Report Projects Food Supply Shortfalls as a Result of Russia’s Import Ban

Russian news outlet Kommersant reported this week that an analysis by the Russian State Audit Chamber suggests the country will not be able to fully substitute food supplies currently locked out of the market due to its import ban. The Ministry of Economy concurs, projecting an overall decline in Russia’s 2015 domestic food production and an increase in food prices.

The largest shortfalls are projected for meat and dairy products, where the two agencies said processors will not be able to fill excess capacity through domestic supplies or alternative sources for imported raw materials. The Audit Chamber report predicts, however, that rising pork prices will drive domestic pork production 7.2 percent higher this year, with a 4.4 percent increase projected in 2015. Beef and dairy production are expected to remain fairly stagnant.

This week Russia’s Veterinary and Phytosanitary Surveillance Service (VPSS) announced approval of pork imports from two plants in Thailand: Betagro Safety Meat Packing and Bangkla Slaughterhouse. Prior to this announcement, Thailand had only exported poultry to Russia. Through August, Thailand exported 12,729 metric tons (mt) of pork worldwide, 88 percent of which was further processed. Processed exports to top market Japan made up about 45 percent of the global total. Betagro is a large-scale producer that could be well-positioned to make shipments to Russia, but so far Thailand is mainly exporting processed pork.

Recent news reports have discussed the possibility of VPSS approving imports from additional pork plants in China, but currently only two Chinese plants are eligible. Shipments from China began Oct. 11 but reportedly went mostly to the Moscow area – rather than to eastern Russia, which currently has the greatest need for additional supplies.