THE MARKET FOR YOUR PRODUCTS

There are various aspects to determining whether your product has market
potential in Russia:

-   Review the information provided in *Section IV. Best High-Value
    Product Prospects* of this report.

-   Participate in one of several established trade shows in Russia.
    This will allow you to take a first-hand look at the local market,
    meet potential importers, and gauge how competitive your product is
    compared to similar products being promoted at the show.

-   Review recent Trade Leads submitted by Russian companies. This can
    give you a general idea about the demand for particular products, as
    well as give you specific trade contacts.

-   Contact ATO Moscow to request a brief market assessment for your
    product and/or a list of Russian importers.

## WORKING WITH A RUSSIAN IMPORTER

Selecting the right trade partner is probably the most important thing
you can do to develop your business in Russia. An experienced and
reliable importer can help you avoid the kinds of mistakes that could
cost your company profits and sales. In this regard, banking and
supplier references are essential, as is an examination of the company's
experience and business history. There are local and U.S.-based
organizations that can help provide this kind of information. However,
be aware that credit reporting is still a relatively new practice in
Russia, and credit-reporting agencies may not have complete information
on potential business partners.

## DISTRIBUTION CHANNELS

Most importers also act as a primary wholesalers or distributors.
However, one of the key factors influencing any business operation in
Russia is the availability of working capital. Some importers simply
cannot afford to hold large stocks. In addition, they may be limited in
their ability to offer terms to retailers, which has become a very
common practice with the larger retailers.

Many wholesalers/distributors, particularly those located in the
regions, procure products locally from importers or domestic food
processors. Using relatively small but conveniently located warehouses,
these businesses supply local retail shops and supermarkets. The means
used by wholesalers to distribute products vary widely and are adjusted
according to the needs of their retail buyers and local market
conditions. Much of this business with smaller retailers and independent
shops is still done on a cash and carry basis. Some distributors offer
direct delivery based on telephone orders, while others sell exclusively
through agents. Through regular personal contact, the agent is expected
to know what the retailer needs and delivers goods as frequently as once
per day.

The entry of large foreign supermarket/hypermarket chains has had a
fundamental impact on food distribution in Russia. Increasingly, these
large retailers are buying in bulk directly from local manufacturers. At
the same time, the increasing buying power of these retail chains is
encouraging consolidation and growth among distributors in an attempt to
maintain some balance. Although, up to now, Russian retailers have done
little direct import, several of the larger chains are beginning to
bring in some items and a few are considering an even larger range of
products.

## PRICING

Product pricing for the Russian market, as elsewhere, is essentially
determined by local market conditions. In fact, retail prices can
sometimes vary significantly between relatively nearby cities and even
areas within the same city. However, with the spread of large retail
chains, pricing is becoming more competitive.

To understand how final prices and margins are determined, it is
important to understand the impact of the Russian tax system. The
product retail price is based on a several factors/assumptions:

-   Import duties vary by product, but generally range from about 5-30
    percent (see Appendix III)

-   An 18 percent value-added tax (VAT) is levied on imports at the
    point of entry (note: the VAT on some food products is only 10
    percent)

-   Customs clearance charges add about 1.25 percent The wholesale
    mark-up is typically 12-15 percent, while retail mark-up runs 35
    percent or more, depending on the product and the retailer

-   A profit tax is assessed at 39 percent of gross margin

## CREDIT AND PAYMENT TERMS

While the Russian banking system has recovered markedly since the 1998
financial crisis, credit is still relatively expensive and can be
difficult to arrange. In addition, Russian bank fees are often high, and
it can take much longer to open letters of credit or transfer funds than
is common in the United States. However, as the economy improves, the
financial operations of Russian banks also are improving. About half the
banks that are authorized to open foreign currency accounts also have
general licenses enabling them to undertake a full range of foreign
currency transactions. Many of these banks have correspondent banks in
the United States. Further, several American and foreign banks such as
Citibank, J.P. Morgan, Rafeissenbank, Societe Generale, and Credit
Suisse are licensed to operate in Russia.

Russian importers are accustomed to making 100 percent prepayment prior
to shipment. Where business relationships have become well established,
simple bank transfers often are made on the basis of payment on delivery
or payment after an agreed number of days. A letter of credit (LC) may
be used when required by the foreign supplier, but LCs are expensive and
sometimes difficult to arrange, so this is not a favored payment method.
Many foreign exporters, particularly those in Western Europe, are
offering credit terms to selected partners.

USDA credit guarantee programs (Supplier Credit, GSM-102, GSM-103 and
the Facilities Guarantee Program) can help overcome some of these
financing problems. For further information on these programs, please
visit the FAS website ([www.fas.usda.gov](http://www.fas.usda.gov/)) or
contact ATOMoscow (see *SECTION V. KEY CONTACTS AND FURTHER
INFORMATION*).

## BRAND IDENTITY

Foreign food companies were largely responsible for the concept of
product brands and brand loyalty through the introduction of imported
and, subsequently, locally processed products. However, the idea has
quickly caught on among local food producers and retailers. In fact,
name-brand food products have benefited from some of the heaviest media
advertising, particularly television.

Although imported consumer-oriented food products were trendy and very
much in demand during the early 1990\'s, many consumers are now showing
strong interest in old and new local products bearing Russian brand
names. Even some foreign food processors have taken advantage of this
trend by introducing new products with typically "Russian" brand names.
In fact, some of the most successful new food products are produced
locally but promoted using a mix of western marketing techniques and
traditional Russian values/themes.

Although the concept is relatively new in Russia, several of the larger
supermarket chains are beginning to offer a growing range of private
label products. Bottled water and juices, produced locally, were among
the first products to appear, but the list is growing. In fact, private
label products now account for as much as 10-15 percent of total sales
in some chains.

## ADVERTISING AND PROMOTIONAL ACTIVITIES

According to the Association of Communication Agencies of Russia and
Direct Info estimation, the local advertising market expanded sharply to
an estimated \$4.2 billion in 2003, an increase of nearly 20 percent
above the 2003 level. Television advertising, the largest and one of the
fastest growing segments, surged by 17 percent to \$1.5 billion. Much of
this rapid growth can be attributed to the continued expansion of the
local economy and the entry of new, large advertisers. However, higher
advertising fees likely contributed to the growth on a value basis. The
following table shows projected growth for all segments of the
advertising market in Russia.

Table A: Advertising Expenditures, 2001-2004

  --------------- ------------- ------------- ------------- -------------- -------------
                  **2001(\$     **2002(\$     **2003(\$     **2004         **2004/2003
                  Millions)**   Millions)**   Millions)**   forecast(\$    (% change)**
                                                            Millions)**    

  Television      510           900           1,210         1,500          24%

  Radio           70            90            115           135            17%

  Newspapers      310           380           455           490            8%

  Magazines       160           220           300           385            28%

  Billboards      275           400           530           610            15%

  Direct          110           170           250           300            20%
  Marketing                                                                

  Other           340           520           602           747            24%

  Total           1,800         2,700         3,500         4,200          20%
  --------------- ------------- ------------- ------------- -------------- -------------

Source: 'Association of Communication Agencies of Russia'; 'Direct INFO'
est.

Despite this continued strong growth, annual advertisement expenditure
in Russia is still less than \$30 per capita, compared with about \$100
per capita in Western Europe. TV ad rates are also much lower compared
to western countries. Such low TV rates are possible due to the fact
that Russian TV stations do not rely solely on advertising for revenue -
they are also financed either by the state or large corporations.
Because of the low rates, TV advertising has become the single most
favored means of advertising as it allows the advertiser to target
virtually all segments of the population at a lower cost than for any
other media. However, as suggested above, these rates are increasing,
which probably explains the slower growth in 2004 compared to the
previous years (76 percent increase in 2002, and 34 percent increase in
2003).

There are few regulations prohibiting specific forms or types of
advertising. One exception is the ban on TV advertising for tobacco and
hard liquor. Growing concern about the rapid increase in beer
consumption (albeit largely at the expense of vodka) has led to tighter
restrictions on beer ads, too. While TV advertising is still permitted,
no beer ads are permitted during prime time viewing hours when children
and teenagers are more likely to be watching. Also, no beer ads in any
medium may use cartoon, animal, sport or entertainment figures that
could be seen as targeting the youth market.

In-store promotions are becoming increasingly popular, especially in
Moscow, as are other point-of-sale advertising and promotional methods
commonly used in the U.S. However, such promotions are usually initiated
and funded by the distributor or the food processor, rather than by the
supermarket chains themselves although this, too, is starting to change.

## LOGISTICS AND TRANSPORTATION

Various routes are available for shipment of food products to Russia,
each with its own advantages and disadvantages. Some products are
sourced through Western European importers or brokers and transshipped
by truck or boat to Russian ports. More direct imports previously came
via Baltic or Finnish ports and then were shipped by truck or rail to
St. Petersburg or Moscow. The advantage of these ports was greater
efficiency, fewer problems with loss or damage, and overall lower
handling costs. However, changes in Russian import requirements have
largely redirected these shipments to Russian ports: St. Petersburg;
Novorossisk; and Rostov-on-Don.

Most consumer-oriented food and beverage products enter through St.
Petersburg and are customs-cleared there or in Moscow. In fact, the
transportation system for shipping U.S. high value food products into
Russia via St. Petersburg and Moscow is very well established. Transit
time ranges from 20 days to 27 days depending on the origination, with
an additional four days shipping time for final delivery by rail or
truck to Moscow.

From Moscow, products may move further eastward by truck or rail to
cities in Siberia and beyond. In fact, some products are shipped all the
way to the Russian Far East (RFE). However, most products destined for
the RFE enter through the ports of Vladivostok, Vostochny, Vanino,
Nakhodka and Magadan. Although Vostochny is the region's largest port by
volume, the majority of U.S. food exports to the Russian Far East enter
through Vladivostok.

# SECTION III. MARKET SECTOR STRUCTURE AND TRENDS

As the Russian economy continues to grow and consumer incomes rise,
there are emerging opportunities for a wide range of U.S. food products.
Following is an overview of the three major food and beverage sectors
\-- food retail, food processing and food service (HRI). While each
sector offers a unique set of challenges, there are also many
interesting possibilities for U.S. exporters. For more detailed
analysis, please refer to the other reports provided in *SECTION V. KEY
CONTACTS AND FURTHER INFORMATION*.

## THE RETAIL FOOD SECTOR

-   Rapid expansion of both local and foreign retail food chains

-   Room for further growth as supermarkets/hypermarkets account for
    only 12-15 percent of sales in Moscow -- less in secondary cities

-   Retail food sales surged 20 percent to \$67.5 billion in 2003[^1]

-   In fact, A.T. Kearney's 2003 Retail Development Index ranked Russia
    as the top expansion target for international retailers

-   Imports of consumer-oriented food products also were up sharply to
    6.62 billion -- a 19 percent increase

The value of retail food sales in Russia plummeted following the 1998
financial crisis as consumers were forced to scale back sharply on
purchases of imported food products and some higher-priced local
delicacies. However, like the rest of the Russian economy, the retail
food sector has recovered quickly over the past several years. In fact,
retail food sales in 2003 increased by more than 20 percent, reaching a
total of \$67.5 billion.

The most visible sign of growth in the retail food sector has been the
rapid introduction and expansion of western-style supermarket chains,
particularly in Moscow. Several foreign retailers, including Metro
(Germany), Spar (Netherlands) and Auchan (France), have already opened
outlets and announced plans for further expansion in Moscow, St.
Petersburg, and other secondary cities. France's Carrefour opened a
representative office in Moscow last year and continues to discuss plans
to open several hypermarkets in Moscow and St. Petersburg. Other
retailers (including Wal-Mart) are also rumored to be considering entry
into the Russian market.

