Meat Russia has reported IKAR's analysis of the Russian poultry market for Q1 2009.

It says that economic growth in domestic poultry production industry has continued, with production growth rates remaining high. In January-February 2009, poultry meat production was up 13.3 per cent compared to the corresponding period last year.

The economic downturn will result in the growth rates gradually falling: 15 per cent from January 2008 to January 2009, and 11.5 per cent February 2008 to February 2009. IKAR estimates the March growth rate to be 8.7 per cent.

There has been significant import volume reduction. For the first two months, imports were down 38.5 per cent from the corresponding period last year, and by 46.6 per cent for the first quarter (including the preliminary data for March) compared with the same period last year. In the first quarter, domestic meat production increased by 65 per cent to meet demand previously met by imports.

Poultry production costs are growing constantly but opportunities are open for improvement in cost-effectiveness as the result of recent falls in feed prices and a rise in poultry meat prices.

There are two contrary factors regarding demand, according to IKAR. On one hand, the economic crisis has caused consumers to switch from more expensive red meat to cheaper poultry meat. On the other hand, amid the recent poultry price rises, there is some evidence that the market is reaching saturation for poultry meat. Prices appear to have hit the ceiling and further growth is unlikely.

The final key factor, reports Meat Russia, is export price change. The export prices for American drumsticks have risen recently, reaching a record high of $0.80 per kilogram in the second half of March. Prices for frozen broilers in Brazilian domestic market also increased but in mid-March, they have fallen to $1.16 per kilo.