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8 Aug, 2007 10:25

Russia bans British beef

Russia has banned beef imports from the UK following an outbreak of foot-and-mouth disease in the country. But the restrictions on imports may be causing a shortage on the market.

Domestic meat production is growing. Only this year the country produced over 6 MLN tons of meat and poultry and this figure is expected to grow further. Though Russia is close to self-sufficient in pork and chicken, it is a different story with beef.

Frozen beef represents about 25% of all meat imports to Russia.

Demand for meat in Russia is growing: about 3 MLN tons of meat is imported to Russia annually. That is about a third of total consumption. With products like sausages taking a greater share of the market. These products are in the top five favorite types of food among Russian consumers.

Russia’s sausage market volume is about 1.60 MLN tons a year, premium products are the fastest growing sector, at about 2-3% each year.

“The idea was to make sausages. Predominantly I thought that idea would be just a little something: once a week, once a month. Now we are getting into the retail market. The sausages are now sold in Metro, Globus Gourmet. Oh, yes! You know, we are working hard getting into other supermarkets,”  John Warren, entrepreneur, Moscow, explains.

The Russian Government supports domestic production by a quota system intending to stop meat export from heavily subsidized EU farmers from flooding the market. The aim is to stop prices falling below the level at which local producers cannot compete.

This policy has succeeded as a number of the country’s biggest companies plan to open different meat processing factories around the country.

But it has also created a shortage of beef in particular. Domestic producers cannot increase production fast enough to keep up with demand.

“The amount of imports from EU will decrease and domestic production will grow in the future driven by the government support. We expect 20% growth in pork production next year,”  Musheg Mamikonyan, the Chairman of the Russian Meat Union hopes.

Analysts say to satisfy the demand, Russia must continue importing meat products but increasingly from Latin America, where the prices are low.

However, if there is a shortage of meat in the EU, it could have an effect on prices as far away as Brazil or Argentina.