Russia's agricultural miracle continues with meat and livestock

It appears that the Russian agricultural miracle contiues and now involves the meat and livestock sector.
Russia has moved into the fourth position among the world's leading meat and livestock producers. This is what experts are calling yet another example of  Russia's recent agricultural miracle  this time its in meat and livestock.
Over the last 20 years Russia has made significant strides in poultry and pork production, achieving complete self-sufficiency after previously heavily relying on imports. What has taken place and what strategies have been employed to elevate livestock farming in Russia from a position of serious weakness to this exalted level in only 20 years?
Plus what external factors have been involved,Also  why  has beef production not yet reached the same level of success as other sectors of the meat and livestock sector?
The  Prime Minister Mikhail Mishustin at a meeting with Rosselkhozbank Chairman of the Board Boris Listov.reveaed that Russia has moved into secured fourth place among the world's largest meat producers. The leading three are China,USA,and Brazil
According to the National Meat Association, the volume of meat and meat products imported from the period 2003 to 2023 decreased from 2.67 million tons to 0.64 million tons.

Notably, significant progress has been made in import substitution, particularly in the poultry and pork sectors. In the early 2000s, meat imports reached 1.2 million tons. By 2023, this figure had fallen to 230,000 tons.

The import of pork and pork by-products, including lard, reached a peak of between 600 thousand and 1.25 million tons between 2000 and 2010. In the current year, pork imports are expected to reach only 3,000 tons, while exports are projected to total approximately 300,000 tons. The reduction in beef imports is not a result of our success, but rather a shift in consumer preferences and a change in the cost structure of meat products. As other types of meat have become more affordable, consumers have begun to consume less beef. Import in 2003 reached 700 thousand tons, and in 2023 it decreased to 231 thousand tons. This year, Russia will export approximately 40 thousand tons of beef to other countries," says Sergey Yushin, head of the executive committee of the National Meat Association.
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So What factors contributed to Russia's success in poultry and pork production?
The head of the executive committee of the National Meat Association, Sergei Yushin, recalls that following the 1990s, by the beginning of the 2000s, the situation was challenging. At that time, 70% of consumption was provided by imported broiler meat, which was known as the "Bush drumstick" product. In the US, there was a surplus of drumsticks, as they are a popular cut among Russian consumers.

"The initial investments were made in broiler production because it is the most accessible and understandable meat for Russians. There are no religious restrictions on its consumption, the payback period is relatively short due to the quick production of a piece of meat from a chicken, unlike pig farming, where the terms are several times longer, and cattle farming, where capital costs are also much higher," says Sergei Yushin.

It is noteworthy that the initial significant investors in Russian poultry farming were American funds, which began actively investing in Russia after 1998.
One of the most significant developments in the history of livestock farming was the appointment of Alexey Gordeyev to the Ministry of Agriculture in the early 2000s. Mr Gordeyev highlighted the potential risks associated with import dependence, noting that a man-made disaster or animal disease could have a significant impact on food security. Secondly, it was regrettable that Russia, with its extensive land area suitable for feed and oilseed production, was so reliant on imported meat," states Yushin.

The main issue, he believes, is the low and often negative profitability of production. Gordeyev therefore set himself the task of ensuring profitability. In 2005, the government introduced new customs and tariff regulations, including quotas for meat imports and high duties above the quota. This resulted in a rise in meat prices and increased revenues for Russian businesses. Europe employed similar measures to enhance its livestock farming sector in the aftermath of World War II, the interlocutor recalls.

Since approximately 2005, the introduction of tariffs has led to the emergence of a second industry of interest to investors: pig farming.

"A number of foreign companies, primarily German, Danish and French, also played a role in the development of modern pig farming in Russia. "They not only constructed their own pig farms, but also provided expertise, technological equipment, breeding material, breeding programmes, genetic material and so on," says Yushin.
The second significant phase was the rollout of the National Project for the Development of the Agro-Industrial Complex in 2006-2007. This marked the inaugural instance of the state offering preferential loans for livestock farming. The injection of state support and cheap money led to a notable shift in the banking sector, with financial institutions becoming more willing to issue loans to companies for the construction of farms.

The third stage was the introduction in 2008 of a state programme for the development of agriculture and the regulation of the market for agricultural products, raw materials and foodstuffs, which was in effect for four years until 2012. The programme included a number of measures designed to support agricultural producers, including those engaged in livestock farming. This included the construction of new facilities and the modernisation of existing infrastructure, as well as the implementation of zero-rate tariffs for the importation of breeding material. "Significant financial resources were then allocated," the source stated.