Not content to sit by and watch the market be carved up by foreign
retailers, several local supermarket chains (Perekryostok, Seventh
Continent, Pyatorochka, etc.) and one foreign early-entrant (Ramstore)
have all launched equally ambitious expansion plans. While the focus for
some of these chains (Pyatorochka, Kopeika) is on smaller, neighborhood
stores, the trend is definitely for increasingly larger supermarkets and
hypermarkets. Financing for many of these projects is coming from the
Russian oil industry, which is looking for profitable ways to invest the
earnings that has accumulated from high oil prices in recent years.

It is not clear, at this point, if the local retail market can
accommodate all of the new supermarkets, hypermarkets, and cash and
carry outlets being planned in the short-term. However, two factors
point to significant market expansion opportunities over the longer
term: 1) per capita retail space in Russia is much less than in other
countries in Western and Central Europe; 2) supermarkets currently
account for only an estimated 10-15 percent of total retail food sales
in Russia (traditional wholesale markets and smaller local shops/kiosks
account for the bulk of sales).

The most important aspect of the growth of the supermarket/hypermarket
chains is the fact that such stores are more likely to attract middle-
and upper- income buyers. As a result, these outlets offer the best
opportunity to introduce and expand sales of U.S. food products. Indeed,
all of the foreign and most of the local chains offer bright, clean, and
convenient facilities, good service and selection, and relatively good
value. Again, although supermarkets/hypermarkets currently account for a
relatively small share of total retail sales, this is one of the fastest
growing areas of the rapidly expanding Russian retail sector.

## THE HOTEL, RESTAURANT, AND INSTITUTIONAL (HRI) SECTOR

-   Sharp increases in consumer income, pent-up consumer demand, and
    expanding tourism are creating a boom in Russia's HRI sector

-   Total turnover in the hotel/resort segment increased by 5.8 percent
    to \$7.5 billion in 2003[^2]

-   Fast-food chains, both foreign and home-grown versions, are
    expanding by 14-16 percent annually

-   Sales for mid-level or "democratic" restaurants are growing even
    faster - as much as 30 percent per year

-   Coffee shops are seeing the fastest growth -- 20-25 percent or more
    annually

-   As a result, Russia's imports of consumer-oriented food products in
    2003 increased by 19 percent to \$6.62 billion

-   However, further expansion is possible as the average Russian
    consumer spends only about nine percent of total food expenditures
    on meals away from home[^3]

The HRI sector may have suffered the most as a result of the 1998
financial crisis. Prior to 1998, this was, perhaps, the fastest growing
and most lucrative part of the Russian market for imported foods.
However, the sharp ruble devaluation in the months immediately following
the crisis wiped out a large part of the Russian middle class. According
to industry sources, restaurant revenues dropped by half, and many
restaurants found it difficult to remain profitable.

Fortunately, the sector is making an impressive comeback, particularly
as reflected in the growth of fast-food outlets and "democratic"
(mid-level) restaurants. Total HRI turnover expanded by more than 5.8
percent in 2003 (\$7.5 billion). Among the fastest-growing fast-food
chains are imports such as McDonald's and Sbarros and some very
successful local chains like Rostiks - the Russian version of Kentucky
Fried Chicken.

While most of these fast-food franchises are trying to source as much
food locally as possible to keep costs (and prices) down, there are a
number of middle-class, foreign-theme restaurants (American Bar and
Grill, Starlite Diner, Planet Sushi, etc.) that already use some U.S.
products and offer good potential for even greater use of imported
products, including beef, pork, seafood, and wine. Portion-controlled
and other semi-prepared foods should also gain in popularity. In
addition, the expansion of more up-scale restaurants will continue to
offer the best prospects for high-end U.S. wine, marble-beef, and
specialty seafood products.

## THE FOOD PROCESSING SECTOR

-   Total production increased sharply to \$40 billion in 2003, up 5.1
    percent over 2002

-   Consumer demand for more product variety and more consistent quality
    is pushing local food processors to source better quality
    ingredients

-   Although Russia's agricultural production is expanding, domestic
    output of intermediate or semi-processed is still limited

-   As a result, while imports of bulk commodities grew slightly by 4
    percent in 2003 to \$2.4 billion, imports of intermediate products
    grew more slowly to \$1.6 billion than last year, just 7 percent

-   Imports of fish and seafood, much of which is destined for further
    processing, grew even faster up 27 percent to \$482 million

Ironically, the financial crisis of 1998, which dealt a sharp blow to
the economy as a whole, breathed new life into the domestic food
processing industry as consumers who could no longer afford imported
goods increasingly turned toward less expensive domestic brands. Long
suffering domestic food processors suddenly found a captive and growing
market for their products. In fact, in some sub-sectors (beer, dairy
products, fruit juices) domestic suppliers have captured market share
that will be difficult to wrest away.

Those processors who have been able to attract further investment have
also done a good job of improving the quality of their products and the
sophistication of their marketing efforts. In fact, growing consumer
demand for more varied and better quality products helped boost direct
investment in the food-processing sector during the first six months of
2003 by nearly 63 percent (in dollar terms), with investments increasing
from \$552 million in 2002 to \$898 million in 2003 (Jan-Jun).

While the increasing sophistication of local food processors is creating
tougher competition for some imported food products, the rapid growth of
the domestic food-processing sector is creating new import opportunities
for a wide range of food ingredients. Also, as the Russian economy
continues to improve and consumer incomes grow, local processors are
finding it necessary to source new and/or better quality ingredients to
help maintain market share.

# SECTION IV. BEST HIGH-VALUE PRODUCT PROSPECTS

Following are suggested best prospects for U.S. exporters by sector:

## Food Retail Sector

-   Frozen/processed poultry products

-   Frozen/processed beef and pork products

-   Fish and seafood products

-   Fresh fruit (apples, pears, citrus)

-   Dried fruit and nuts

-   Convenience foods (including frozen and microwaveable, private
    label)

-   Canned vegetables (including private label)

-   Rice and wild rice

-   Ice cream and other frozen desserts

-   Confectionery

-   Wine

-   Dietetic/health foods

-   Pet foods

## HRI Sector

-   Chilled/frozen beef and pork

-   Fish and seafood products

-   Fresh fruit (apples, pears, citrus)

-   Dried fruit and nuts

-   Frozen vegetables

-   Frozen potato products

-   Rice and wild rice

-   Sauces and seasonings

-   Ice cream and other frozen desserts

-   Confectionery

-   Wine

## Food Processing Sector

-   Poultry meat and MDM

-   Beef and pork trimmings/offals

-   Fish and seafood products

-   Prunes, raisins, and other dried fruit

-   Almonds, pecans, other tree nuts, and peanuts

-   Hops

-   Soy protein/isolates/flour

-   Lactose

-   Quality Textured Vegetable Protein (TVP)

-   Gluten Powder

-   Preservatives and food colors

-   Seasonings/spices/flavorings

-   Beverage bases

-   Frozen/processed fruit

-   Specialized food ingredients (emulsifiers, enzymes, etc.)

