28 November 2008

6 minute read

Whilst little was known about the old Soviet Union, which included all countries east of Germany, even less is known about modern day Russia and its 142 million population. This is a nation that is debt free, oil rich and eager to do business, Moscow the capital is the most expensive city in the world. There are more billionaires residing in Moscow than in London or New York.

The Soviet Union from the end of the second world war until 1991, controlled its “satellite countries” of Poland, Hungary, Romania and the former Yugoslavia, which are the best beef producing countries in eastern Europe, with a combined cattle herd of 125 million cattle. In the Soviet days these countries exported prime beef to western Europe, with ample supplies left over for the domestic market. Yugoslav and Romanian beef was considered the best in the world, suckled on small farms and hand fed like family pets.

Since 1991 and the fall of the Soviet bloc, when independence came for the satellite countries, Russia turned to South America for its beef imports and more recently Australia. The United States, Denmark and Germany catered for poultry and pork supplies. The previously mentioned satellite countries, turned to the west and now are members of the European Union, restricting them from exporting meat to Russia.

The cattle herd in Russia today is 25 million head , whilst the nations total meat requirements are 7.5 million tonnes. Russians consume 50 kilos of meat per capita, a figure that is increasing at extraordinary rates. Projections are that by 2012, Russia will consume 10 million tonnes of meat per year. Domestic production of meat currently provides 4.7 million tonnes, leaving a shortfall of 2.8 million tonnes to be imported, making Russia the worlds largest meat importer.

Meat is imported under a government quota system, which falls into two categories, Manufacturing and Retail meat quotas. The quota for 2008 is Manufacturing beef 445 thousand tonnes, Retail beef 450 thousand tonnes, Pork 493.5 thousand tonnes and Poultry meat 1.21 million tonnes.

Traditionally beef and pork are the most popular meats, along with many varieties of sausages, eaten cold in summer and hot in winter often in broth or stew. Poultry consumption has tripled in the last fifteen years, with imports now being double those of pork. The emergence of a wealthy middle class with high disposable incomes, has seen a high restaurant culture and the demand for more delicacies, in primal cuts of imported beef.

The prime beef imports fall into two categories, the first being, round cuts, Topside, Silverside and Knuckle, for the high class trade. Secondly Chuck & Blade, which is divided into seven different cuts, providing secondary steak for stewing meat catering for the working class trade. This beef comes under the Retail quota system, with higher import duties than those of manufacturing meat.

The trade for manufacturing beef, which is used in the production of burgers, sausages and kebabs, accounts for 40 percent of the beef imported. This product is block packed frozen manufacturing cow hindquarters and forequarters and beef trimmings, Russia buys all the beef trimmings available in South America.

Australia has pioneered a lucrative trade in kangaroo meat, with the Far East of Russia in the frozen parts of Siberia, Kamchatka and Vladivostok, where the diet was previously reindeer and horse meat, mainly used in broth because of the cold Arctic temperatures. The plants in the Far East, have readily adapted to the use of kangaroo meat in sausages, salami and for general retail trade as stewing meat, replacing the need for reindeer meat. This trade has been very beneficial to Australia and for Russia who could never obtain sufficient quantities of reindeer meat. Australia are the main suppliers of horse meat to Russia followed by Argentina.

Russia plans to be self sufficient, in the production of pork and poultry within the next five years, however beef production cannot catch up with demand for at least fifteen years.

Russia is the only country in the world, where carcass’s are water brushed after slaughter in the primitive abattoirs, which significantly reduces the shelf life to 10 days maximum. Whereas the shelf life of Argentine or Brazilian chilled beef is 120 days. Russia will produce an additional 300 thousand tonnes of poultry meat this year, along with an extra 200 thousand tonnes of pork by 2009.

The farming opportunities are enormous, with European companies building multi million dollar pig farms and poultry units. The regulations are not as stringent as in the European Union, in regard to effluent disposal and farrowing crates. This will change as time goes on but currently the development is moving at such a rapid pace, trying to keep up with the governments ambitions for self sufficiency in meat production. There are unlimited opportunities for supplying tractors and farm machinery, as well as the latest technology in intensive farm production.

There are 25,000 small meat and food processing companies in Russia, employing 1.5 million people turning over seventy billion dollars a year. There are opportunities for new and used meat machinery such as mincers, sausage machines, slicers and mixers, as much of this work is still done by hand. The very old fashioned butchers shops still use handsaws and make sausage with hand filling machines, labor is readily available and until recently was inexpensive.

The majority of the European supermarket chains are now operating in Moscow, which has a population of 12 million and in the second city St Petersburg, whose population is around 5 million. McDonalds, Kentucky Fried Chicken, Pizza Hut and Starbucks can be found on every corner, along side the showrooms for Rolls Royce, Bentley and Porsche, Russia is the worlds largest buyer of all three makes of car.

The major meat giants such as JBS-Swift, Mafrig SA, Sadia, AIBP Ireland, JBS Foods Atlanta, Tysons Foods, Cargill Inc and Smithfield Foods, all have trading offices or appointed agents with English speaking personnel, in the main port of St Petersburg and of course in Moscow. Nestles, Mars, Danone, Hochland Lactalis and many other well known names, can also be found in Russia, actively involved in their own food processing factories. Barclays and HSBC Banks are active in Russia, as well as respected American, European and Russian banks.

There has been a big chill in relations between Russia and the United States, following tensions over the war in Georgia and the Russian recognition of breakaway provinces as independent states. The dramatic and swift action of Russia, in banning 19 American meat plants from exporting to Russia, coupled with the cutting of the US poultry quota by 300 thousand tones in September, have created an opportunity for countries like Australia and Brazil, to fill the void created. Russia is the largest buyer of American poultry products importing 870 thousand tons last year, they are the second largest buyer of pork products from the United States after China.

The meat is retailed by the supermarket chains in all of the cities, which have taken the place of the communist government subsidized stores. Retail butchers can be found in rural areas, along with butchers operating from stalls in open markets. There are many Kosher butchers in Moscow and St Petersburg, selling traditional Jewish products as they have for 1,000 years.