Russian Meat Sector: Time of opportunities or Time of uncertainty? Sergey Yushin National Meat Association UECBV AGM and the YEMCo Autumn Conference 2014 26 September 2014, Barcelona
Meat Consumption per Сapita in 2000-2013 (kg/year) 80 70 + 84% 74,7 kg 60 50 40 30 20 40,6 kg 12.9 12 51,6 kg 18.7 14.8 30.4 26.7 poultry pork beef mutton 10 0 Source: NSS 14.7 17 16.3 1 1.1 1.3 2000 2005 2013 2
Meat Consumption Structure in Russia in 2013, % 41% 23% beef pork poultry 36% Source: NMA 3
180 160 162 304 Number of New Farms Built in 2008-2013 140 120 100 80 60 40 20 0 Pig farms 85 Poultry 57 37 131 162 64 271 167 79 80 131 61 61 67 60 75 52 40 25 26 17 6 2008 2009 2010 2011 2012 2013 Source: Ministry of Agriculture of the Russian Federation Beef farms 4
2,500 2,000 1,500 Meat and Poultry Production January-June 2013-2014 (thousand tonnes, slaughter weight) January June 2014 г. / January June 2013 г., % beef -2,5% pork +7,7% poultry +5,2% 1,304 1,404 1,834 1,929 1,000 500 637 621 0 beef pork poultry January-June 2013 January-June 2014 Source: Russian Federal State Statistics Service 5
2,500 2,000 1,500 1,000 Industrial Meat and Poultry Production in Russia January-July 2013-2014 (thousand tonnes, slaughter weight) January July 2014 г. / January July 2013 г., % beef -2,0% pork +13,1% poultry +5,8% 1,147 1,297 1,998 2,114 500 298 292 0 beef pork poultry January-July 2013 January-July 2014 Source: Russian Federal State Statistics Service 6
TOP-20 Pork Producers in Russia in 2013 (thousand tonnes, live weight) Miratorg Cherkizovo Agro-belogorje Rusagro The share of these 20 producers amounted to 54,2% of the overall industrial pork production in Russia in 2013 7
2011 2012 2013 2011 2012 2013 2011 2012 2013 100% 75% 50% 25% Structure of Meat and Poultry Production by category of producers, % 10% 9% 9% 1% 1% 1% 41% 35% 28% 90% 90% 89% 63% 62% 61% 2% 2% 3% 70% 62% 56% 5% 6% 6% 32% 32% 32% backyards small farms 0% industrial production Source: Russian Federal State Statistics Service 8
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To Invest or Not To Invest (Pros and Contras) High meat and poultry prices High margins Good harvest 105 mln t Comfortable feed prices Declining production in the back-yards and more space on the market Meat production state priority Growing competence Better understanding of consumer needs Slow economy growth Possibly decreasing disposable incomes Shortage of bank loans and growing interest rates ASF and other diseases Unpredictable import volumes Exchange rates State budget deficit? Shortage of qualified top-managers for fig agricultural production Further liberalization of trade (FTA, CU, CIS etc.)
5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Forecast for Meat Production in Russia 2014-2020 (thousand tonnes) Production at new farms: Pork +1300 tt Poultry +900 tt Beef +280 tt 1600 1900 +19% 3000 3700 +23% 4000 beef pork poultry 4550 2014 2014 2014 2020 2020 2020 Source: Ministry of Agriculture of the Russian Federation, NMA, NSS, RPU +14% 11
What Affects Import of Meat in 2014 Animal diseases (ASF-related ban from EU) Feed additives and hormones (USA, Australia, Canada) Strict veterinary requirements of the Customs Union not enough establishments approved High export prices for the Russian market Exchange rates Monopoly of some exporting countries Growing demand on internal and international markets Decree on Protection Measures of August 6 th 2014
About 40 thousand tonnes of meat and meat products from USA, EU, Norway and Canada worth 140 million dollars were in transit (road/sea) when the Government s list of products under the ban was published
2000 1500 1000 Import of Meat to Russia January-June 2013-2014 (CIS, offals, fat included, thousand tonnes) African Swine Fever in EU Ractopamine in USA and Canada Imported pork (including Belarus) and High pork export products prices share for Russia in pork USD/Ruble consumption exchange exceeds rate 30% Slower economy Stagnation of consumption and change of consumption trends 470 500 375 295 192 239 184 0 01-06.2013 01 06.2014 01-06.2013 01 06.2014 01-06.2013 01 06.2014 beef pork poultry Source: NMA 14
