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The meat is ready for the East
In the first nine months of 2024, Russia exported a record amount of meat – about 570,000 tons, mainly to Asia and the Middle East. At the same time, the supply of finished products is increasing, which brings the greatest benefit to producers. But experts expect that the growth of Russian meat exports will slow by half over the next three years, as high borrowing costs are likely to reduce production growth.
According to a study by Rosselkhozbank provided to Kommersant, in January-September 2024, Russian meat and meat product producers increased their exports by 16% compared to last year, to 570 thousand tons. Poultry meat supplies are increasing due to sales to Asia and the Middle East, including Saudi Arabia (an increase of 11 thousand tons) and China (an increase of 8 thousand tons). Analysts added that since the opening of the Chinese market for Russian pork imports in February 2024, more than 17 thousand tons of products have been delivered to the country. According to their forecasts, by the end of 2024, Russia's total foreign supplies will reach 800 thousand tons, which will be a record figure since 2014 (see the infographic for details).
Rosselkhoznadzor data confirms the growth of exports. From January to September 2024, more than 264 thousand tons of poultry meat and offal were delivered to Russia, which is 11% more than a year earlier, pork - 189 thousand tons, an increase of 24%, beef - 37.7 thousand tons, an increase of 22%.
Earlier, Cherkizovo reported that the manufacturer's main export channel is China, where chicken by-products and wings are supplied. About 85% of deliveries to China are chicken and 15% are turkey. In the first eight months of 2024, Cherkizovo Group shipped 24 thousand tons of products to China, which is 5% more than in the previous year. The Agropromkomplektatsiya Group of Companies (meat producers) plans to increase export volumes by more than 10% by the end of 2024.
At the same time, supplies of finished products are also growing, which increases the margin of Russian producers, says Oleg Lityaykin, Managing Director of the Center for Industry Expertise at Rosselkhozbank. Sergei Yushin, Head of the National Meat Association, says that finished meat products are supplied from the Russian Federation mainly to the CIS countries. The development of meat product supplies to the Middle East and Asia is often hampered by protectionist tariffs on finished products for the development of processing.
Meat production in the form of primary processing (semiconductors and by-products) is a very unstable business, says Albina Koryagina, business development partner at the consulting firm NEO. According to her data, the profitability of pig farming in 2021 was 21.2%, fell to 9.9% in 2022, and then rose again to 26.4% in 2023. At the same time, meat products help reduce risks for producers. The profitability of sausage and semi-finished meat production is growing steadily, explains Koryagina.
Sergei Yushin predicts that the growth rate of Russian meat exports may slow down in the next three years.
"The trend towards food independence is becoming increasingly obvious throughout the world. Therefore, many countries today are already trying to limit food imports in order to develop their own agriculture and food industry. Even though such products are more expensive than imported ones," the expert explains. For example, from January 1, 2025, Benin will ban the supply of eggs and frozen chicken from abroad, despite the fact that the price of local products is 80% higher than imported ones. Moreover, says Albina Koryagina What Russia He added that the biggest problem with exporting meat products to foreign markets, especially to China, is the closed nature of these markets.
In addition, Yushin explains that in order to increase exports, a corresponding increase in meat production is necessary. According to him, high rates of production growth should not be expected in the coming years, since the high cost of borrowed funds and the increase in interest rates on preferential investment loans for agricultural producers have already forced enterprises to reconsider their development plans. Experts predict that the dynamics of deliveries in Russia may also be negatively affected by a possible reduction in export support and logistics subsidies due to a serious budget deficit. At the same time, for the meat industry today, export is the main incentive for new projects. Because domestic demand for these products is almost completely satisfied.
According to the Rusprodsoyuz Association (which unites food producers and suppliers), the average retail price of beef in Russia today is 573.8 rubles. For pork, the price per kilogram is 357.5 rubles, the retail price is about 216 rubles.