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Russia Changes Global Market for
Livestock Products
William Liefert, USDA/ERS
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In moving from a centrally planned to a market economy, Russia
experienced a dramatic drop in the consumption of high-value
livestock products, such as meat, milk, and eggs. Per capita
meat consumption, for example, fell from 165 pounds in 1990 to 90
pounds in 2000. The main reason for the decline was the elimination
of massive government subsidies for livestock products that had
helped boost production and consumption during the former Soviet
era. Without these subsidies, producers could not sustain output
levels, consumer prices rose, and demand fell. In addition, demand
has shifted to goods and services of which consumers were starved
during Soviet times, but that are now becoming more plentiful: fruits,
vegetables, and packaged convenience foods, as well as consumer
durables—such as automobiles, refrigerators, and televisions—and
services ranging from legal and financial services to car repair
and health clubs.
These changes could have important implications for global
trade in meat, animal feeds, and high-value products. Incomes
began to grow in Russia in 2000, following the 1998 financial crisis,
and gross domestic product and consumer income are currently rising
at about 5-6 percent per year. The income growth has generated a
rebound in meat and other livestock consumption. But because the
large subsidies of the former Soviet era encouraged overconsumption
of livestock products relative to the economy’s real wealth,
per capita consumption is unlikely to return soon to the levels
of that period. Nonetheless, the rise in livestock consumption provides
export opportunities for U.S. producers.
Despite the drop in overall meat consumption, during the 1990s,
Russia became a major meat importer, especially of poultry. In 2001,
Russia imported 1.1 million tons of U.S. poultry, accounting for
45 percent of U.S. poultry exports. In spring 2003, however, Russia
imposed a quota
on its poultry imports, as well as restrictions on its beef
and pork imports. The poultry quota allows 1.05 million tons of
imports a year, compared with Russia’s total 2002 poultry
imports of about 1.5 million tons. Russia’s apparent motive
behind these measures is to protect its poultry and other meat producers
from import competition, given that, in recent years, Russia has
been importing about a third of all domestically consumed beef and
pork, and over half of its poultry. It remains an open question,
however, as to whether Russian poultry producers will respond sufficiently
to this added stimulus to satisfy the growing demand among Russian
consumers for poultry meat.
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