Opportunities For Asian Suppliers As Russia Considers Cancelling Beef And Pork Import Duties For 2022

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Import Tariffs of 25% to be Skewered

Russia’s authorities are reportedly discussing abolishing import duties on pork and beef to tame the upward price rally on the domestic red meat market.

This is of special interest to Asian countries such as India, the world’s fourth largest exporter of beef, and to China, Thailand and Vietnam, Asia’s primary exporters of pork.

All these countries are currently negotiating trade agreements with Russia and the Eurasian Economic Union while Vietnam already has a deal.

Russia’s Ministry of Economic Development and Agriculture have preliminary plans to permit the duty-free import of 200,000 tonnes of beef in 2022 and 100,000 tonnes of pork in the first half of 2022, according to the Russian newspaper Vedomosti.

Stabilizing Russia’s Meat Prices

“This measure is designed to become part of a complex solution aimed at stabilizing the domestic prices for products of social importance” according to the article, adding that the duty-free import would be allowed under the condition that the delivered pork and beef undergo some processing in Russia before hitting grocery shelves.

Prior to 2020, Russia allowed duty-free pork imports of 430,000 tonnes per year under an agreement with the WTO. Last year however, duty-free imports were cancelled, with all imported pork being subjected to a 25% duty. The Russian National Meat Association (NMA) estimated that Russia imported only 3,800 tonnes of pork in 2020, its lowest figure ever.

ASF Infection Has Driven Pig Prices Up

Since December of 2020, due to animal diseases, including ASF, the meat supply on the Russian market has narrowed, according to Ekaterina Luchkina, an executive director of the Russian Meat Processors Association.

The duty-free imports are being called for to increase the supply and meet the demand, she said, adding that eventually, this measure would stabilize pig prices. In January-September of 2020, the average price of pig meat in half carcasses in Russia reached 178 rubles (US$2.40) per kg, compared to 145 rubles (US$2.00) in the same period of 2019.

In retail, the price of boneless meat reached 388 rubles (US$5.50) per kg, which was around 10% higher than in the previous year, according to official statistical data. Russia culled over half a million head of pigs in several major ASF outbreaks this winter.

No Growth In Russian Pig Farming

Yuri Kovalev, general director of the Russian Union of Pork Producers, said that this year pork production in Russia would remain at the 2020 level of 4.3 million tonnes. Earlier forecasts envisaged growth by 5% compared to the previous year, but ASF and an abnormal heatwave during the 2021 summer hampered production in several regions.

In 2022 the production is likely to grow by 350,000 to 400,000 tonnes. Kovalev said that those factors, in combination with duty-free imports, are expected to push domestic prices down.

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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