Why is the growth of beef imports dangerous?

Due to the duty-free admission of imported frozen beef into the country (in 2022 it is allowed to bring 200,000 tons), domestic selling prices have been decreasing for two months in a row, which put the industry at risk of mass slaughter of livestock with a further reduction in beef production, its producers publicly announced in June . Roman Kostyuk, General DIRECTOR of the National Union of Beef Producers, explains the situation in an interview with Agrotrend.ru.

– Why is a foreign product cheaper, and where does it come from?

- The reason is the foreign exchange rate. With a DOLLAR of 70 rubles or more, the prices for our beef were balanced with world prices. When the exchange rate falls below 60 rubles per dollar, the domestic price becomes uncompetitively high, and the external price becomes too low. Since the fall of the dollar to 50+ rubles, our cost has, in fact, increased by the corresponding amount against the dollar.

– What is the current price level?

– There are more than ten cuts in the carcass of a bull with different prices, plus prices depend on the region. As a result, the selling price for beef can fluctuate between 280 and 380 rubles per kilogram, depending on the cut and in different parts of the country. The purchase price of imports is approximately $3-$3.5 per kilogram (all figures are live weight). With a rate of 70 to 80 rubles per dollar, we coincided with the world price, and the higher the dollar was, the more rubles the price gave us. After the rate has gone below 60 rubles per dollar, the purchase price does not cover anything.

- And why are our beef less often bought abroad? Previously, RUSSIA imported it, and part of the domestic product was exported.

- We mainly import frozen beef, and EXPORT expensive and, as a rule, chilled pieces. The export price provided the manufacturer with a higher revenue than domestically. Now no one abroad refuses our beef. It is Russian suppliers who have lost interest in export sales - after all, there is no longer the previous price in terms of rubles. We sell, as before, for dollars, but when we convert the proceeds into rubles, we no longer have a gain.

- According to Rosstat, from January to mid-June, retail prices for beef increased by almost 14%. At the same time, pork has risen in price only by 1.1%, lamb - by 7.7%, chickens - by 2.3%. What is the reason for the difference in pace?

– Beef is getting more expensive due to the shortage of the current supply. We cover only 80% of the market with domestic production. There was a turning point. At the end of last year, in order to stabilize consumer prices, the government decided to import about 200,000 tons of Brazilian beef duty-free. It was planned that it would fit into the usual level of imports (usually we bring up to 300 thousand tons of beef per year), this should not have greatly affected the market balance, and slow down prices. But this year, everything did not go according to plan: a protracted fall in the dollar exchange rate began, and with the start of the special operation, logistics chains began to collapse. Large cattle processors, seeing that they can buy cheaper imported beef, began to lower their purchase prices and buy less from Russian producers. In response, farmers whose ruble cost is only growing, they began to refuse the supply of livestock. You can also drive the cows out to pasture and wait a couple of summer months to see if the market changes. Thus, in central Russia, the volume of livestock processing has quickly and significantly decreased, despite the fact that imports have not yet been fully imported and have not been cleared through customs. Plus, our and imported beef are goods of different purposes. Imports are imported for industrial processing, minced MEAT, and our product goes to stores, including retail, so few people import it. The inconsistency of a number of such factors against the backdrop of a sharp collapse of the dollar has led to the fact that there seems to be a lot of beef in the country, but “at the moment” it is not there or is not enough. In central Russia, the volume of livestock processing has been rapidly and significantly reduced, despite the fact that imports have not yet been fully imported and have not been cleared through customs. Plus, our and imported beef are goods of different purposes. Imports are imported for industrial processing, minced meat, and our product goes to stores, including retail, so few people import it. The inconsistency of a number of such factors against the backdrop of a sharp collapse of the dollar has led to the fact that there seems to be a lot of beef in the country, but “at the moment” it is not there or is not enough. In central Russia, the volume of livestock processing has been rapidly and significantly reduced, despite the fact that imports have not yet been fully imported and have not been cleared through customs. Plus, our and imported beef are goods of different purposes. Imports are imported for industrial processing, minced meat, and our product goes to stores, including retail, so few people import it. The inconsistency of a number of such factors against the backdrop of a sharp collapse of the dollar has led to the fact that there seems to be a lot of beef in the country, but “at the moment” it is not there or is not enough.

– How long will it last?

- This is a temporary moment. Processors and retailers are interested in maintaining turnover, so in the near future they will sharply increase the import of the necessary cuts from abroad, since imports are relatively cheap. At the same time, it is not known whether they will agree to lower consumer prices. A very convenient moment to keep the price of the final product and get a good income. Enterprises that invest in beef cattle will prefer to stop investments and reduce the number of livestock in such uncertainty. If the increase in imports continues, they will try to fix the losses and get out of the risks. This will lead to a significant stop and loss of the rate of development of domestic production. We will become even more dependent on beef imports.

- Will there be early slaughter of livestock?

- They can be with those who are in debt, who do not have access to sufficient working capital. In order not to lose their land, equipment, they will slaughter livestock, close loans - if they see that there is no chance to hold out for some time.

– In 2020, beef consumption fell to 1.94 million tons, a 10-year low. What will be the dynamics in 2022?

- It will remain stable. In the past five years, the country has been consuming an average of 13 kg of beef per person per year. The lowest level was 12.7 kg. This year it will be about 12.5 - 12.6 kg, and then in the worst case scenario. Consumption is rolling back a little, because 70% of the beef that is consumed in Russia is in the lower and middle price segments. There is no noticeable reduction in consumption, and I don't think there will be.