Russian broiler production is expected to increase 9.1 percent in 2012, as the Russian government increased its subsidies to producers in late July 2011 so they can realize “normalized feed prices,” according to “Poultry and Products AnnualGAIN Report RS1139 from Moscow.  In addition to stepped-up producer subsidies, several other cost-reducing measures were implemented, such as commodity interventions, distributed grain without auctions, and preferential railway rates for grain transportation, to stimulate increased poultry production.  These government actions apparently helped reduce grain prices by as much as 22 percent from January to the end of May this year, the report stated.

Broiler production next year is scheduled to reach 2.75 million metric tons, 9.1 percent above the 2.52 million tons in 2011, which will be 9.0 percent more than the 2.31 million tons in 2010.  However, Rosstat (Russian government statistical service) usually overestimates current year poultry production, the GAIN Report noted.

Russia’s Ministry of Agriculture acknowledged that limiting competition from imported poultry does support the continued expansion of domestic poultry production and provides better assurance that the 13 major broiler and turkey construction and renovation projects now underway will succeed.  These announced development projects could add as much as 700,000 tons of new broiler production capacity within the next couple of years.  Also,  Miratorg,  Russia’s leading pork producer, plans to begin producing 105,000 tons of poultry annually, the report stated.

Regarding Russia’s accession to the World Trade Organization (WTO), Prime Minister Vladimir Putin said Russia will not adjust poultry production subsidies from the planned future schedule nor would the tariff-rate quota (TRQ) be adjusted to move toward a more open trading system.  He explained “we want to assure you, we will consider these issues very carefully.  We will not accept any solution that would put our manufacturers at a distinct disadvantage or would undermine their competitiveness.”

The GAIN Report points out that for 2011 Russia’s TRQ for poultry is 350,000 metric tons with whole birds excluded.  Russia sees whole broilers as directly competing with domestic production and thus made whole birds subject to the over-quota duty of 80 percent but not less than 0.70 euros per kilogram.  As a result, Brazil, which had supplied the vast majority of imported whole birds has seen its sales of whole broilers drop to a minimal level.

For 2012 the announced TRQ will be 330,000 tons, 20,000 tons less than this year, but will have 250,000 allocated for parts and 80,000 tons for mechanically-deboned poultry meat.  Despite Putin’s announcement, he indicated the TRQ could be changed, pending Russia’s accession to the WTO.  FAS’s GAIN Report explained that the only “unsettled outstanding” sanitary/phytosanitary trade barrier that could potentially prevent the TRQ from being filled again in 2012 would be the set termination of Russia’s agreed veterinary certificates with trading partners.  However, FAS officials in Moscow do not presently expect this to transpire.

Of the 163,933 metric tons of broiler meat Russia imported during the first half of 2011 (up 40 percent over January-June 2010), the United States supplied 53.3 percent, Brazil 25.2 percent, and the European Union 18.5 percent.  Prepared poultry products are not subject to the TRQ and are targeted primarily toward the fast food business.  Russia’s poultry producers continue to pursue market access for their products in the European Union.  The European Union has agreed in principle to open its market for Russian poultry.  Reportedly, it is satisfied with Russia’s compliance with its veterinary requirements.  After the European Union officially inspects and approves individual Russian poultry establishments , certificates will be issued to allow them to export to its 27 member countries.

Poultry consumption, which has been relatively stagnant in recent years, is forecast to rebound in 2012 to 7.2 percent from “an artificially low estimate in 2011,” the report noted.  Poultry prices continue to rise in 2011 and are expected to continue to do so in 2012 as more affordable imported poultry declines.  Retail poultry prices were increasing at the beginning of 2011, but since then the Ministry of Agriculture has ceased reporting this time-series of prices, apparently with no explanation.