-   Certified organic/natural ingredients

-   Kosher and halal-certified ingredients

+-------+------+-----+-----+------+-------+----------+--------------+---+
| #     |      |     |     |      |       |          |              | # |
| ## Ta |      |     |     |      |       |          |              | # |
| ble B |      |     |     |      |       |          |              | # |
| : Bes |      |     |     |      |       |          |              |   |
| t Hig |      |     |     |      |       |          |              | [ |
| h-Val |      |     |     |      |       |          |              | ] |
| ue Pr |      |     |     |      |       |          |              | { |
| oduct |      |     |     |      |       |          |              | . |
|  Pros |      |     |     |      |       |          |              | m |
| pects |      |     |     |      |       |          |              | a |
|       |      |     |     |      |       |          |              | r |
|       |      |     |     |      |       |          |              | k |
|       |      |     |     |      |       |          |              | } |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| **Pr  | **   | **  | **2 | **5  | **I   | **Key    | **Market     |   |
| oduct | 2003 | 200 | 003 | -Yr. | mport | Con      | Attr         |   |
| Categ | Imp  | 3** | Imp | Avg. | T     | straints | activeness** |   |
| ory** | orts |     | ort | Annu | ariff | to       |              |   |
|       | from | **  | s** | al** | R     | Market   | **for USA**  |   |
|       | U    | Mar |     |      | ate** | Devel    |              |   |
|       | SA** | ket |     | **Im |       | opment** |              |   |
|       |      | Siz |     | port |       |          |              |   |
|       |      | e** |     | Grow |       |          |              |   |
|       |      |     |     | th** |       |          |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Po    | 0.7  | 1.9 | 1   | 8%   | 25%,  | Country- | US has the   |   |
| ultry | MMT  | MMT | .14 |      | but   | specific | largest      |   |
| Meat  |      |     | MMT |      | not   | TRQs for | country TRQ. |   |
|       |      |     |     |      | less  | meat and | US leg       |   |
|       |      |     |     |      | than  | MDM.     | quarters     |   |
|       |      |     |     |      | 0.2   | Local    | popular      |   |
|       |      |     |     |      | Eu    | pr       | among        |   |
|       |      |     |     |      | ros/k | oduction | low-income   |   |
|       |      |     |     |      | ilo + | in       | buyers. MDM  |   |
|       |      |     |     |      | 10%   | creasing | use          |   |
|       |      |     |     |      | VAT,  | sharply. | increasing   |   |
|       |      |     |     |      | 18%   |          | in           |   |
|       |      |     |     |      | VAT   |          | processing   |   |
|       |      |     |     |      | for   |          | sec          |   |
|       |      |     |     |      | proc  |          |              |   |
|       |      |     |     |      | essed |          | tor.         |   |
|       |      |     |     |      | meat  |          |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Beef  | 0    | 0.9 | 0.4 | 4%   | 15%   | Import   | U.S.         |   |
| /Veal | .001 | MMT | MMT |      | (60%  | TRQs for | coun         |   |
|       | MMT  |     |     |      | ou    | frozen   | try-specific |   |
|       |      |     |     |      | t-of- | and      | quota. Good  |   |
|       |      |     |     |      | quota | chilled  | prospects    |   |
|       |      |     |     |      | tari  | beef.    | for high     |   |
|       |      |     |     |      | ffs), | Local    | quality and  |   |
|       |      |     |     |      | but   | beef     | por          |   |
|       |      |     |     |      | not   | covers   | tion-control |   |
|       |      |     |     |      | less  | bulk of  | beef in fast |   |
|       |      |     |     |      | than  | pr       | growing HRI  |   |
|       |      |     |     |      | 0.15  | ocessing | and some     |   |
|       |      |     |     |      | --    | and some | upscale      |   |
|       |      |     |     |      | 0.25  | retail   | retail.      |   |
|       |      |     |     |      | Euros | needs,   |              |   |
|       |      |     |     |      | /kilo | but      |              |   |
|       |      |     |     |      | (     | output   |              |   |
|       |      |     |     |      | 0.6 - | de       |              |   |
|       |      |     |     |      | 0.8   | clining. |              |   |
|       |      |     |     |      | Euros | Germany  |              |   |
|       |      |     |     |      | /kilo | d        |              |   |
|       |      |     |     |      | ou    | ominates |              |   |
|       |      |     |     |      | t-of- | chilled  |              |   |
|       |      |     |     |      | quota | imports; |              |   |
|       |      |     |     |      | tar   | Ukraine, |              |   |
|       |      |     |     |      | iffs) | Brazil,  |              |   |
|       |      |     |     |      |       | and      |              |   |
|       |      |     |     |      | \+    | Ireland  |              |   |
|       |      |     |     |      | 10%   | account  |              |   |
|       |      |     |     |      | VAT,  | for most |              |   |
|       |      |     |     |      | 18%   | frozen   |              |   |
|       |      |     |     |      | VAT   | imports. |              |   |
|       |      |     |     |      | for   |          |              |   |
|       |      |     |     |      | veal, |          |              |   |
|       |      |     |     |      | cuts  |          |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Pork  | 0    | 0.9 | 0.4 | 1    | 15%   | Import   | U.S.         |   |
|       | .002 | MMT | MMT | 3,7% | (80%  | TRQ.     | coun         |   |
|       | MMT  |     |     |      | ou    | Local    | try-specific |   |
|       |      |     |     |      | t-of- | output   | quota. Some  |   |
|       |      |     |     |      | quota | in       | prospects    |   |
|       |      |     |     |      | tari  | creasing | for high     |   |
|       |      |     |     |      | ffs), | and      | quality and  |   |
|       |      |     |     |      | but   | con      | por          |   |
|       |      |     |     |      | not   | sumption | tion-control |   |
|       |      |     |     |      | less  | de       | pork in fast |   |
|       |      |     |     |      | than  | clining. | growing HRI  |   |
|       |      |     |     |      | 0.2 - | Strong   | and some     |   |
|       |      |     |     |      | 0.25  | import   | upscale      |   |
|       |      |     |     |      | Euros | com      | retail.      |   |
|       |      |     |     |      | /kilo | petition |              |   |
|       |      |     |     |      | (1.06 | from     |              |   |
|       |      |     |     |      | Euros | Brazil   |              |   |
|       |      |     |     |      | /kilo | and      |              |   |
|       |      |     |     |      | ou    | Poland.  |              |   |
|       |      |     |     |      | t-of- |          |              |   |
|       |      |     |     |      | quota |          |              |   |
|       |      |     |     |      | tarif |          |              |   |
|       |      |     |     |      | fs) + |          |              |   |
|       |      |     |     |      | 10%   |          |              |   |
|       |      |     |     |      | VAT,  |          |              |   |
|       |      |     |     |      | 18%   |          |              |   |
|       |      |     |     |      | VAT   |          |              |   |
|       |      |     |     |      | for   |          |              |   |
|       |      |     |     |      | cuts  |          |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| O     | \$   |     | \   | 14%  | 15% - |          | Not covered  |   |
| ffals | 44.6 |     | $11 |      | 20%,  |          | under TRQ.   |   |
|       | mil  |     | 4.5 |      | but   |          | Good         |   |
|       | lion |     | m   |      | not   |          | consumer     |   |
|       |      |     | ill |      | less  |          | demand,      |   |
|       |      |     | ion |      | than  |          | especially   |   |
|       |      |     |     |      | 0     |          | for beef     |   |
|       |      |     |     |      | .15 - |          | liver.       |   |
|       |      |     |     |      | 0.8   |          |              |   |
|       |      |     |     |      | E     |          |              |   |
|       |      |     |     |      | uros/ |          |              |   |
|       |      |     |     |      | k     |          |              |   |
|       |      |     |     |      | ilo + |          |              |   |
|       |      |     |     |      | 10%   |          |              |   |
|       |      |     |     |      | VAT,  |          |              |   |
|       |      |     |     |      | 5%    |          |              |   |
|       |      |     |     |      | and   |          |              |   |
|       |      |     |     |      | 18%   |          |              |   |
|       |      |     |     |      | VAT   |          |              |   |
|       |      |     |     |      | for   |          |              |   |
|       |      |     |     |      | ph    |          |              |   |
|       |      |     |     |      | armac |          |              |   |
|       |      |     |     |      | ology |          |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Fish  | 0.0  | 3.9 | 1   | 11%  | 10% + | Recovery | O            |   |
| and   | 1MMT | MMT | MMT |      |       | in local | pportunities |   |
| Se    |      |     |     |      | 1     | catch/   | for          |   |
| afood |      |     |     |      | 0-18% | pro      | groundfish   |   |
|       |      |     |     |      | VAT   | duction, | and salmon,  |   |
|       |      |     |     |      |       | expected | especially   |   |
|       |      |     |     |      |       | higher   | u            |   |
|       |      |     |     |      |       | prices.  | nderutilized |   |
|       |      |     |     |      |       |          | species, for |   |
|       |      |     |     |      |       |          | processing.  |   |
|       |      |     |     |      |       |          | Growing      |   |
|       |      |     |     |      |       |          | demand for   |   |
|       |      |     |     |      |       |          | high value   |   |
|       |      |     |     |      |       |          | products for |   |
|       |      |     |     |      |       |          | HRI and      |   |
|       |      |     |     |      |       |          | retail.      |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Fresh | 0.00 |     | 2.8 | 1    | Ap    | Cold     | Good         |   |
| f     | 3MMT |     | MMT | 2.7% | ples: | storage  | potential    |   |
| ruit, |      |     |     |      |       | infras   | for U.S.     |   |
| deci  |      |     |     |      | (Jan  | tructure | apples and   |   |
| duous |      |     |     |      | 1-Jul | limits   | pears,       |   |
|       |      |     |     |      | 31)   | e        | especially   |   |
|       |      |     |     |      |       | fficient | during       |   |
|       |      |     |     |      | 0.1   | distr    | February-    |   |
|       |      |     |     |      | Euros | ibution. | April        |   |
|       |      |     |     |      | per   | Strong   | period.      |   |
|       |      |     |     |      | kg    | com      |              |   |
|       |      |     |     |      |       | petition |              |   |
|       |      |     |     |      | (Aug  | from     |              |   |
|       |      |     |     |      | 1-Dec | Poland,  |              |   |
|       |      |     |     |      | 31)   | China,   |              |   |
|       |      |     |     |      |       | Moldavia |              |   |
|       |      |     |     |      | 0.2   | for      |              |   |
|       |      |     |     |      | Euros | apples;  |              |   |
|       |      |     |     |      | per   | A        |              |   |
|       |      |     |     |      | kg    | rgentina |              |   |
|       |      |     |     |      |       | and      |              |   |
|       |      |     |     |      | \+    | China    |              |   |
|       |      |     |     |      | 18%   | for      |              |   |
|       |      |     |     |      | VAT   | pears.   |              |   |
|       |      |     |     |      |       | Note:    |              |   |
|       |      |     |     |      | P     | Belgium  |              |   |
|       |      |     |     |      | ears: | and      |              |   |
|       |      |     |     |      |       | Net      |              |   |
|       |      |     |     |      | 10% + | herlands |              |   |
|       |      |     |     |      | 18%   | are      |              |   |
|       |      |     |     |      | VAT   | major    |              |   |
|       |      |     |     |      |       | trans    |              |   |
|       |      |     |     |      |       | shipment |              |   |
|       |      |     |     |      |       | ports.   |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Dried | \    |     | \   | 1    | 5%,   | Tough    | U.S. raisins |   |
| f     | $4.4 |     | $74 | 0.7% | but   | com      | and prunes   |   |
| ruits | mil  |     | m   |      | not   | petition | competitive  |   |
| and   | lion |     | ill |      | less  | from     | for quality  |   |
| nuts  |      |     | ion |      | than  | Iran,    | retail and   |   |
|       |      |     |     |      | 0.02  | Taj      | processing   |   |
|       |      |     |     |      | Euros | ikistan, | market. U.S. |   |
|       |      |     |     |      | per   | Afg      | almonds      |   |
|       |      |     |     |      | kg +  | hanistan | enjoying     |   |
|       |      |     |     |      |       | and      | very strong  |   |
|       |      |     |     |      | 18%   | Uz       | growth. Good |   |
|       |      |     |     |      | VAT   | bekistan | potential    |   |
|       |      |     |     |      |       | for bulk | for U.S.     |   |
|       |      |     |     |      |       | dried    | pecans and   |   |
|       |      |     |     |      |       | fruits.  | other nuts.  |   |
|       |      |     |     |      |       | Iran     |              |   |
|       |      |     |     |      |       | biggest  |              |   |
|       |      |     |     |      |       | co       |              |   |
|       |      |     |     |      |       | mpetitor |              |   |
|       |      |     |     |      |       | for      |              |   |
|       |      |     |     |      |       | peanuts  |              |   |
|       |      |     |     |      |       | and      |              |   |
|       |      |     |     |      |       | pis      |              |   |
|       |      |     |     |      |       | tachios; |              |   |
|       |      |     |     |      |       | Ta       |              |   |
|       |      |     |     |      |       | jikistan |              |   |
|       |      |     |     |      |       | for      |              |   |
|       |      |     |     |      |       | walnuts. |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| C     | \    |     | \$  | 5.1% | 5-15% | Local    | Market for   |   |
| anned | $1.5 |     | 223 |      | (duty | canned   | canned       |   |
| f     | mil  |     | m   |      | de    | pr       | vegetables   |   |
| ruits | lion |     | ill |      | pends | oduction | in           |   |
| and   |      |     | ion |      | on    | with     | particular   |   |
| veget |      |     |     |      | pro   | good     | should show  |   |
| ables |      |     |     |      | duct, | brand    | continued    |   |
|       |      |     |     |      | size  | loyalty; | strong       |   |
|       |      |     |     |      | of    | imports  | growth as    |   |
|       |      |     |     |      | pac   | account  | consumers    |   |
|       |      |     |     |      | kage, | for good | learn time   |   |
|       |      |     |     |      | e     | share of | saving       |   |
|       |      |     |     |      | tc.), | high     | qualities.   |   |
|       |      |     |     |      | but   | -quality | Good         |   |
|       |      |     |     |      | not   | market:  | potential    |   |
|       |      |     |     |      | less  | B        | for private  |   |
|       |      |     |     |      | than  | onduelle | label        |   |
|       |      |     |     |      | 0.075 | (        | products.    |   |
|       |      |     |     |      | Euros | France), |              |   |
|       |      |     |     |      | per   | Eko and  |              |   |
|       |      |     |     |      | kilo  | Globus   |              |   |
|       |      |     |     |      | +10%  | (H       |              |   |
|       |      |     |     |      | VAT,  | ungary), |              |   |
|       |      |     |     |      | 18%   | P        |              |   |
|       |      |     |     |      | VAT   | illsbury |              |   |
|       |      |     |     |      | for   | (U.S.,   |              |   |
|       |      |     |     |      | proc  | France,  |              |   |
|       |      |     |     |      | essed | Italy).  |              |   |
|       |      |     |     |      | pro   |          |              |   |
|       |      |     |     |      | ducts |          |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Fruit | 4.4  | 1,  | 6   | 1.2% | 5-15% | Strong   | Strong       |   |
| ju    | mln  | 724 | 3.6 |      | (duty | com      | import       |   |
| ices/ | li   | mln | mln |      | de    | petition | demand for   |   |
|       | ters | lit | lit |      | pends | from     | c            |   |
| co    |      | ers | ers |      | on    | local    | oncentrates, |   |
| ncent | \$8  |     |     |      | pro   | packaged | including    |   |
| rates | mil  |     | \   |      | duct, | juices,  | exotic and   |   |
|       | lion |     | $13 |      | size  | some     | some premium |   |
|       |      |     | 0.8 |      | of    | local    | juices.      |   |
|       |      |     | m   |      | pac   | pr       |              |   |
|       |      |     | ill |      | kage, | oduction |              |   |
|       |      |     | ion |      | e     | of       |              |   |
|       |      |     |     |      | tc.), | conce    |              |   |
|       |      |     |     |      | but   | ntrates. |              |   |
|       |      |     |     |      | not   |          |              |   |
|       |      |     |     |      | less  |          |              |   |
|       |      |     |     |      | than  |          |              |   |
|       |      |     |     |      | 0     |          |              |   |
|       |      |     |     |      | .05 - |          |              |   |
|       |      |     |     |      | 0.07  |          |              |   |
|       |      |     |     |      | Eu    |          |              |   |
|       |      |     |     |      | ros\\ |          |              |   |
|       |      |     |     |      | liter |          |              |   |
|       |      |     |     |      | +10%  |          |              |   |
|       |      |     |     |      | VAT   |          |              |   |
|       |      |     |     |      | and   |          |              |   |
|       |      |     |     |      | 18    |          |              |   |
|       |      |     |     |      | VAT   |          |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Pr    | \$1  |     | \$2 | 10%  | 15% + | Some     | Continued    |   |
| otein | mil  |     | 3.3 |      | 18%   | local    | strong       |   |
| iso   | lion |     | m   |      | VAT,  | pr       | demand from  |   |
| lates |      |     | ill |      | 10%   | oduction | food         |   |
| and   |      |     | ion |      | VAT   | dev      | processing   |   |
| co    |      |     |     |      | for   | eloping, | sector.      |   |
| ncent |      |     |     |      | child | es       |              |   |
| rates |      |     |     |      | and   | pecially |              |   |
|       |      |     |     |      | dia   | foreign  |              |   |
|       |      |     |     |      | betic | c        |              |   |
|       |      |     |     |      | nutr  | ompanies |              |   |
|       |      |     |     |      | ition |          |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Hops  | \    |     | \$1 | 20%  | 5% +  | Most     | Growth in    |   |
| (hops | $2.7 |     | 8.4 | (    | 18%   | brewers  | beer output  |   |
| con   | (    |     | (3  | 23%) | VAT   | are      | slowed       |   |
| centr | 0.4) |     | .2) |      | (5% + | German   | somewhat     |   |
| ates) | mil  |     | m   |      | 18%   | or       | last year    |   |
|       | lion |     | ill |      | VAT,  | German   | but should   |   |
|       |      |     | ion |      | 10%   | -trained | grow by 10   |   |
|       |      |     |     |      | VAT   | with     | percent or   |   |
|       |      |     |     |      | for   | natural  | more over    |   |
|       |      |     |     |      | medi  | bias in  | near term.   |   |
|       |      |     |     |      | cine) | favor of | Limited      |   |
|       |      |     |     |      |       | German   | local hops   |   |
|       |      |     |     |      |       | hops.    | production.  |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Snack | \    |     | \   | -8%  | 5% -  | Strong   | Good         |   |
| Foods | $0.3 |     | $49 |      | 15%,  | com      | potential    |   |
|       | mil  |     | m   |      | but   | petition | for high     |   |
|       | lion |     | ill |      | not   | from     | quality U.S. |   |
|       |      |     | ion |      | less  | local    | snacks:      |   |
|       |      |     |     |      | than  | pr       | popcorn,     |   |
|       |      |     |     |      | 0.15  | oducers, | nuts, dried  |   |
|       |      |     |     |      | --    | i        | fruits       |   |
|       |      |     |     |      | 0.075 | ncluding | mixes.       |   |
|       |      |     |     |      | Eu    | some     |              |   |
|       |      |     |     |      | ro/kg | foreign  |              |   |
|       |      |     |     |      | (duty | brands   |              |   |
|       |      |     |     |      | de    | such as  |              |   |
|       |      |     |     |      | pends | Lay's    |              |   |
|       |      |     |     |      | on    | (        |              |   |
|       |      |     |     |      | pro   | PepsiCo) |              |   |
|       |      |     |     |      | duct, | and      |              |   |
|       |      |     |     |      | size  | Estrella |              |   |
|       |      |     |     |      | of    | (Kraft)  |              |   |
|       |      |     |     |      | pac   | --       |              |   |
|       |      |     |     |      | kage, | Pringles |              |   |
|       |      |     |     |      | sugar | from     |              |   |
|       |      |     |     |      | con   | Europe.  |              |   |
|       |      |     |     |      | tent, |          |              |   |
|       |      |     |     |      | et    |          |              |   |
|       |      |     |     |      | c.) + |          |              |   |
|       |      |     |     |      | 10% - |          |              |   |
|       |      |     |     |      | 18%   |          |              |   |
|       |      |     |     |      | VAT   |          |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Rice  | 0    | 0   | 0   | 12%  | 10%,  | Some     | Opportunity  |   |
|       | .002 | .65 | .46 |      | but   | local    | for high     |   |
|       | MMT  | MMT | MMT |      | not   | pr       | quality U.S. |   |
|       |      |     |     |      | less  | oduction | rice, wild   |   |
|       |      |     |     |      | than  | and      | rice in HRI  |   |
|       |      |     |     |      | 0.03  | lo       | and retail.  |   |
|       |      |     |     |      | Euros | w-priced |              |   |
|       |      |     |     |      | per   | com      |              |   |
|       |      |     |     |      | k     | petition |              |   |
|       |      |     |     |      | ilo + | from     |              |   |
|       |      |     |     |      | 10%   | China    |              |   |
|       |      |     |     |      | VAT   | /Vietnam |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Wine  | 0.4  | 593 | 229 | 7.4% | 2     | Com      | Existing     |   |
|       | mln  | mln | mln |      | 0%, + | petition | w            |   |
|       | li   | lit | lit |      | 18%   | from     | ine-drinking |   |
|       | ters | ers | ers |      | VAT   | locally  | culture      |   |
|       |      |     |     |      |       | produced | getting      |   |
|       |      |     |     |      |       | beer,    | boost from   |   |
|       |      |     |     |      |       | vodka,   | GOR policy   |   |
|       |      |     |     |      |       | plus     | to reduce    |   |
|       |      |     |     |      |       | wine     | hard alcohol |   |
|       |      |     |     |      |       | imports  | (vodka)      |   |
|       |      |     |     |      |       | from     | consumption. |   |
|       |      |     |     |      |       | Europe.  | Especially   |   |
|       |      |     |     |      |       |          | good         |   |
|       |      |     |     |      |       |          | potential    |   |
|       |      |     |     |      |       |          | for          |   |
|       |      |     |     |      |       |          | m            |   |
|       |      |     |     |      |       |          | edium-priced |   |
|       |      |     |     |      |       |          | wines.       |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| Pet   | \    | \$  | \$4 | 1    | 20%,  | Strong   | Large number |   |
| food  | $2.4 | 335 | 4.5 | 5.3% | but   | local    | of pets and  |   |
|       | mil  | m   | m   |      | not   | prod     | limited      |   |
|       | lion | ill | ill |      | less  | uction - | consumption  |   |
|       |      | ion | ion |      | than  | Mars has |              |   |
|       |      |     |     |      | 0.16  | two      |              |   |
|       |      |     |     |      | Euros | plants   |              |   |
|       |      |     |     |      | /kg + | that     |              |   |
|       |      |     |     |      | 18%   | produce  |              |   |
|       |      |     |     |      | VAT   | Whiskas, |              |   |
|       |      |     |     |      |       | Kitekat, |              |   |
|       |      |     |     |      |       | P        |              |   |
|       |      |     |     |      |       | edigree; |              |   |
|       |      |     |     |      |       | Nestle's |              |   |
|       |      |     |     |      |       | Purina   |              |   |
|       |      |     |     |      |       | produces |              |   |
|       |      |     |     |      |       | Friskies |              |   |
|       |      |     |     |      |       | and      |              |   |
|       |      |     |     |      |       | Darling  |              |   |
|       |      |     |     |      |       | locally; |              |   |
|       |      |     |     |      |       | other    |              |   |
|       |      |     |     |      |       | imported |              |   |
|       |      |     |     |      |       | and      |              |   |
|       |      |     |     |      |       | local    |              |   |
|       |      |     |     |      |       | brands,  |              |   |
|       |      |     |     |      |       | some     |              |   |
|       |      |     |     |      |       | very     |              |   |
|       |      |     |     |      |       | ine      |              |   |
|       |      |     |     |      |       | xpensive |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+
| ***So |      |     |     |      |       |          |              |   |
| urce: |      |     |     |      |       |          |              |   |
| Ru    |      |     |     |      |       |          |              |   |
| ssian |      |     |     |      |       |          |              |   |
| State |      |     |     |      |       |          |              |   |
| Stati |      |     |     |      |       |          |              |   |
| stics |      |     |     |      |       |          |              |   |
| Comm  |      |     |     |      |       |          |              |   |
| ittee |      |     |     |      |       |          |              |   |
| (Go   |      |     |     |      |       |          |              |   |
| skoms |      |     |     |      |       |          |              |   |
| tat); |      |     |     |      |       |          |              |   |
| Ru    |      |     |     |      |       |          |              |   |
| ssian |      |     |     |      |       |          |              |   |
| Cust  |      |     |     |      |       |          |              |   |
| oms;' |      |     |     |      |       |          |              |   |
| D     |      |     |     |      |       |          |              |   |
| irect |      |     |     |      |       |          |              |   |
| INFO' |      |     |     |      |       |          |              |   |
| esti  |      |     |     |      |       |          |              |   |
| matio |      |     |     |      |       |          |              |   |
| n.*** |      |     |     |      |       |          |              |   |
+-------+------+-----+-----+------+-------+----------+--------------+---+

