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Meat & Dairy in Russia: New realities means new technologies

With the changing face of Russia’s agricultural sector, fuelled by international food bans, comes a number of opportunities for expansion in the meat and dairy sectors. How? More government support, and a shift towards self-sufficiency, means production levels are up and still rising.

Crucially, modern technologies are needed to push Russian production levels higher. ITE Food & Drink has put together this overview of the dairy and meat sectors in Russia, how the state is playing its hand in supporting domestic producers and how foreign companies can help shape the industry’s future.
 

Dairy in Russia: What is the state of the market?


Russia provides around 6% of the world’s milk supply, which makes the country the world’s fifth largest milk producer. At present, the country is around 74-75% self-sufficient in terms of production. 

Under the auspices of the Food Security Doctrine, the Russian government is aiming at domestic sufficiency figure of 90% (that is, 90% of the country’s dairy requirements supplied by internal producers). As of 2015, Russia was home to just over 2,300 dairy facilities and processing businesses backed by 33,650 dairy farms.

Annual Russian consumption of dairy products amounts to 190-250 kilograms per capita, at a rate of 300-350 kg per year. 

Even before import substitution became an integral part of the dairy sector’s development, investments in dairy product production has been on the rise across Russia. Over the past 10 years, the amount of investment has increased two and a half times, hitting a record $383 million in 2015. 

Further monetary investment is on the way. President Putin signed the 2016 budget in December 2015, which pledged $450 million of state budget for the support of the dairy industry. A big chunk of this figure is for the development of livestock rearing, technical and technological modernisation and industry-wide innovation.

Since 2015, the industry has seen a stable, consistent demand for equipment and modern technologies needed for producing cheese, milk and quark products. Indeed, as import substitution remains a pronounced focus of Russian food policy, the supply of quality machinery and equipment in the dairy sector provides the best entry point for foreign firms into Russia. 

Minister of Agriculture Alexander Tkachyov has stated over the next 10 years, the structure of Russian agricultural production will shift. 50% will be given over to major agriculture holdings, while the remaining half will be composed of small to medium sized businesses. It is in the latter section where the real opportunities lie. 

Small to medium sized dairy producers need modern technologies in order to meet production quotas – so international manufacturers of farming equipment could do well by establishing strong links with the smaller, less established players likely to experience growth across the next decade. 
 

Russia’s meat industry: Hungry for expansion?


Despite being one of Russia’s strongest agricultural sectors, followed by grain and dairy, the meat industry will be required to step up its production levels in accordance with import substitution programmes. 


Russia accounts for around 2.5% of the global meat industry. 3.3% of global meat resources are consumed by Russians. Prior to the ongoing food embargo, the country was also one of the world’s foremost importers of meat products.

Now, the decision has been made to reduce Russia’s dependency on imports of meat. Much like dairy, it falls to domestic producers to satiate Russian appetites. Production levels have subsequently increased. 


In the first four months of 2016, for example, production of meat and meat products increased by 9% when compared with the same period in 2015. The beef industry, selected for special development by the Ministry of Agriculture, has shown similar production rises. 

October 2015 saw levels of production beef reach its highest for three years – 13% higher than the same period in 2014. President Putin signed a decree exempting taxpayers of VAT for selling and importing pedigree livestock into Russia until 31 December 2020 in June 2016. Expect beef production levels to rise further in relation to this legislation entering law. 

Much like dairy, state support for the meat sector deals in vast sums of investment – mainly in the modernisation of existing production facilities and farms. For example, a programme for the development of livestock farming in 2016 was allocated $144 million in funding, with that figure rising to $166 million for 2017. 

Further support comes in the form of the state paying interest on loans taken out for the building or reconstruction of facilities for livestock farming. Under this programme, the state payed out $70.4 million in 2016. Again, this figure will increase in 2017, reaching $80 million.

With imports of meat products expected to drop to 0.5 million tons by the end of 2016, Russia needs to maintain high levels of production and development until at least 2020. Machinery and equipment manufacturers are well placed to aid in this endeavour. 


Where can your company find its place in Russia’s dairy & meat industry?


More government funding and support, exacerbated by a shift in policy from import reliance to internal sustainability, suggests Russian dairy and meat farmers will have more cash to invest in updated equipment, machinery and facilities.

It is here that foreign suppliers have been gifted a golden opportunity to capitalise on government-spurred initiatives. Equipment and technologies for meat and dairy product, livestock farming and production of roughage feeds is, and will remain, in hot demand. 

Capitalise on this increased need for world class technology at the Dairy & Meat Industry show in Moscow. Running from 28 February – 03 March at Moscow’s Crocus exhibition centre, this event presents the full agro-industrial production cycle for the dairy and meat industry, showcasing the very best in equipment and machinery.

The leading figures of Russia’s meat & dairy industries will be in attendance, so do not miss out on your chance to enter a highly lucrative market. Learn more about the Dairy & Meat Industry show today.


Image: © Fotosrus via Flickr

 

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Event24 Sep

WORLDFOOD MOSCOW..

24-27 September, 2019
RUSSIA

MOSCOW, RUSSIA
Venue: CROCUS EXHIBITION CENTRE

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