Russian Consumer Highly Reliant on Imported Meat Products
The catalyst underpinning the dramatic increase in meat imports by Russia since the early 1990's was the nearly 60 percent decline in domestic meat production. Since the onset of market reforms in 1991, Russian livestock and poultry producers have been caught in a cost-price squeeze as livestock prices have not risen as quickly as input prices.
Competitively priced imported poultry meat, particularly broiler leg quarters from the United States, have largely filled the gap left by a decimated Russian livestock industry. Expectations of a continued decline in overall Russian meat production in 1998 and 1999 implies that no respite will be given consumers from higher domestic meat production. Meat output is expected to decline nearly 3 percent to 4.1 million tons in 1999, less than half of 1989 and down 12 percent from 1997.
Imports of all meat as a share of domestic consumption have risen from 15 percent in the late 1980's to 34 percent in 1997. Imported poultry meat in 1997 accounted for nearly two-thirds of total poultry meat consumption and nearly 35 percent of total meat. Consumers have become heavily dependent on chicken leg quarters as a cheap source of protein.
Difficulties in getting letters of credit, overall currency and price uncertainties have put in question the trade/consumption outlook for the remainder of 1998 and 1999. Overall meat consumption , projected at 5.6 million tons in 1999, will be only half the level of 1989 when per capita consumption peaked at 80 kg/person.
Consumer demand in 1999 will likely be constrained by the inflationary effect of the devaluation and its effect on disposable income and consumer buying patterns. One of the consequences of the devaluation of the ruble since August 17th has been steep increases in prices for imported meat. With Russian consumers reportedly spending more than half of their disposable income on food, this implies difficult choices for consumers and a gloomy outlook for trade.