# 

# SECTION V. KEY CONTACTS AND FURTHER INFORMATION

***Contact Information for FAS Offices in Russia and in the United
States:***

Eric Wenberg, ATO Director

Olga Taybakhtina, Marketing Assistant

U.S. Agricultural Trade Office

American Embassy

Bolshoy Devyatinskiy Pereulok 8

121099 Moscow, Russia

Tel: 7 (095) 728-5560; Fax: 7 (095) 728-5069

E-mail: <atomoscow@usda.gov>

*For mail coming from the U.S.:*

Agricultural Trade Office

PSC 77 AGR

APO, AE 09721

*For international mail*:

Agricultural Trade Office

U.S. Embassy - Box M

Itainen Puistortie 14

00140 Helsinki, Finland

*Covering Northwest Russia (St. Petersburg):*

Maria Baranova, ATO Marketing Assistant

American Consulate General

Nevskiy Prospekt, 25

191186 St. Petersburg, Russia

Tel: 7 (812) 326-2580; Fax: 7 (812) 326-2561

E-mail: <Maria.Baranova@usda.gov>

*Covering the Russian Far East (Vladivostok):*

Svetlana Ilyina, ATO Marketing Assistant

American Consulate General

Ulitsa Pushkinskaya, 32

690001 Vladivostok, Russia

Tel: 7 (4232) 300-089; Fax: 7 (4232) 300-089

E-mail: <Svetlana.Ilyina@usda.gov>

*For General Information on FAS/USDA Market Promotion Programs and
Activities:*

AgExport Services Division

Room 4939

14^th^ and Independence, SW

Washington, DC 20250

Tel: (202) 720-6343; Fax: (202) 690‑0193

**FAS Website:** [www.fas.usda.gov](http://www.fas.usda.gov/)

*For Trade Policy/Market Access Issues, General Information on the
Russian Agricultural Sector, etc:*

Allan Mustard, Minister-Counselor

Office of Agricultural Affairs

American Embassy

Bolshoy Devyatinskiy Pereulok 8

121099 Moscow, Russia

Tel: 7 (095) 728-5222; Fax: 7 (095) 728-5133 or 728 5102

E-mail: <agmoscow@usda.gov> or <agmoscow@corbina.ru>

## USDA/FAS AND ATO SERVICES

The Foreign Agricultural Service and the Agricultural Trade
Office/Moscow offer a variety of programs, services, and information
resources to help U.S. exporters of food, beverage, and agricultural
products learn more about the Russian market, establish initial contact
with Russian buyers, and promote their products in the local market.
Following is a partial listing of programs and services.

***Trade Leads*** are direct inquiries from Russian buyers seeking U.S.
sources for specific food, beverage, or agricultural products. U.S.
companies can receive these Trade Leads by contacting the AgExport
Services Division, FAS/USDA or by visiting the USDA/FAS Homepage (see
contact information above).

