What's new ? - 2018

What's new ? - 2018

Russia: the poultry market

GAIN Report Number: RS1829 10 November, 2018

In 2019, Russian chicken meat production is forecast to grow 1.2 percent to 4.78 MMT. New processing facilities are gradually replacing older less efficient operations. Consolidation in the poultry industry continues to favor large companies that can access credit and can undertake major investments to improve productivity. Production overcapacity is squeezing profit margins, however domestic consumer demand for chicken meat remains stable, while exports continue to steadily grow. Chicken meat consumption is forecast at 4.8 MMT in 2018 and 2019. This forecast assumes no significant changes in macroeconomic conditions, however there are uncertainties heading into 2019. The Russian Government has announced an increase in the minimum retirement age. VAT taxes have also increased from 18 to 20 percent. Russia’s Central Bank is currently forecasting annual inflation in range of 4 to 4.5 percent for 2019. Animal feed costs are likely to remain high in the near future due to limited feed supplies and the Eurasian Economic Union (EAEU) tariff on key feed components. The increased tax burden, pressure on consumer income, combined with relatively expensive animal feed, will likely continue to challenge the Russian poultry industry in 2019. Russian chicken meat exports are forecast at 180,000 MT (RTC) in 2019, a 20 percent increase from the 150,000 MT (RTC) expected in 2018. Exports currently account for less than 4 percent of total production. The Russian poultry industry faces significant competition in terms of production costs, especially feed. Recurring challenges with Avian Influenza (AI) further restrict access to export markets. In June 2018, Russia’s AI situation took a turn for the worse following the discovery of High Pathogenic Avian Influenza (HPAI) in the Kurskaya and Penzenskaya oblasts. As of August 6, 2018, Russia’s veterinary service, VPSS, confirmed 76 outbreaks in 13 regions.