An article which first appeared in March, but has only just been picked up by the Global Meat News website, notes the Meat Council of the Eurasian Economic Union has predicted a quarter of pig producers, 15% of poultry producers and 20% of red meat processing companies could be bankrupt within two years.
The economic crisis which hit Russia three years ago has seen imports drop from 2.3 million tonnes in 2013 to 700,000t in 2015 because the market was unwilling or unable to pay the price for imported products. But the declining economy has also seen total meat consumption drop from 10.8m tonnes to 10m tonnes over the same period with a further decline to 9.4m tonnes forecast for this year. The impact of reduced imports will have worked its way through the system by 2018.
The outcome of these changes means domestic producers and processors will be competing for an ever lower volume of meat with the inevitable result of company failures. The normal response to a lower volume of domestic sales would be to export, but for obvious reasons Russia is restricted from developing larger export markets because of trade embargos which have closed a number of desirable markets.
Russian consumers are spending less on food, turning to lower-priced products, which means the meat producers and processors must compete with cheaper products in an attempt to hang on to their share of the market.
What has been sustainable during the period of adjustment from lower import volumes will no longer be possible in a period of strong competition for the declining consumer rouble.
