Russian Federation: Poultry and Products Semi Annual Report 2008

Domestic poultry production will continue to increase in Russia even though demand for biofuels is contributing to rising feed costs and hurting profits, according to the USDA Foreign Agricultural Service. The Russian government continues to search for a middle ground between protecting domestic poultry producers and protecting consumers from rising food prices.
calendar icon 18 April 2008
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Executive Summary

Domestic poultry production is expected to increase 10 percent in 2008 compared to a 15- percent growth rate in 2007. Demand for bio-fuels and high world grain prices are contributing to rising feed costs and hurting profits and investments. The Russian government continues to search for a middle ground between protecting domestic poultry producers and protecting consumers from rising food prices. The Russian Poultry Union has demanded more government assistance in controlling grain prices in addition to more protection from imports. Rising grain prices are revealing inefficiencies in domestic poultry production. Some Russian politicians are resorting to invalid comparisons between domestic and U.S. imported chicken in an effort to sway Russian consumers away from imported poultry.

Turkey products are a relatively new product on the Russian market and investors are committing resources to increase production capacity. Producers are positioning turkey as a healthier, more affordable alternative to red meat. Consumption is expected to fall, however, as increases in customs duties curtail imports. Growing domestic production and rising levels of domestic and foreign investment in this are expected to compensate some for the loss of imports.

The Russian Federal Antimonopoly Service (FAMS) drafted a resolution that would expand the number of importers eligible to receive meat and poultry tariff rate quota (TRQ) allocation in 2008 and 2009. The resolution would give quota allocation to importers that purchased volumes any time during the previous three years.

In late 2007 the Federal Customs Service (Customs) issued an order announcing a new list of approved customs declaration points authorized to handle import documentation for meat and meat products that left out many major points in the Russian Far East and the port of Saint Petersburg.

Avian influenza outbreaks were confirmed in a commercial poultry farm and several private backyard flocks in Rostov oblast in December 2007.


Broiler production increased 15 percent in 2007 and is projected to grow another 10 percent in 2008 even though the profitability of poultry production is declining due to increasing input prices. In response, the Russian Poultry Union requested that the Ministry of Economic Development and Trade (MEDT) impose an import duty on poultry that is four times the currently set rate to slow imports and compensate domestic producers.

Poultry meat production is slated to increase by a further 650,000 metric tons (MT) to 2.5 million MT by 2012, including an increase of 150,000 MT-200,000 MT in 2008 alone. Egg production increased 1 percent in 2007 but is expected to grow at a much faster rate in 2008 due to expanding demand of domestic food processors.

Domestic turkey production is forecast to increase 25 percent in 2008. Several investors signed a $100 million agreement this in June 2007 to build a turkey production facility in southern Russia. Currently four major players dominate the market and they are steadily increasing turkey production. The total turkey meat consumption potential in Russia is approximately 175,000 MT, according to some estimates. Turkey is a relatively new product for Russia, and it is advertised as a healthy, less expensive alternative to beef. In retail trade turkey prices are 40 to 70 percent higher than broiler meat, and profits are up to 10 percent higher.

Russian Prime Minister Viktor Zubkov has publicly stated that Russia should balance domestic meat output and meat imports as domestic producers should remain the first priority. Nevertheless, there is considerable pressure on the Russian government not to take measures restricting meat imports in order to combat rising food prices. Meat and poultry prices were the largest contributors to the overall growth of the cost of a consumer basket of goods from January-September 2007 compared with the same period a year earlier.

Feed Stocks

Feed stocks at the beginning of February 2008 were 2.2 percent lower compared to February 2007. Feed prices are currently RUR 8-9/kilo compared to RUR 3/kilo in spring 2007 (exchange rate is approximately RUR 24.5/USD 1). Lower feed stocks and higher prices will create problems for poultry operations in 2008 and hinder achievement of growth rates seen in previous years. Grain prices increased rapidly in Russia through the middle of July before finally stabilizing at high levels as harvest progress reports were released. To limit the negative effects of grain exports on feed prices, the Russian government issued a resolution on December 15, 2007, that authorizes imposition of bans on export of several “essential commodities” such as grain and grain products (see RS7094). In addition, Russia raised the export tariff on wheat and meslin to 40 percent ad valorem but not less than 105 Euros per MT, a prohibitive level effective January 28, 2008 to April 30, 2008.

Currently Russia is developing protocols to register feed produced from genetically modified organisms (GMOs). A Russian government resolution transferred the testing and registration of feeds involving GMOs to the Ministry of Agriculture’s Federal Veterinary and Phytosanitary Surveillance Service (VPSS). VPSS has developed the draft administrative statute (procedure) for registration and has already begun accepted applications based on the procedures described in that draft (see RS7078).

Epizootic Situation

An outbreak of avian influenza (AI) was confirmed in late 2007 in a large poultry farm in Rostov Oblast in south Russia. Representatives of Gulyay-Borisovskaya poultry farm informed that birds began dying on November 29, 2007, and that laboratory studies confirmed the presence of H5 bird flu virus. As a precaution, the poultry farm's entire population of over half of million chickens was culled. Avian influenza outbreaks were later recorded in private backyard flocks located close to the poultry farm. Police set up quarantine in the affected region and restricted all movement of people, animals and goods. No human cases were reported. In total, approximately 517,000 chickens were destroyed during these series of outbreaks. Local veterinary officials suspect migratory waterfowl were the vectors. A second commercial poultry farm in Rostov Oblast was shut down as a preventive measure.


Poultry meat consumption will continue to grow and is projected to rise by 5 percent in 2008 compared to the more rapid 10-percent growth in domestic production.

Turkey meat consumption is increasing in Russia as growth in domestic turkey production is compensating for some of the sharp decreases in turkey imports caused by stricter measures in assuring declaration of full customs values.

The poultry supply is expected to increase by 10 percent in 2008 due to sustained growth in domestic poultry production and large import volumes. Poultry consumption is also expected to grow as disposable incomes are increasing. Income growth in January 2008 jumped 12.9 percent compared to the income growth in January 2007. The gross domestic product grew by an annual 8.1 percent in 2007, exceeding the government's forecast and registering the fastest growth rate since 2000. The average wage increased an annual 16.2 percent in 2007, reaching RUR 18,467 ($754) per month in December, while retail sales grew 15.2 percent.


Poultry imports into Russia increased from 1.273 million MT in 2007 to 1.287 million MT in 2006 while the value of imports significantly increased from $921 million to $1.151 billion. The poultry TRQ for 2007 was set at 1.171 million MT.

The current livestock environment in Russia makes imported broiler meat an attractive source of animal protein for Russian consumers. As reported in previous GAIN reports (see Other Relevant Reports), cattle production has not yet begun to recover in Russia and pork production growth is still below Ministry of Agriculture expectations. Additionally, rising feed prices are slowing investments in the domestic broiler industry.

From January-September 2007, broiler cuts in relation to total poultry imports reached 88 percent; whole birds 6.2 percent; and turkey cuts 5 percent (compared to 87 percent, 5.7 percent and 6.7 percent, respectively during the same time period in 2006). The U.S. share of total broiler imports was 71 percent; Brazil 15 percent; and Germany 5.7 percent (compared to 69 percent, 15.5 percent and 4.7 percent, respectively a year earlier). Total turkey imports decreased 28 percent in January-September 2007 in comparison with 2006. France (38 percent) and the United States (18 percent) were the largest exporters of turkey cuts to Russia while Belgium and Germany also exported significant quantities (15.8 percent and 13.6 percent, respectively).

Further Reading

More information - You can view the full report by clicking here.

April 2008

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