Meat is considered to be one of the most important food products in the human diet, as, depending on the variety, it contains 10–35% of protein. Despite the vegetarianism trend popular in recent years, volume of apparent consumption* of meat and offal in Russia has been on the increase: in 2017, said indicator equaled 8.2 million tonnes, exceeding the level of the previous year by 5%. Poultry is leading in the market structure, being the most affordable meat variety. In 2016, poultry meat occupied approximately 58.8% of the market in physical terms, whereas in 2017 its share grew to 59.7%, since consumers were giving preference to cheaper products due to decreasing incomes and purchasing power. At the same time, growth in pig farming has been recorded. Further growth in the segment of poultry breeding is expected for 2018, although the rates are expected to be lower.
It is important to mention that, since 2013, the share of beef has been declining, which is connected with a reduction in cattle population as well as factual negative dynamics in the segment. Production of beef is characterized by a long payback period for farms, feeds and pedigree cattle, as well as greater production costs compared with the poultry and pork industries; the resulting final consumer prices are high (as of October 2018, the price for beef, boneless meat excluded, amounted to 323 rubles per kilogram, which is 2% higher than in 2017).
Prices for poultry, on the other hand, were declining in 2017: in particular, prices for chicken dropped by 17.5% to the value of 96.8 rubles per kilogram, which is primarily due to production surplus in the highly saturated market. However, in 2018 prices for chicken began to grow, reaching 132.56 rubles per kilogram, as a result of increased prices for compound feed purchased from abroad.
During the past few years, the livestock industry has received a number of development drivers, which helped domestic producers occupy a certain position in the market—at the moment, Russian companies provide approximately 89% in the meat market. One of the defining factors was the embargo imposed against a number of countries, including countries of the EU, the US, Canada, Australia, and Norway: since August 2014, imports of virtually all varieties of meat and meat-containing products from these countries has been banned. As a consequence, producers from the EU, the US, and Canada left the Russian market completely; in the past, however, their total share was reaching 45%.
In 2017, the largest meat producers in the Russian Federation were “Cherkizovo Group” PJSC (8.8% in physical terms), “Prioskolye” CJSC (8.6%), “Miratorg” Agribusiness Holding (6.8%), and “Agropromyshlenny Kholding (Agricultural Holding) “BEZRK-Belgrankorm” LLC (4%). Together, the top 50 meat producers account for more than 70% in total product output in volume terms.
Export-oriented production has been actively developing as well: dynamics of meat exports in 2013–2017 were demonstrating stable growth at average annual rates of approximately +45%.
In 2017, meat exports reached 239.8 thousand tonnes (+42.6% to the similar period of the previous year) valued at $ 318 million total. Around 68% of meat and offal supplies fell on poultry; 30% were made up of pork; whereas 2% consisted of beef and other meat varieties. Substantial growth is expected in 2018 as well, since in the period from January to September exports already reached 216 thousand tonnes.
Russian products are mainly supplied to countries of the CIS, Vietnam, and Hong Kong. In exports to countries of Asia, meat offals prevail (chicken legs, pork legs, beef cheeks, and others).
In physical terms, largest volumes of supplies in 2017 fell on Ukraine (69.1 thousand tonnes), Vietnam (51.4 thousand tonnes), Hong Kong (37.2 thousand tonnes), Kazakhstan (32.4 thousand tonnes), Kyrgyzstan (13.9 thousand tonnes), and Belarus (9.4 thousand tonnes). In monetary terms, the leading countries were Ukraine ($ 98.8 million), Hong Kong ($ 59.9 million), and Kazakhstan ($ 44.9 million).
In 2018, changes took place in the structure of exports: Iran became one of the leading importers of Russian meat (beef, specifically), occupying the share of 13.3%. Iran increased their purchases due to the simplicity of foreign exchange transactions, transportation security, and quality of Russian beef. Beef is mainly supplied to Iran by companies from Astrakhan.
The meat market in Russia is primarily influenced by household purchasing power, as standards of living rising imply that consumers can afford meat, including beef. In the medium term, no significant shifts are expected in the structure of consumption, given the current lack of significant growth in real household incomes; average annual growth will not exceed 101–102%, and by 2025 consumption of meat and offal may reach 8.7 million tonnes, exceeding the level of 2017 by 7.5%. Production of poultry (in particular chicken, despite the growing prices), pork and beef will remain the most promising segments.
* Apparent consumption implies the current market balance between production, imports and exports. In essence, said indicator reflects the volume of goods available for consumption in the domestic market. It is assumed that stocks, unsold goods and losses are included in the given volume, but are not indicated separately.