Swine flu meat bans could add to inflation pressure

The Swine flu outbreak in Mexico has spread to several countries, including the United States and Europe. That forced the Russian authorities to ban meat imports from several countries.

With a possible health threat to consumers at stake, higher meat prices could soon become a fact of life in Russia.

After the outbreak of so-called swine flu, the Russian food import watchdog banned pork imports, this week, from some parts of the United States, Mexico, several regions of Canada, Great Britain and Spain.

Brazil is the biggest supplier of pork to Russia, followed by the U.S. Russia has since lifted the ban from several U.S. states, and John Brook, Regional Director, Europe, Russia & Middle East from the U.S. Meat Export Federation believes there will be little longer term impact on American pork sales to Russia.

“In Russia it seems very clear that consumers are fully aware of the fact that this human flu epidemic has nothing to do with flu or pork , and consumption in Russia has remained fairly stable. So although shipments from United States to Russia are suspended we hope that they will be resumed very shortly.”

Russia depends on imports for 40% of its meat. Inflation to May this year hit 6.3%, according to Federal State Statistic Service. The ban on meat might significantly contribute to this year's forecast of 13%. Meat prices rose 22% alone last year.

Evgeny Nadorshin, Chief Economist at Trust Bank, believes the bans could have a significant inflationary impact.

“We depend significantly on import of meat and meat is a significant part of Russian CPI index. All these events may have effect on local prices very rapidly. We could have observed a similar situation in August 2008 – when rumors about the possibility of decrease in quotas for imported meat resulted in a rapid price growth.”

Besides Russia, several countries including China have banned pork imports. That means producers of substitute foods are likely to be among the few to benefit from the pandemic.