According to many experts, Russia has achieved significant indicators over more than 12 years of experience in the development of the beef cattle industry, but it cannot be called completely positive.
The total number of cows continues to decline. In 2021, it decreased by 1.9% to 7.7 million heads. The decline in livestock in 2021 was the highest since 2014, Milknews analysts say.
It should be noted that in 2022 Russia produced about 11.5 million tons of all types of meat. In 2022, the growth of meat production is about 6%. Pork production increased by 9%, poultry by 4%, but beef production decreased by 4%.
Beef is the third most important sector of the Russian meat market. According to Rosstat (the Russian Statistical Agency), in 2021, the volume of cattle cultivation for meat amounted to 1673.5 thousand tons in slaughter weight – 14.7% in the structure of meat livestock products. According to industry calculations, the capacity of the beef market in Russia, excluding rolling stocks, amounted to 1,924 thousand tons, per capita consumption – 14 kg.
Despite insufficient production for the domestic market, beef exports began to develop actively in Russia, supplies to China, other Asian and CIS countries are increasing. In 2014-2021, beef exports from the Russian Federation increased by 18.5 times to 37 thousand tons.
But in order to talk seriously about the beef production market, it is necessary to remember and separate the main sources of beef in the country – dairy cattle (80% of beef production), beef cattle (20% of beef production) and imported beef.
In general, import substitution in the beef cattle industry can be assessed as successful over the past 10-12 years: a more than twofold decrease in imports, an increase in self-sufficiency by almost 20%, a multiple increase in exports. But at the beginning of 2022, monthly import volumes increased significantly – by 40 percent or more. Many importers, expecting the possibility of preferential supplies from the very beginning of the year, sent large quantities of beef to Russia in advance.
Manufacturers believe that the duty-free quota will affect the reduction of the share of small producers in the long term. The price of farm meat for small industries will become uncompetitive. Thus, the volume of beef production will decrease, because the production of this meat will be unprofitable. At the same time, the big players will not benefit either: cheap meat now means there is no need to build long—term relationships with farms, invest in some of their herd projects, develop their domestic livestock. As a result, the end consumer may suffer: cheap meat now from abroad is a trap that will become noticeable by the end of 2023 and the beginning of 2024.
It is not possible to solve the problem quickly without the participation of the state due to long payback cycles (more than 12 years). According to market participants, it is necessary to finance the industry on the principle of direct stimulation of raw materials for beef production. It is necessary to transform the industry in terms of the production of young animals through small farms.
Over the past 8 years, not a single major and significant project has appeared in the industry. In general, the uneven technological equipment of the industry can be stated in the industry. Skewed investments towards fattening and processing. The infrastructure industry facilities already put into operation (feedlots, slaughter with processing) exceed the capacity (loading 32%).
The cost of calf production at small farms is 2.5-3 times less than that of Agricultural holdings. The yield and safety of calves per 100 cows in small farms is significantly higher than in Agricultural holdings. At the same time, the shortage of young animals (bulls for rearing and fattening) is more than 200 thousand heads annually.
The problem of import substitution in the industry has not been solved. Beef imports remain substantial (310 thousand tons, 14% of total consumption). Moreover, a zero rate of customs duty on the import of 200 thousand tons of frozen beef in 2022 has been established in the country since 2022.
The strengthening of the ruble makes beef imports extremely profitable for importers, and beef exports may begin to decline.
As a result, beef cattle breeding in Russia has a low investment attractiveness for obtaining young animals, as a raw material base for fattening animals for slaughter.
The growth potential of the industry lies in the more active involvement of small farms at the stage of production of young animals. Moreover, large businesses would be happy to acquire young animals grown on small farms for themselves. This is evidenced by the incalculable shortage of young animals for fattening and competition between leading producers and feeders of livestock.