***Buyer Alert*** is a bi-weekly publication providing information on
specific food, beverage, and agricultural products offered by U.S.
exporters. U.S. companies may place ads in Buyer Alert by contacting the
AgExport Services Division, FAS/USDA (see contact information above).

***U.S. Supplier Lists*** are drawn from an extensive database of
companies that can supply a wide range of U.S. food, beverage, and
agricultural products. The ATO Moscow supplies these lists to Russian
importers on request. U.S. companies that wish to be included in this
database should contact the AgExport Services Division, FAS/USDA (see
contact information above).

***Foreign Buyer Lists*** are drawn from an extensive database of
Russian importers dealing with a wide range of food, beverage, and
agricultural products. U.S. companies can order these lists through the
AgExport Services Division, FAS/USDA (see contact information above).

The ATO/Moscow also coordinates U.S. participation in local trade shows
(see list of Russian Trade Shows below), sponsors supermarket and menu
promotions, provides support for trade missions, and can help arrange
appointments for first-time visitors to Russia. For more detail on these
and other programs or activities, please contact the ATO/Moscow (see
contact information above).

The USDA/FAS website is an excellent source of information on other
USDA/FAS export promotion/assistance programs, such as the Market Access
Program (MAP) and Credit Guarantee Programs, as well as a wide range of
information and reports on market opportunities for U.S. food, beverage,
and agricultural exports world-wide.

## OTHER MARKET REPORTS

Reports on the Russian food and agricultural market are also available
on the FAS website. U.S. exporters may also contact ATO/Moscow for
copies of these reports (see contact information at the beginning of
this section).

## OTHER USEFUL CONTACTS:

The ATO/Moscow works with a large number of U.S. industry organizations,
some of which have local offices to assist U.S. exporters of these food
and agricultural products:

U.S. Poultry and Egg Export Council (USAPEEC)

Petrovskiy Bulvar, 15, Stroyeniye 1

127051 Moscow, Russia

Tel.: 7 (095) 980-6140; Fax: 7 (095) 980-6141

E-mail: <usapeec@usapeec.ru>

U.S. Meat Export Federation (USMEF)

9th Floor, Business Center, Leninsky Prospekt, 2

117049 Moscow, Russia

Tel: 7 (095) 239-1578; Fax: 7 (095) 230-6849

E-mail: <Moscow@usmef.org>

U.S. Wheat Associates

Ul. Petrovka, 27, Stroyeniye 2, Entrance 3

107031 Moscow

Tel: 7 (095) 956-9081

Fax: 7 (095) 956-9080

E-mail: <uswmow@dol.ru>

U.S. Grains Council (USGC)

Denezhniy Pereulok, 7, Bld. 2

103051 Moscow, Russia

Tel: 7 (095) 795-0662; Fax: 7 (095) 795-0663

E-mail: <fgcmow@online.ru>

Pear Bureau Northwest

Ul. Nekrasovskaya, 88 A, 4^th^ Floor, Office 302

690002 Vladivostok, Russia

Tel/Fax: 7 (4232) 53-22-36

E-mail: katerina@newmark.ru

California Almond Board

Ul. Yefremova, 18, Bld. 41

119048 Moscow

Tel/fax: 7 (095) 246-0359

E-mail: Irina.Koziy@mail.ru

American Soybean Association

Bolshoy Cherksskiy Per., 15, Office 323

109012 Moscow

Tel/fax: 7 (095) 925-4349

E-mail: soyaru@rol.ru

Califronia Wine Institute

35, Perovskiy Proyezd

111024 Moscow

Tel/fax: 7 (095) 787-7750, 787-7758

E-mail: dc_wines@mail.ru

Pet Food Institute

4, Ul. Pudovkina

119285 Moscow

Tel: 7 (095) 145-0308

Fax: 7 (095) 937-9618

E-mail: agerman@globalworks.ru

Renderers

82, Vernadskogo Avenue

119571 Moscow

Tel/fax: (7-095) 434-9114

E-mail: lischenko@ane.ru

Another good source for information on doing business in Russia, the
American Chamber of Commerce has offices in Moscow and St. Petersburg:

American Chamber of Commerce in Russia (AmCham)

Ul. Dolgorukovskaya, Building 7, 14th floor

127006 Moscow, Russia

Tel: 7 (095) 961‑2141; Fax: 7 (095) 961‑2142

Email: <amchamru@amcham.ru>

American Chamber of Commerce in St. Petersburg

25 Nevsky Prospect, 3^rd^ Floor

191186 St. Petersburg, Russia

Tel: 7 (812) 326-2590; Fax: 7 (812) 326-2591 or 326-2561

Email: <st.pete@amcham.ru>

For questions on agricultural machinery, food processing and packaging
equipment/materials, refrigeration equipment, etc., please contact the
Foreign Commercial Service:

Foreign Commercial Service

Bldg. 2, 23/38 Bolshaya Molchanovka

121069 Moscow, Russia

Tel: 7 (095) 737-5030; Fax: 7 (095) 737-5033

E-mail: moscow.office.box@mail.doc.gov

<moscow.office.box@mail.doc.gov>

## APPENDIX I. STATISTICS

+-------------------------------------------------------+--------------+
| ### T                                                 |              |
| able A: Key Trade & Demographic Information ^1/^ ^2/^ |              |
+-------------------------------------------------------+--------------+
| Agricultural Imports From All Countries (\$Billion)   | 10.62        |
| ^3/^                                                  |              |
+-------------------------------------------------------+--------------+
| Consumer Food Imports From All Countries (\$Billion)  | 6.62         |
| ^3/^                                                  |              |
+-------------------------------------------------------+--------------+
| Edible Fishery Imports From All Countries (\$Million) | 482          |
| ^3/^                                                  |              |
+-------------------------------------------------------+--------------+
| Total Population (Millions)/Annual Growth Rate (%)    | 143,32 /     |
|                                                       | -0,768       |
+-------------------------------------------------------+--------------+
| Urban Population (Millions)/Annual Growth Rate (%)    | 104.6 / 1.3  |
+-------------------------------------------------------+--------------+
| Number of Major Metropolitan Areas ^4/^               | 13           |
+-------------------------------------------------------+--------------+
| Size of the Middle Class (Millions)/Growth Rate (%)   | 19 / 27      |
| ^5/^                                                  |              |
+-------------------------------------------------------+--------------+
| Per Capita Gross Domestic Product (US\$)^6/^          | 3,018        |
+-------------------------------------------------------+--------------+
| Unemployment Rate (%)^6/^                             | 8.1          |
+-------------------------------------------------------+--------------+
| Per Capita Food Expenditures (US\$) ^7/^              | 487,6        |
+-------------------------------------------------------+--------------+
| Percent of Female Population Employed ^8/^            | 92           |
+-------------------------------------------------------+--------------+
| Exchange Rate (US\$1 = 29.2 Rubles)                   | As of        |
|                                                       | September    |
|                                                       | 2004         |
+-------------------------------------------------------+--------------+

^1/^ Unless otherwise noted, 2003 data

^2/^ Source: Unless otherwise noted, Russian State Statistics Committee
(Goskomstat)

^3/^ Source: GTI World Trade Atlas

^4/^ Population in excess of 1,000,000

^5/^ Source: Various - based on estimate of individuals earning
US\$500-\$2,000 per month

^6/^ Source: Business Monitor International

^7/^ Source: Estimate based on annual total retail food sales

^8/^ As percentage of economically-active female population (employed or
actively seeking employment)

\- female workers account for 41% of the total economically-active
population.

### 

<table>
<colgroup>
<col style="width: 41%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><h3
id="table-b-consumer-food-edible-fishery-product-imports">Table B:
Consumer Food &amp; Edible Fishery Product Imports</h3></td>
</tr>
<tr class="even">
<td></td>
<td colspan="3"><p><strong>Imports from</strong></p>
<p><strong>the World</strong></p></td>
<td colspan="3"><p><strong>Imports from</strong></p>
<p><strong>the U.S.</strong></p></td>
<td colspan="3"><h4 id="u.s-market-share">U.S Market Share</h4></td>
</tr>
<tr class="odd">
<td></td>
<td colspan="3"><em><strong>(Million Dollars)</strong></em></td>
<td colspan="3"><em><strong>(Million Dollars)</strong></em></td>
<td colspan="3"><em><strong>(Percent)</strong></em></td>
</tr>
<tr class="even">
<td></td>
<td><strong>2001</strong></td>
<td><strong>2002</strong></td>
<td><strong>2003</strong></td>
<td><strong>2001</strong></td>
<td><strong>2002</strong></td>
<td><strong>2003</strong></td>
<td><strong>2001</strong></td>
<td><strong>2002</strong></td>
<td><strong>2003</strong></td>
</tr>
<tr class="odd">
<td><strong>CONSUMER-ORIENTED AG TOTAL</strong></td>
<td>4,642</td>
<td>5,617</td>
<td>6,687</td>
<td>679</td>
<td>535</td>
<td>534</td>
<td>15</td>
<td>10</td>
<td>8</td>
</tr>
<tr class="even">
<td>Snack Foods (excl. Nuts)</td>
<td>263</td>
<td>252</td>
<td>307</td>
<td>1</td>
<td>1</td>
<td>3</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Breakfast Cereals &amp; Pancake Mix</td>
<td>18</td>
<td>11</td>
<td>11</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>2</td>
<td>2</td>
</tr>
<tr class="even">
<td>Red Meats, Fresh/Chilled/Frozen</td>
<td>935</td>
<td>1,414</td>
<td>1,426</td>
<td>59</td>
<td>70</td>
<td>53</td>
<td>6</td>
<td>5</td>
<td>4</td>
</tr>
<tr class="odd">
<td>Red Meats, Prepared/Preserved</td>
<td>65</td>
<td>64</td>
<td>58</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>2</td>
<td>2</td>
<td>2</td>
</tr>
<tr class="even">
<td>Poultry Meat</td>
<td>756</td>
<td>816</td>
<td>698</td>
<td>565</td>
<td>417</td>
<td>405</td>
<td>75</td>
<td>51</td>
<td>58</td>
</tr>
<tr class="odd">
<td>Dairy Products (excl. Cheese)</td>
<td>230</td>
<td>188</td>
<td>264</td>
<td>13</td>
<td>1</td>
<td>1</td>
<td>5</td>
<td>1</td>
<td>0</td>
</tr>
<tr class="even">
<td>Cheese</td>
<td>166</td>
<td>235</td>
<td>355</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Eggs &amp; Products</td>
<td>8</td>
<td>12</td>
<td>16</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>4</td>
<td>1</td>
<td>6</td>
</tr>
<tr class="even">
<td>Fresh Fruit</td>
<td>595</td>
<td>742</td>
<td>1,053</td>
<td>1</td>
<td>3</td>
<td>2</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Fresh Vegetables</td>
<td>162</td>
<td>224</td>
<td>377</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>0</td>
<td>1</td>
<td>0</td>
</tr>
<tr class="even">
<td>Processed Fruit &amp; Vegetables</td>
<td>317</td>
<td>380</td>
<td>451</td>
<td>4</td>
<td>6</td>
<td>5</td>
<td>1</td>
<td>2</td>
<td>1</td>
</tr>
<tr class="odd">
<td>Fruit &amp; Vegetable Juices</td>
<td>85</td>
<td>131</td>
<td>148</td>
<td>1</td>
<td>1</td>
<td>3</td>
<td>0</td>
<td>1</td>
<td>2</td>
</tr>
<tr class="even">
<td>Tree Nuts</td>
<td>27</td>
<td>23</td>
<td>25</td>
<td>6</td>
<td>6</td>
<td>4</td>
<td>21</td>
<td>26</td>
<td>16</td>
</tr>
<tr class="odd">
<td>Wine &amp; Beer</td>
<td>340</td>
<td>361</td>
<td>497</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>1</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Nursery Products &amp; Cut Flowers</td>
<td>75</td>
<td>94</td>
<td>112</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>0</td>
<td>0</td>
<td>1</td>
</tr>
<tr class="odd">
<td>Pet Foods (Dog &amp; Cat Food)</td>
<td>18</td>
<td>22</td>
<td>48</td>
<td>1</td>
<td>1</td>
<td>3</td>
<td>5</td>
<td>6</td>
<td>6</td>
</tr>
<tr class="even">
<td>Other Consumer-Oriented Products</td>
<td>583</td>
<td>651</td>
<td>844</td>
<td>25</td>
<td>24</td>
<td>52</td>
<td>4</td>
<td>4</td>
<td>6</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>FISH &amp; SEAFOOD PRODUCTS</strong></td>
<td>280</td>
<td>382</td>
<td>481</td>
<td>5</td>
<td>5</td>
<td>9</td>
<td>2</td>
<td>1</td>
<td>2</td>
</tr>
<tr class="odd">
<td>Salmon</td>
<td>23</td>
<td>41</td>
<td>60</td>
<td>1</td>
<td>1</td>
<td>2</td>
<td>0</td>
<td>0</td>
<td>3</td>
</tr>
<tr class="even">
<td>Surimi</td>
<td>5</td>
<td>11</td>
<td>21</td>
<td>1</td>
<td>1</td>
<td>2</td>
<td>23</td>
<td>4</td>
<td>10</td>
</tr>
<tr class="odd">
<td>Crustaceans</td>
<td>13</td>
<td>23</td>
<td>33</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>0</td>
<td>3</td>
</tr>
<tr class="even">
<td>Groundfish &amp; Flatfish</td>
<td>35</td>
<td>44</td>
<td>63</td>
<td>1</td>
<td>2</td>
<td>2</td>
<td>4</td>
<td>5</td>
<td>3</td>
</tr>
<tr class="odd">
<td>Molluscs</td>
<td>5</td>
<td>11</td>
<td>14</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>4</td>
<td>1</td>
<td>7</td>
</tr>
<tr class="even">
<td>Other Fishery Products</td>
<td>198</td>
<td>251</td>
<td>290</td>
<td>2</td>
<td>2</td>
<td>3</td>
<td>1</td>
<td>1</td>
<td>1</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>AGRICULTURAL PRODUCTS TOTAL</strong></td>
<td>8,546</td>
<td>9,443</td>
<td>10,699</td>
<td>910</td>
<td>713</td>
<td>663</td>
<td>11</td>
<td>8</td>
<td>6</td>
</tr>
<tr class="odd">
<td><strong>AGRICULTURAL, FISH &amp; FORESTRY</strong></td>
<td>8,964</td>
<td>10,001</td>
<td>11,422</td>
<td>917</td>
<td>721</td>
<td>674</td>
<td>10</td>
<td>7</td>
<td>6</td>
</tr>
<tr class="even">
<td colspan="10"><em><strong>Source: FAS' Global Agricultural Trade
System using data from the United Nations Statistical
Office</strong></em></td>
</tr>
</tbody>
</table>

