The Ministry of Agriculture proposed limiting the export of poultry meat for six months to stabilize prices

The Ministry of Agriculture’s proposal to limit the export of poultry meat for six months to stabilize prices in the Russian Federation may affect the supply of broiler carcasses, which bring producers about $50 million in revenue. Market participants also see the risks of companies losing their positions in foreign retail and consider the initiative a warning signal for other meat producers. At the same time, export restrictions are in principle not capable of leading to a serious reduction in prices for poultry meat in the Russian Federation.

The introduction of a restriction on the export of poultry meat only to broiler carcasses for a period of six months could affect the supply of products worth about $50 million (4.67 billion rubles at the Central Bank exchange rate as of Friday), Yakov and Partners calculated. As analysts note, of the total poultry meat exports of 350 thousand tons per year, broiler carcasses account for about 50 thousand tons, the average price of products is about $2 per 1 kg.

The Ministry of Agriculture announced plans to limit the export of certain types of poultry meat and edible eggs from Russia for six months. The corresponding legal act, the text of which has not yet been published, should be adopted in December.

The Ministry of Agriculture explained the need for measures by an increase in prices for poultry meat and eggs by 25.3% and 24% year-on-year, respectively, which they associate with a decrease in production volumes in recent months and rising costs against the backdrop of a high dollar exchange rate.

This increases the attractiveness of exports and creates a threat to the food security of the Russian Federation, and restrictions should curb the rise in prices for socially important products and prevent shortages, the Ministry of Agriculture indicated.

On Wednesday, Russian President Vladimir Putin drew attention to rising prices for poultry meat during a meeting with government members. “Why has chicken become so expensive?” – he asked the head of the Ministry of Agriculture Dmitry Patrushev. The minister explained that there are no economic prerequisites for increasing prices, and manufacturers have already begun to reduce prices. According to data available to Kommersant from market participants, as of October 22, the wholesale cost of a broiler carcass in the center was 210 rubles. for 1 kg versus about 215 rubles. for 1 kg a week earlier. The cost of fillet in the wholesale segment remained at 385 rubles. for 1 kg.

The Ministry of Agriculture did not answer the question about positions that may be subject to restrictions. President of Agrifood Strategies Albert Davleev believes that the measure may affect the broiler carcass, possibly the legs. According to him, these products are mainly supplied to Saudi Arabia and neighboring countries.

Vice President, Head of the Analytical Department of Gazprombank Daria Snitko also notes that the restrictions will most likely affect positions in demand on the domestic market, primarily broiler carcass and breast meat. In January-September, broiler carcasses accounted for about 38 thousand tons of total poultry meat exports, of which a third was supplied to the EAEU countries, she cites Emeat data. But, Ms. Snitko notes, the extension of export restrictions to the EAEU is less likely.

A Kommersant source in the industry says that restrictions on turkey exports are also being discussed.

According to a Kommersant source in the industry, GAP Resurs and the Cherkizovo group may be the first to suffer from the restrictions. GAP Resurs reported an increase in poultry meat exports in 2022 by 15%, to 144 thousand tons, naming Saudi Arabia among its key partners. Cherkizovo exports increased by 25%, to more than 100 thousand tons. The group’s portfolio also includes poultry brands for foreign markets – Urussa and Dajajti, respectively. GAP Resurs and Cherkizovo declined to comment.

The head of the National Meat Association, Sergei Yushin, emphasizes that discussing any restrictions on the export of poultry meat requires a thorough analysis of the structure of supplies and the consequences for the domestic market and exporters. According to him, a ban on the export of offal products that are not in demand in the Russian Federation will force producers to sell them at a low price or process them into meat and bone meal, to look for and take into account lost income in prices. For a number of foreign markets, carcasses of 0.9–1 kg are also produced, which are not in demand in Russia, and with export restrictions, such items can only be sold for the production of cheap raw materials, leaving foreign retail chains, the expert adds.

As Daria Snitko notes, although according to Rosstat, poultry meat production in organizations has been declining year on year since July, in January-September it remains higher than last year – 4.82 million versus 4.81 million tons. The problem of a lack of staff for cutting played a role in the rise in prices, but there is no overproduction of carcasses on the market, and the growing cost due to rising import prices and increased labor costs is contained due to the huge supply of grain on the domestic market, says Ms. Snitko.

Director of Yakov and Partners Oleg Shenderyuk points out that exports in poultry meat production account for 5–7%, therefore restrictions may lead to some increase in supply and affect price dynamics in the Russian Federation in the short term, but most likely the effect will be limited . Sergei Yushin says that in the medium term, only stimulating production will produce results, for which investors need to be assured that there are no risks of overstocking the market. The initiative looks rather like an alarming signal for producers of other types of meat, in particular pork, he points out.

Anatoly Kostyrev