Russian pork prices rise as ban on EU imports continues into third month

Prices for pork in Russia is on the rise as the countries ban on imports from the EU enters its third month.

This is according to Alla Barinova of Bord Bia’s Moscow Office. Russia restricted imports from a number of key suppliers following the discovery of ractopamine residues in the US pork and the incidents of African swine fever in Europe.

Barinova commented: “Meat processors in Russia are attempting to replace imported pork using local sources, beef offals, MDM and sausages recipe change.”

“However, as a result of the trade embargo on key suppliers, the price of pork products has significantly increased. Many processors are tied into supply contracts and, as a result, are facing significant losses. In some cases, local sources are insufficient or unavailable, while in others, local and non-EU sources cannot satisfy demand for pork brisket.”

However, she also noted Russia’s hope to use restrictions on imports as a catalyst for domestic production is likely to be hampered by a lack of foreign investments, while rising interest rates might not allow the increase demand to generate a sufficiently strong domestic supply response.

Barinova outlined in Bord Bia’s latest food alert that Russian pork consumption has been increasing strongly, leading to a profitable domestic pork sector that reported an EBIDTA margin for pork production in 2012-2013 of 40%. However, during the course of 2013, the production margin came under pressure for two principal reasons, namely: The strength of pork imports, and an increase in the feed prices

She added: “Following a rise of 10% in 2012, Russian imports of pork fell as 2013 progressed. Ireland exported 42% more pigmeat in 2013, at 21,000 tonnes. Figures for the first two months of 2014 show a further fall of 11% in Russian import volumes. Much of the pork sold in the Russian stores is produced in Russia. However, the majority of factories use imported pork.”