### 

+------------+------+------+------+---+------------+------+------+------+
| ###        |      |      |      |   |            |      |      |      |
|  Table C:  |      |      |      |   |            |      |      |      |
| Top 15 Sup |      |      |      |   |            |      |      |      |
| pliers of  |      |      |      |   |            |      |      |      |
| Consumer F |      |      |      |   |            |      |      |      |
| oods & Edi |      |      |      |   |            |      |      |      |
| ble Fisher |      |      |      |   |            |      |      |      |
| y Products |      |      |      |   |            |      |      |      |
+------------+------+------+------+---+------------+------+------+------+
| **CONSUME  |      |      |      |   | **FISH &   |      |      |      |
| R-ORIENTED |      |      |      |   | SEAFOOD    |      |      |      |
| AG TOTAL   |      |      |      |   | PRODUCTS   |      |      |      |
| (          |      |      |      |   | (          |      |      |      |
| \$1,000)** |      |      |      |   | \$1,000)** |      |      |      |
+------------+------+------+------+---+------------+------+------+------+
|            | **20 | **20 | **20 |   |            | **20 | **20 | **20 |
|            | 01** | 02** | 03** |   |            | 01** | 02** | 03** |
+------------+------+------+------+---+------------+------+------+------+
| Brazil     | 233  | 714  | 721  |   | Norway     | 94   | 157  | 198  |
|            | ,432 | ,952 | ,577 |   |            | ,917 | ,482 | ,663 |
+------------+------+------+------+---+------------+------+------+------+
| Ukraine    | 557  | 461  | 685  |   | Latvia     | 35   | 39   | 39   |
|            | ,713 | ,391 | ,834 |   |            | ,459 | ,674 | ,740 |
+------------+------+------+------+---+------------+------+------+------+
| United     | 680  | 536  | 535  |   | United     | 12   | 24   | 32   |
| States     | ,697 | ,588 | ,118 |   | Kingdom    | ,982 | ,466 | ,720 |
+------------+------+------+------+---+------------+------+------+------+
| Germany    | 487  | 488  | 466  |   | Denmark    | 10   | 24   | 28   |
|            | ,492 | ,069 | ,096 |   |            | ,862 | ,070 | ,987 |
+------------+------+------+------+---+------------+------+------+------+
| Poland     | 202  | 284  | 381  |   | China      | 13   | 19   | 28   |
|            | ,788 | ,934 | ,051 |   | (Peoples   | ,824 | ,495 | ,355 |
|            |      |      |      |   | Rep)       |      |      |      |
+------------+------+------+------+---+------------+------+------+------+
| N          | 198  | 279  | 327  |   | Lithuania  | 14   | 16   | 20   |
| etherlands | ,828 | ,775 | ,825 |   |            | ,111 | ,785 | ,335 |
+------------+------+------+------+---+------------+------+------+------+
| France     | 180  | 232  | 274  |   | Mauritania | 22   | 12   | 18   |
|            | ,636 | ,991 | ,566 |   |            | ,266 | ,233 | ,940 |
+------------+------+------+------+---+------------+------+------+------+
| Ecuador    | 165  | 191  | 261  |   | K          | 10   | 12   | 12   |
|            | ,369 | ,361 | ,244 |   | azakhstan, | ,247 | ,952 | ,658 |
|            |      |      |      |   | Rep        |      |      |      |
+------------+------+------+------+---+------------+------+------+------+
| Moldova,   | 200  | 173  | 260  |   | United     | 4    | 4    | 8    |
| Republic   | ,590 | ,791 | ,750 |   | States     | ,804 | ,809 | ,762 |
+------------+------+------+------+---+------------+------+------+------+
| China      | 91   | 223  | 243  |   | Spain      | 2    | 4    | 7    |
| (Peoples   | ,632 | ,398 | ,417 |   |            | ,324 | ,322 | ,747 |
| Rep)       |      |      |      |   |            |      |      |      |
+------------+------+------+------+---+------------+------+------+------+
| Spain      | 121  | 146  | 187  |   | Thailand   | 1    | 2    | 7    |
|            | ,476 | ,677 | ,604 |   |            | ,219 | ,558 | ,194 |
+------------+------+------+------+---+------------+------+------+------+
| Italy      | 128  | 147  | 182  |   | Chile      | 3    | 6    | 7    |
|            | ,130 | ,124 | ,941 |   |            | ,914 | ,203 | ,127 |
+------------+------+------+------+---+------------+------+------+------+
| Finland    | 81   | 130  | 152  |   | Poland     | 2    | 4    | 6    |
|            | ,634 | ,014 | ,954 |   |            | ,796 | ,113 | ,315 |
+------------+------+------+------+---+------------+------+------+------+
| Argentina  | 35   | 73   | 141  |   | Ukraine    | 11   | 6    | 5    |
|            | ,029 | ,010 | ,967 |   |            | ,292 | ,634 | ,456 |
+------------+------+------+------+---+------------+------+------+------+
| Turkey     | 93   | 122  | 138  |   | Estonia    | 8    | 7    | 5    |
|            | ,554 | ,547 | ,394 |   |            | ,578 | ,602 | ,036 |
+------------+------+------+------+---+------------+------+------+------+
| Other      | 1    | 1    | 1    |   | Other      | 30   | 38   | 58   |
|            | ,195 | ,431 | ,777 |   |            | ,422 | ,163 | ,779 |
|            | ,798 | ,362 | ,303 |   |            |      |      |      |
+------------+------+------+------+---+------------+------+------+------+
| World      | 4    | 5    | 6    |   | World      | 280  | 381  | 486  |
|            | ,654 | ,637 | ,738 |   |            | ,017 | ,561 | ,814 |
|            | ,798 | ,984 | ,641 |   |            |      |      |      |
+------------+------+------+------+---+------------+------+------+------+
| ##         |      |      |      |   |            |      |      |      |
| ##### **So |      |      |      |   |            |      |      |      |
| urce: FAS\ |      |      |      |   |            |      |      |      |
| ' Global A |      |      |      |   |            |      |      |      |
| gricultura |      |      |      |   |            |      |      |      |
| l Trade Sy |      |      |      |   |            |      |      |      |
| stem using |      |      |      |   |            |      |      |      |
|  data from |      |      |      |   |            |      |      |      |
|  the Unite |      |      |      |   |            |      |      |      |
| d Nations  |      |      |      |   |            |      |      |      |
| Statistica |      |      |      |   |            |      |      |      |
| l Office** |      |      |      |   |            |      |      |      |
+------------+------+------+------+---+------------+------+------+------+

## APPENDIX II. OTHER ECONOMIC AND DEMOGRAPHIC DATA

The Russian economy has expanded sharply following the 1998 economic
crisis and Ruble devaluation. The table below shows this growth during
the 1997-2004 period.

+------+------+------+------+------+------+------+-----------------+
| ##   |      |      |      |      |      |      |                 |
| # Ta |      |      |      |      |      |      |                 |
| ble  |      |      |      |      |      |      |                 |
| A: G |      |      |      |      |      |      |                 |
| DP G |      |      |      |      |      |      |                 |
| rowt |      |      |      |      |      |      |                 |
| h (% |      |      |      |      |      |      |                 |
| ), 1 |      |      |      |      |      |      |                 |
| 997- |      |      |      |      |      |      |                 |
| 2004 |      |      |      |      |      |      |                 |
+------+------+------+------+------+------+------+-----------------+
| **19 | **19 | **19 | **20 | **20 | **20 | **20 | **2004          |
| 97** | 98** | 99** | 00** | 01** | 02** | 03** | forecast**      |
+------+------+------+------+------+------+------+-----------------+
| 1.4  | -5.3 | 6.4  | 10.0 | 5.1  | 4.7  | 7.3  | 6.8             |
+------+------+------+------+------+------+------+-----------------+
| **   |      |      |      |      |      |      |                 |
| *Sou |      |      |      |      |      |      |                 |
| rce: |      |      |      |      |      |      |                 |
| Busi |      |      |      |      |      |      |                 |
| ness |      |      |      |      |      |      |                 |
| Mon  |      |      |      |      |      |      |                 |
| itor |      |      |      |      |      |      |                 |
| Inte |      |      |      |      |      |      |                 |
| rnat |      |      |      |      |      |      |                 |
| iona |      |      |      |      |      |      |                 |
| l*** |      |      |      |      |      |      |                 |
+------+------+------+------+------+------+------+-----------------+

As indicated in the following table, the Russian population is largely
urban. The two largest cities are Moscow (nine million) and St.
Petersburg (five million). Although not widely known, Moscow's total
metropolitan population of nearly 18 million makes it the largest city
in Europe. Another 12 cities across Russia have populations in excess of
one million each.

