International Egg and Poultry Review - By the USDA's Agricultural Marketing Service - This is a weekly report looking at international developments concerning the poultry industry, this week looking at Russia.

Russia

Meat imports into Russia have come under stricter hygienic control. Due to the continuing global bird flu crisis and other health scares, customs officers are clearing imported meat only after it has been inspected by state experts. The meat, in other words, must now be inspected by two agencies before it is allowed entrance into Russia. The agencies are Federal Veterinary and Phytosanitary Oversight Services and the Federal Service for the Oversight of Consumer Protection and Welfare. Other preventive measures being taken concerning poultry include vaccinating all personnel at regional poultry farms against bird flu and emergency checks at nineteen poultry farms in Nizhny Novgorod region. Since July, 2005 more than 600,000 domestic fowl have been destroyed in Russia.

Previously shipments of food products were sent directly to Russia or transshipped through either Western Europe or Baltic and Finnish ports. The advantage of these ports were greater efficiency, fewer problemswith loss or damage and overall lower handling costs. Due to changesin import requirements, shipments have been redirected to the portsof St. Ptersburg, Novorssisk, Valdivistok and Rostov-on- Don. However, most products destined for the Russian Far East (RFE) enter through the ports of Vladivistok, Vostochny, Vanino, Nakhodka and Magadan. Even though Vostochny is the regions largest port by volume, the majority of U.S. food exports to the RFE enter through Vladivostok.

The greater port of St. Petersburg unloads more than 50 percent of all container shipments to Russia, 12 million tons from January – November, 2005. The container turnover is estimated to have increased 45% in 2005 and will reach 1 million TEU (TEU is a 20 foot container). It is one of the largest ports in the Baltic region and its turnover exceeds the container traffic of all the Finnish ports combined. Transit time from the U.S. to St. Petersburg is 20-27 days, depending on origination, and an additional 4 days shipping by rail to Moscow for the final destination. Moscow is said to consume 90% of the food imported by Russia, about $15 billion in 2005.

Plans have been announced for a $280 million investment in the development of the infrastructure of the port with completion estimated by 2010. Plans include the construction of five specialized terminals. The terminals are for containers, refrigerated containers, mineral fertilizers, bulk cargo and metals (alumina). The container terminal will be operational by 2008 and will be able to transship 500,000 20 foot containers. The refrigerated terminal will be able to transfer 1.5 million tons of refrigerated goods and will have a special section for cargo from the United States due to the large volumes of U.S. poultry, fish and fresh fruits that are the major consignee of the Greater Port of St. Petersburg. The other terminals will be able to handle 1.2 million tons of alumina and 3 million tons of bulk cargo.

Russia’s reliance on imports underscores the need for safe, reliable sources of food for its 143 million consumers. High world prices for oil and natural gas, increases in sovereign credit ratings and stability in the political situation has caused an overall economic development and consumer spending boom that is beginning to spread beyond Moscow and St. Petersburg into the regions. Approximately ninety percent of food prepared in restaurants and cafes in Western Russia and forty-four percent of products sold through retail are imported. From January – November, 2005 Russia imported 729,530 metric tons of poultry meat from the United States.

As a result of the reliance Russia has on imports, any import bans placed on exporting countries can affect internal meat prices. For example, after Russian officials met with Brazilian officials in December, 2005 concerning several foot and mouth disease outbreaks, Russian officials announced a one year ban on all beef and pork products from Mato Grosso do Sul and Parana plus six month bans on six other nearby states in Brazil. Once Brazilian meat supplies in storage run low it is expected pork and beef prices to increase by more than 10 percent in the near term and 15-20 percent in the long term. During the first nine months of 2005, 50% of all pork imports and 40% of all beef imports to Russia came from Brazil. Starting January 20, 2006, Russia has also banned all livestock products from the Ukraine.

The Agricultural National Priority Project was announced in early September, 2005 with an aim to increase domestic production of livestock and dairy products by providing interest free loans to businesses that will construct and/or modernize livestock farming facilities. A major aim of the program is to expand the quantity (and reduce the price of leasing) of pedigree livestock by expanding rural credit. Livestock is defined as including dairy cattle, swine, beef and poultry. The loan program started in 2003 that had farmers receiving 3 and 5 year loans with interest tow-thirds funded by the federal budget will continue.

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Source: USDA's Agricultural Marketing Service - 24th January 2006