In 2012, Russia joined the WTO, and measures were put in place to protect our market for livestock breeders. The state programme was extended until 2020.

"Over the years, a number of enterprises have been established in Russia. We collaborated closely with leading foreign companies, receiving the best equipment, technologies, breeding material, and advice on animal feed production. Genetic companies, market leaders worldwide, established a presence in Russia, offering training to local specialists. They invested significant resources into developing selection in Russia. The outdated notion that collective farming is a dirty, unskilled occupation has been dispelled. The industry attracted highly educated, erudite and active individuals. "Without this, the outcome would have been very different," states Sergey Yushin.

The growth of the population's income in the 2000s also contributed to the Russian livestock miracle. As the economy expanded, so did meat consumption.
There has been a notable increase in meat consumption in Russia over the past two decades. In 2003, the per capita consumption was 52 kg, which rose to 80 kg in 2023. This includes poultry, which increased from 18 kg to 36 kg, pork, which rose from 17 kg to 32 kg, and a slight decline in beef consumption, from 17 kg to 13 kg.

Despite significant import volumes, we were required to produce more and more, with population demand supporting favourable pricing, enabling companies to secure new loans and invest in expansion. We established a significant number of new enterprises and created over a hundred thousand new jobs. "The development of animal husbandry has driven the accelerated development of crop production, the construction of the most advanced feed mills, veterinary science, vaccine production, etc.," states Yushin.

It is evident that the cost of meat in Russia was artificially inflated at the early stages of livestock farming due to import restrictions.

It is worth noting that during the initial stage of development in the second half of the 2000s and the first half of the 2010s, the price of meat in Russia was higher than the global market average. However, the objective was to enhance profitability and boost local production. The objective was to reach a point where competition in the market would be so intense that meat would become one of the cheapest in the world for us.

Over the past decade, we have been actively engaged in efforts to expand our export markets. "We are competing with imports in a challenging market, but consumer demand is not unlimited. Our meat consumption has already reached 83 kg per person, which is the level seen in developed countries. Consequently, there is potential for increased exports. Russia already supplies meat to over 60 countries worldwide, according to the expert.

The export of meat and meat products has grown exponentially over the past 20 years, with a 22-fold increase: from 36,000 tons in 2003 (mainly destined for neighbouring CIS countries) to 800,000 tons in 2023. Russia exported 343 thousand tons of poultry meat, 223 thousand tons of pork, and 36 thousand tons of beef to other countries. 

An important step was the country's leadership's understanding that exports should be developed by the country's top officials, In addition, other government departments were involved in the process, and the Ministry of Agriculture established a robust network of agricultural attachés abroad. The result is a significant increase in agricultural exports, reaching almost 45 billion. "Who could have foreseen this outcome a decade ago?" Yushin remarks.
Furthermore, the expert has stated that the current situation with expensive money due to the high key rate greatly complicates matters. "If we adopt a realistic outlook, the industry may experience a period of stagnation in investments and a cessation of growth. Consequently, we will be unable to compete for global markets with countries where loans remain inexpensive. It is unlikely that any borrower would accept a loan at an interest rate of 22-23%. The cost of construction has risen significantly over the past five years, almost doubling in price. "Not only has the cost of labour increased, but we are also experiencing a shortage of workers," the interlocutor will say.
Another potential area for growth in the livestock farming sector in Russia is cattle meat. Russia has not yet achieved significant success in the beef market, although it has become a net exporter of high-value, marbled beef, previously imported from the US and Australia. The consumption of this premium meat has increased tenfold over the past decade. Furthermore, it is also exported. However, there have been no significant investments in the beef industry, with the exception of a few projects. The payback periods are lengthy, the cattle infrastructure is underdeveloped, and profitability is low or even negative. We are witnessing a persistent reduction in the cattle population. Russia has a sufficient supply of beef, with the option of importing if necessary. However, beef represents an opportunity for Russia to take the next step, albeit a challenging one. However, this will require a similar level of investment to other projects. We are talking about a trillion rubles and a period of 10-20 years. Beef in Russia is also one of the cheapest in the world, which is a significant challenge for the industry. The low price is deterring investors and slowing down the development of the industry.