### 

+----------+-------------+-------------+-------+-------------+-------+
| ### Tabl |             |             |       |             |       |
| e B: Res |             |             |       |             |       |
| ident Po |             |             |       |             |       |
| pulation |             |             |       |             |       |
+----------+-------------+-------------+-------+-------------+-------+
| ######## | ####        | **Urban**   |       | **Rural**   |       |
| # Year { | ##### Total |             |       |             |       |
| #year-1} |             |             |       |             |       |
+----------+-------------+-------------+-------+-------------+-------+
|          | **          | **          | **    | **          | **    |
|          | *Million*** | *Million*** | *%*** | *Million*** | *%*** |
+----------+-------------+-------------+-------+-------------+-------+
| **1979** | 137.4       | 94.9        | 69    | 42.5        | 31    |
+----------+-------------+-------------+-------+-------------+-------+
| **1989** | 147.0       | 108.0       | 73    | 39.0        | 27    |
+----------+-------------+-------------+-------+-------------+-------+
| **1999** | 146.3       | 106.8       | 73    | 39.5        | 27    |
+----------+-------------+-------------+-------+-------------+-------+
| **2000** | 145.6       | 106.1       | 73    | 39.5        | 27    |
+----------+-------------+-------------+-------+-------------+-------+
| **2001** | 144.8       | 105.6       | 73    | 39.2        | 27    |
+----------+-------------+-------------+-------+-------------+-------+
| **2002** | 144.0       | 105.1       | 73    | 38.9        | 27    |
+----------+-------------+-------------+-------+-------------+-------+
| **2003** | 143.3       | 104.6       | 73    | 38.7        | 27    |
+----------+-------------+-------------+-------+-------------+-------+
| **       |             |             |       |             |       |
| *Source: |             |             |       |             |       |
| Russian  |             |             |       |             |       |
| State    |             |             |       |             |       |
| St       |             |             |       |             |       |
| atistics |             |             |       |             |       |
| C        |             |             |       |             |       |
| ommittee |             |             |       |             |       |
| (Goskom  |             |             |       |             |       |
| stat)*** |             |             |       |             |       |
+----------+-------------+-------------+-------+-------------+-------+

The majority of Russians live in the western or European part of the
country (the area west of the Ural Mountains), but there are also large
cities in Central Russia and the Russian Far East (RFE). In fact, the
major RFE cities of Vladivostok and Khabarovsk, with about 600,000
inhabitants each, provide an important market for products shipped the
U.S. West Coast.

However, the Moscow/St. Petersburg region remains the most important
market in Russia simply because of its overall population, developed
market structure and, most important, significantly greater affluence.
In fact, Moscow accounts for more than 60 percent of the country's
financial and economic wealth. In addition, many buyers in outlying
regions source their products through Moscow, which is the major
transportation hub for truck, air, rail and shipping lines.

+--------------------------------------------+-------+------+---------+
| ### Ta                                     |       |      |         |
| ble C: Resident Population (by age/gender) |       |      |         |
+--------------------------------------------+-------+------+---------+
|                                            | **    | *    | **F     |
|                                            | Milli | *%** | emales/ |
|                                            | ons** |      | 1,000   |
|                                            |       |      | males** |
+--------------------------------------------+-------+------+---------+
| **Working age (16-59 men; 16-54 women)**   | 87.3  | 60.7 | 976     |
+--------------------------------------------+-------+------+---------+
| **Below working age (below 16)**           | 26.8  | 18.6 | 953     |
+--------------------------------------------+-------+------+---------+
| **Above working age (above 59 men; above   | 29.9  | 20.7 | 2,177   |
| 54 female)**                               |       |      |         |
+--------------------------------------------+-------+------+---------+
| **Total**                                  | 144.0 | 1    | 1,139   |
|                                            |       | 00.0 |         |
+--------------------------------------------+-------+------+---------+
| ####### **Source: Russian                  |       |      |         |
|  State Statistics Committee (Goskomstat)** |       |      |         |
+--------------------------------------------+-------+------+---------+

+------------------+--------+---------------------------+--------------+
| ## APPENDIX I    |        |                           |              |
| II. IMPORT DUTIE |        |                           |              |
| S/VAT FOR SELECT |        |                           |              |
| ED PRODUCTS ^1/^ |        |                           |              |
+------------------+--------+---------------------------+--------------+
| **Pr             | **HS   | **Import Duty**           | **VAT**      |
| oduct/Category** | Code** |                           |              |
+------------------+--------+---------------------------+--------------+
| Meat and Meat    | 020    | 15%, but not less than    | 10%; 18% for |
| Products         | 1-0206 | 0.15 - 0.25 Euros per     | veal,        |
|                  |        | kilo, 20 %, but not less  | fillet,      |
|                  |        | than 0.8 Euros/kg for     | tongue       |
|                  |        | tongue, 5% for liver and  |              |
|                  |        | subproducts for           |              |
|                  |        | pharmacology **^2/^**     |              |
+------------------+--------+---------------------------+--------------+
| Poultry and      | 0207   | 25%, but not less than    | 10%; 18% for |
| Poultry Products |        | 0.2 Euros per kilo        | processed    |
|                  |        | **^2/^**                  | products     |
+------------------+--------+---------------------------+--------------+
| Seafood          | 030    | 5% -- 20%                 | 10%; 18% for |
|                  | 1-0307 |                           | some         |
|                  |        |                           | products,    |
|                  |        |                           | incl.        |
|                  |        |                           | salmon,      |
|                  |        |                           | sturgeon,    |
|                  |        |                           | and caviar   |
+------------------+--------+---------------------------+--------------+
| Dairy Products   | 040    | 5% -15%, but not less     | 10%          |
|                  | 1-0406 | than 0.18 - 0.30 Euros    |              |
|                  |        | per kilo                  |              |
+------------------+--------+---------------------------+--------------+
| Fresh/Dried      | 070    | 5%-15%, but not less than | 10%; 18% for |
| Vegetables       | 1-0714 | 0.08 - 0.12 Euros per     | processed    |
|                  |        | kilo                      | products     |
+------------------+--------+---------------------------+--------------+
| Fresh/Dried      | 080    | 5%-10%, but not less than | 18%          |
| Fruit and Nuts   | 1-0813 | 0.02 -- 0.035 Euros/kg;   |              |
|                  |        | 0.1-0.2 Euros/kg for      |              |
|                  |        | apples                    |              |
+------------------+--------+---------------------------+--------------+
| Coffee, Tea, and | 090    | 5-20%, but not less than  | 18%          |
| Spices           | 1-0910 | 0.2 - 0.8 Euros per kilo  |              |
+------------------+--------+---------------------------+--------------+
| Grains           | 100    | 5%; rice - 10%, but not   | 10%          |
|                  | 1-1008 | less than 0.03 Euros per  |              |
|                  |        | kilo                      |              |
+------------------+--------+---------------------------+--------------+
| Wheat Flour,     | 110    | 10% - 20%, but not less   | 18%; 10% for |
| Starch, Malt,    | 1-1109 | than 0.03 -- 0.08 Euros   | flour        |
| Grain Preps,     |        | per kilo                  |              |
| Gluten           |        |                           |              |
+------------------+--------+---------------------------+--------------+
| Oilseeds and     | 120    | 5%                        | 10% - 18%    |
| Oilseed Products | 1-1214 |                           |              |
+------------------+--------+---------------------------+--------------+
| Sausage, Canned  | 160    | 5%-20%, but not less than | 18%; 10% for |
| Meat and Seafood | 1-1605 | 0.4 -- 22 Euros/kg        | liver        |
|                  |        |                           | sausage and  |
|                  |        |                           | some canned  |
|                  |        |                           | fish, incl.  |
|                  |        |                           | tuna,        |
|                  |        |                           | herring,     |
|                  |        |                           | mackerel     |
+------------------+--------+---------------------------+--------------+
| Sugar and        | 170    | 140 - 340 dollars per ton | 18%; 10% for |
| Confectionery    | 1-1704 | for sugar; 5% - 21%, but  | sugar and    |
| Products (not    |        | not less than 0.18 - 1.2  | fructose     |
| including cocoa  |        | Euros/kg                  |              |
| products)        |        |                           |              |
+------------------+--------+---------------------------+--------------+
| Cocoa and Cocoa  | 180    | 5-10%                     | 18%; 10% for |
| Products         | 1-1806 |                           | cocoa butter |
|                  |        |                           | and fat      |
+------------------+--------+---------------------------+--------------+
| Pasta and Baked  | 190    | 5% - 15%, but not less    | 18%; 10% for |
| Products         | 1-1905 | than 0.075-0.15 Euros per | pasta        |
|                  |        | kilo                      | products     |
+------------------+--------+---------------------------+--------------+
| Canned           | 200    | 5%-15%, but not less than | 10%; 18% for |
| F                | 1-2009 | 0.075 Euros/kg            | processed    |
| ruit/Vegetables, |        |                           | products     |
| Juices           |        |                           |              |
+------------------+--------+---------------------------+--------------+
| Instant Soup,    | 210    | 5%-20%, but not less than | 18%; 10% for |
| Ice Cream, Baby  | 1-2106 | 0.2 -- 1.2 Euro/kg        | sauces,      |
| Food, Food       |        |                           | ketchups,    |
| Ingredients      |        |                           | soups,       |
|                  |        |                           | bullions,    |
|                  |        |                           | food mixes   |
+------------------+--------+---------------------------+--------------+
| Alcoholic        | 220    | 15-20%, but not less than | 18%; 10% for |
| Beverages        | 1-2209 | 0.04 - 2.0 Euros per      | child food   |
|                  |        | liter; 0.6 Euro/liter for |              |
|                  |        | malt beer; 5% for stum;   |              |
|                  |        | 100%, but not less than 2 |              |
|                  |        | Euro/liter for ethyl      |              |
|                  |        | alcohol; 2 Euros/liter    |              |
|                  |        | for HS code 2208          |              |
+------------------+--------+---------------------------+--------------+
| Animal Feed      | 2309   | 5-20%, but not less than  | 10%; 18% for |
|                  |        | 0.16 Euros per kilo       | pet food     |
|                  |        |                           | packed for   |
|                  |        |                           | retail       |
+------------------+--------+---------------------------+--------------+
| **1/ The duties  |        |                           |              |
| listed here are  |        |                           |              |
| for illustrative |        |                           |              |
| purposes only.   |        |                           |              |
| For specific     |        |                           |              |
| product          |        |                           |              |
| information,     |        |                           |              |
| please contact   |        |                           |              |
| the              |        |                           |              |
| ATO/Moscow.**    |        |                           |              |
|                  |        |                           |              |
| **2/ Tariff rate |        |                           |              |
| quotas (TRQs)    |        |                           |              |
| were introduced  |        |                           |              |
| for meat and     |        |                           |              |
| poultry products |        |                           |              |
| (HS Code         |        |                           |              |
| 0201-0207) in    |        |                           |              |
| 2003.            |        |                           |              |
| Out-of-quota     |        |                           |              |
| tariffs are      |        |                           |              |
| 60-80% (but not  |        |                           |              |
| less than 0.2 -  |        |                           |              |
| 1.06 Euro/kg).** |        |                           |              |
|                  |        |                           |              |
| **Source: State  |        |                           |              |
| Customs          |        |                           |              |
| Committee**      |        |                           |              |
+------------------+--------+---------------------------+--------------+

## APPENDIX IV. RUSSIAN IMPORT REGULATIONS

**General Import Regulations**

Shipping food or beverage products into Russia can be a bureaucratic and
time-consuming process that is best handled either by a
freight-forwarder or an experienced Russian importer. The process
involves two main steps: (1) Safety, Phytosanitary and Veterinary
Clearance; and (2) Customs Clearance.

Although the information provided in this guide is considered accurate
at the time of publication, exporters should confirm the exact import
requirements for all products prior to shipment. Also, please be aware
that there may be specific import requirements for some products that
are not addressed fully in this document.