2000 1500 Import of Meat to Russia January-August 2013-2014 (CIS, offals, fat not included, thousand tonnes) 01-08.2014/01-08.2013,% Beef -9,0% Pork -35,3% Poultry -16,4% 1000 500 345 314 380 246 275 230 0 01-08.2013 01 08.2014 01-08.2013 01 08.2014 01-08.2013 01 08.2014 beef pork poultry Source: NMA 15
Meat Import Share in Consumption in Russia in 2013,% Meat Import Share in Consumption in Russia in 2014*,% 13% 8% 26% 34% beef pork poultry 10% 30% beef pork poultry * National Meat Association s forecast 16
Structure of Chilled Beef Import to Russia 01.2014-06.2014, % CIS countries 23,6% EU 39,0% Source: NMA Uruguay 5,2% Paraguay 1,2% New Zealand 2,0% Brazil 23,1% Australia 4,5% Argentina 1,4% 17
Source: NMA Argentina 1,7% Australia 0,8% Structure of Frozen Beef Import to Russia 01.2014-06.2014, % EU 5,5% CIS countries 1,7% Brazil 60,6% Paraguay 26,5% Uruguay 2,9% Nicaragua 0,1% New Zealand 0,2% 18
Structure of Pork Import to Russia January-June 2014, % EU 8,6% Brazil 39,9% Canada 41,1% Source: NMA Serbia 2,0% CIS countries 0,4% Chile 3,4% USA 4,2% Paraguay 0,3% 19
Germany 10% Ireland 1% Structure of Pork Fat Import to Russia Denmark 11% 01.2014-06.2014, % Italy Netherlands 9% 11% France 11% Poland 5% Belgium 5% Canada 23% Hungary 4% Austria Serbia 3% Chile Source: NMA 2% 2% USA 1% 20
Germany 8% Hungary 4% Belgium 8% Austria 7% Serbia Switzerland 2% 0,3% Source: NMA Structure of Pork Offals Import to Russia 01.2014-06.2014,% Ireland 3% Denmark 11% Chile 3% USA 3% Italy 11% Netherlands 21% Paraguay 1% Canada 7% Poland 2% Portugal 2% Finland 2% France 5% Sweden 1% 21
Argentina 1,3% Structure of Poultry Import to Russia Brazil 01.2014-06.2014, % 4,8% EU 15,9% USA 74,9% CIS countries 2,5% Turkey 0,5% Source: NMA 22
Resources of Beef, Pork and Poultry in 2013-2014* (thousand tonnes) 2013 2014 2014* to 2013,% beef 2 460 2 307-6% pork 3 815 3 325-13% poultry 4 325 4 324 unchanged TOTAL: 10 600 9 955-6% *National Meat Association forecast 23
Wholesale Prices for Live Pigs and Pork in Russia, rubles/kg New ban on import Pork carcasses EU ASF-related ban Slaughter pigs Source: NMA 24
Wholesale Prices for Poultry Cuts in Russia, rubles/kg Boneless breast EU ASF-related ban New ban on import whole breast whole chicken Source: NMA 25
Wholesale Prices for Beef in Russia, rubles/kg butt New ban on import trimming 80% Source: NMA 26
Export Prices for Beef CIF Sankt-Petersburg, USD Source: NMA 27
Export Prices for Brazilian Pork CIF Sankt-Petersburg, USD Source: NMA 28
Impact and Consequences of Decreased Import Government attention to price hikes Looking for new suppliers Belarus benefits from the ban Meat processing growing losses Reemerging of illegal trade Retail vs Processing who gets meat? Consumption changes Consumer concerns 29
Rosselhoznadzor is holding negotiations on the subject of meat imports from: pork Poultry,milk products beef beef Source: Rosselhoznadzor 30
African Swine Fever in Russia in 2014* Number of outbreaks in 2014: Among wild boars 86 Among domestic pigs 32 among them in industrial holdings 3 Number of animals slaughtered>200 000 *- according to informarion from Rossselhoznadzor 20.08.2014 Source: Rosselhoznadzor 31
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Conclusions Good market for Russian producers Government will stimulate more investments, increase support Investors are ready to invest even if and after the ban is lifted WTO ASF dispute unclear outcome Importers loose market and money, some want to invest in production Processing plants want to invest/build/buy to ensure their own raw material supply New suppliers (China, India? Thailand, Turkey, Mongolia?) will benefit form the ban Trade has become victim to political ambitions and lack of dialogue between business and politicians Russia will continue its pace to self-sufficiency
THANK YOU Sergey Yushin National Meat Association natmeat@yandex.ru + 7 495 912-01-55 34