The following documents are required for all shipments. Further
information on each of these documents is provided in this section.

-   Delivery Contract

-   Bill of Lading

-   Freight customs declaration

-   Certificate of Origin

-   Hygiene or Veterinary Certificates, as necessary

-   Manufacturer's Certificate of Quality

**Labeling and Packaging Requirements**

Russian labeling laws have undergone several changes in recent years.
Ultimately, Russian importers are responsible for complying with these
labeling laws. Below are generic label requirements in force at the time
of this publication. In addition, there may be additional requirements
for certain product categories. Please note that all information must be
in Russian.

-   Name of the product

-   Type, grade or category of the product

-   Name, country, address of producer, packer, exporter and importer of
    the product

-   Weight (net and gross) or volume of the product

-   Nutritional quality of the product

-   Ingredients

-   Date of processing

-   Storage conditions

-   Shelf-life of the product

-   Conformity stamp (RST) and certification code

Currently, importers are allowed to place labels with this information
in the Russian language after the product reaches Russia. The current
law also states that, if the package is small or the label cannot
include all the necessary text, this information may be printed
separately and enclosed with each unit of the product. Please confirm
the specific labeling requirements for your product with your Russian
importer to ensure that your product labeling complies with the current
law. For additional information on the Russian import regulations and
standards, please read the FAS Gain report \# RS3020 'Food and
Agricultural Import Regulations and Standards' at **www.fas.usda.gov**
under the category "Attaché Reports".

######## Certificate of Conformity 

Federal Agency of Technical Regulation and Metrology is the national
body responsible for the certification of goods. A complete schedule of
goods subject to mandatory certification is published and includes
foodstuffs and beverages of local and foreign origin. Full certification
according to standards set by Federal Agency of Technical Regulation and
Metrology is mandatory for all imported product. The most important
certification for imported product is the Certification of Conformity
(called GOST-R), which is issued by the Russian Research Institute for
Certification (VNIIS). Testing is performed by the Testing and
Certification Center (Rostest), which provides a full range of quality
control and inspection facilities in Russia. However, the Certificate of
Conformity can be issued in the United States. Inquiries about
pre-certification can be made to Control Union Inspection, Inc. or to
the U.S. Testing Company, Inc. of New Jersey, which is a subsidiary of
the private survey company, SGS. These companies can also provide
further information on certification requirements and the costs of
testing. The advantage in obtaining the Certificate of Conformity in the
United States is that testing in Russia can take two months or more.

######## Hygiene Certificate

This is required for all food products, additives, and preservatives.
Federal Service of Surveillance in Sphere of Protection of Consumers and
Human Welfare issues the certificates for children's foods, food
additives, non-traditional forms of unprocessed food, as well as food
products purchased under international agreements. Federal Service of
Surveillance in Sphere of Protection of Consumers and Human Welfare is
responsible for sanitary and hygiene regulations. It issues Hygiene
(Sanitary) Certificates through its Moscow certification laboratories.
This committee also works closely with the Institute of Nutrition that
operates under the supervision of the Russian Federation's Academy of
Medical Science. The Hygiene Certificate can also be handled through the
U.S. testing centers mentioned above. Local departments of Sanepidnadzor
may issue certificates for other food products.

***Specific Import Regulations: Meat and Poultry***

Russian Government veterinary authorities determine which meat and
poultry products may be imported and establish the import requirements
for these products.

######## Eligible Products

The following products are eligible for export from the United States to
Russia: poultry meat and poultry products, beef and beef products, pork
and pork products. All raw and processed meat products intended for
export to Russia must comply with USDA standards and regulations.

######## Ineligible Products

The following meat products are not eligible for export from the United
States to Russia: ground red meat packaged in bulk form or in meat
patties; beef products originating from beef animals raised in states
where outbreaks of vesicular stomatitis are occurring; consumer-size
packages of ground or mechanically-deboned poultry meat and giblets;
poultry products originating from birds originating in specific counties
in states affected by an outbreak of larygngotracheitis.

For current information regarding disease status in restricted regions,
please contact the Food Safety and Inspection Service (FSIS), Technical
Service Center, Omaha, Nebraska, tel: (402) 221-7400, fax: (402)
418-8914. For up-to-date information on import requirements for Russia,
please contact the Export Coordination Division of FSIS, tel: (202)
501-6022, fax: (202) 501-6929. You can also get the latest import
requirements by contacting FSIS through the USDA Home Page:
[www.usda.gov.]{.underline}

######## Veterinary Certificates 

All meat and poultry products shipped from the United States require
USDA/FSIS Form 9060-5\--Export Certificate of Wholesomeness. In
addition, the following certificates are also required:

For raw pork, including bacon and pork for retail sale: FSIS Form
9450-3(8/97) Veterinary Certificate for Pork Meat Exported to the
Russian Federation.

For pork casings: FSIS Form 9450-6 (7/95) Veterinary Certificate for
Pork Intestine Raw Material, Exported Into the Russia Federation.

For poultry: FSIS Form 9450-4(3/96) Veterinary Certificate for Poultry
Meat Exported into the Russian Federation.

For raw beef: FSIS Form 9450-5 (6/94) Veterinary Certificate for Beef
Meat Exported into the Russian Federation.

For fully cooked meat and poultry products and heat-treated but
not-fully-cooked meat products: FSIS Form 9450-7 (7/95) Veterinary
Certificate for Prepared Meat Products Exported into the Russian
Federation.

All certificates accompanying product into the Russian Federation must
be signed by a FSIS veterinarian. For guidance in completing the proper
documents, contact FSIS, Technical Service Center, Export Division, tel:
(402) 221-7400, fax: (402) 418-8914.

######## Processing/Packing Plant Certification

*Poultry*

All establishments that process or store raw poultry intended for export
to the Russian Federation must be inspected by an official of the
Russian Ministry of Agriculture and included in the approved plant list
for raw poultry prior shipping products to Russia. Establishments are
inspected at their own expense. The requirements for these
establishments are outlined in The US-Russia Criteria for Processing and
Refrigeration Facilities Exporting Poultry to the Russian Federation.
For additional information on plant inspection, copies of inspection
criteria or an approved plant list, please contact FSIS, Technical
Service Center, Export Division, tel: (402) 221-7400, fax: (402)
418-8914.

*Pork*

All establishments that process or store raw pork intended for export to
the Russian Federation must be inspected by an official of the Russian
Ministry of Agriculture and included in the approved plant list for raw
pork prior to being eligible to export products to Russia.
Establishments are inspected at their own expense. For additional
information on plant inspection, copies of inspection criteria or an
approved plant list, please contact FSIS, Technical Service Center,
Export Division, tel: (402) 221-7400, fax: (402) 418-8914.

*Other Meat Products*

Fully cooked pork products, pork casings, beef and beef products, fully
cooked poultry products, and heat-treated but not-fully-cooked poultry
products can originate from any federally inspected facility.

*Processed Food Products*

Processed food products must comply with the general import requirements
discussed above. In addition, if the product contains meat or poultry,
it must comply with the requirements for importing meat and poultry
products. Fish and seafood products must be from plants approved by the
U.S. Food and Drug Administration (FDA), tel: (202) 418-3163, fax: (202)
418-3196. Please note that there may be additional import requirements
for certain processed food and beverage products. Always check with your
importer to be certain that your products meet Russian standards prior
to shipment.

**Russian Regulatory Bodies**

Below is a list of important Russian regulatory agencies involved in
approving food imports. Contact information can be found at the end of
this appendix.

Federal Agency of Technical Regulation and Metrology is the national
body for the certification of goods. A schedule of goods that are
subject to mandatory certification is published and includes foodstuffs
and beverages, whether of local or foreign origin.

*The Russian Research Institute for Certification (VNIIS)* issues the
Certificate of Conformity.

*The Russian Testing and Certification Center (ROSTEST)* provides a full
range of quality control and inspection facilities in Russia.

Federal Service of Surveillance in Sphere of Protection of Consumers and
Human Welfare is responsible for sanitary and hygiene regulations.

**Customs Clearance**

As a general rule, customs clearance is undertaken at the customs office
for the designated address of the importer, and goods have to travel
under seal to the clearance point. All customs documentation should be
provided in the Russian language. Fees are levied for customs clearance
and these depend upon the regime applicable to the commodity. Fees are
normally 1% of contract value with a further 0.05% due in foreign
currency. Clearance procedures, although formally spelled out, often
appear to be applied inconsistently.

######## *Import Duties* 

Import duties are levied on imported foodstuffs at varying rates with
the actual amount paid depending on the contract value. Please note that
sub-categories within the main tariff categories may attract different
rates. Also, tariff levels and customs procedures may change abruptly.
Moreover, reclassification of product lines occurs frequently and such
reclassification can be made retroactively. The customs office gives
weekly briefings about these changes. It is crucial to determine the
correct tariff category before the product is shipped to avoid
unpleasant (and expensive) surprises or unnecessary delays in customs
clearance.

Russia is currently negotiating to join the World Trade Organization.
Upon accession, Russian will need to make further changes in its
tariffs.

***Excise Duties***

Excise duties are levied on imported alcoholic beverages. This tax can
be as high as 200 percent.

***Value-added Tax***

A value-added tax (VAT) is applied to all food and beverage products.
For imported products, the VAT is collected at the time of importation.
As of January 1, 2004, the maximum value-added tax (VAT) was reduced to
18%.

***Customs Brokers***

There are a growing number of Russian companies that specialize in
customs clearance and other customs-related problems and issues. For a
list of these companies, please contact ATO/Moscow.

**Potential Import Problems to Avoid**

Exporting products into Russia can be a daunting task for the
inexperienced U.S. exporter. Even more experienced exporters encounter
problems and delays due to sudden changes in Russian import requirements
or customs regulations. For this reason, always check with your Russian
importer or other sources to ensure that your shipment has all necessary
documentation prior to shipment. Some of the more common problems
include: errors or omissions on required documents and forms; missing
documents and certificates; product price discrepancies (e.g., the
invoice price does not match Russian customs officials= price
determination); meat or poultry products shipped from a packing plant or
facility not certified by Russian veterinary officials; duties, tariffs
and VAT not paid in advance, delaying customs clearance for the
shipment. (Note: customs duties and VAT must be paid before the product
will be cleared by Russian customs authorities unless the product is
shipped, under the seal, to a Russian bonded, customs-approved
warehouse.

**Contact Information for Russian Regulatory Agencies**

Federal Agency of Technical Regulation and Metrology (former
Gosstandart)

Moscow, Leninsky Prospekt, 9

Tel: 7 (095) 236-0300

Olga F. Kostyleva , Deputy Head of Department of Standardization and
Regulation

Tel: 7 (095) 236-3525

Federal Service of Surveillance in Sphere of Protection of Consumers and
Human Welfare

Moscow, Vadkovskiy per., 18/20

Tel: 7 (095) 973-1717

Anatoliy I. Petukhov, Head of Department of Surveillance Organization of
Population Nutrition

Tel: 7 (095) 973-1630

All-Russian Scientific-Research Institute for Certification (VNIIS)

Moscow, Elektricheskiy per., 3/10, building 1

Tel: 7 (095) 253-3580; Fax 7 (095) 253-3360

Vladimir I. Gelgor, Head of Section of Food Certification

Tel: 7 (095) 253-0288

Rostest - Moskva, Russian Center for Test and Certification

31, Nakhimovsky Prospect, 117418, Moscow

Tel: 7 (095) 332-9735

Marina V. Pronina, Head of Food Certification Body

Tel. 7 (095) 129-3200; Fax 7 (095) 124-9966

# 

[^1]: Source: Goskomstat

[^2]: Source: Goskomstat

[^3]: Source: Goskomstat, Direct Info estimation.