China has become the largest buyer of Russian beef

CHINA has become the largest buyer of Russian beef, follows from the data of the quarterly report of the Center for Industry Expertise (TSOE) of the Russian Agricultural Bank on the state of the MEAT market in RUSSIA. According to the results of the first quarter of 2021, beef supplies to China increased 20 times, and the country's share in the total volume of Russian exports of this type of meat exceeded 55%. The top three exporters of domestic beef also included Saudi Arabia and Kazakhstan.

According to the results of the first three months of this year, China (excluding Hong Kong, Macau and Taiwan) topped the list of the largest importers of Russian beef, (including edible offal), overtaking last year's leader Vietnam. The volume of deliveries to the largest Asian market increased by more than 20 times year-on-year from 179 tons in January-March 2020 to 3.66 thousand tons in 2021. The EXPORT of domestic beef in the same period increased by 2.5 times from 2.6 thousand tons in the first quarter of 2020 to 6.5 thousand tons in 2021.

“The need to compensate for the fall in domestic pork production due to the outbreak of African swine fever in 2018-2019 opened the Chinese market to foreign meat producers,” explains Andrey Dalnov, HEAD of the Center for Industry Expertise at Rosselkhozbank.

Thus, according to experts, in 2019-2020, China increased meat imports into the country many times over: beef supplies to the domestic market doubled compared to 2018, poultry meat imports tripled to 1.5 million tons, and pork 2.6 times to 5.7 million tons (including pork and edible offal from pigs).

“High growth in exports in the first quarter of this year is due to both the low base effect and the competitive price, which makes Russian beef popular with Chinese consumers,” adds Andrey Dalnov.

According to the COE, both inexpensive boneless meat and premium beef are in demand in the Chinese market.

“The need to maintain high levels of meat imports will continue for at least the next 5 years while the effects of the African swine fever outbreak are felt. Therefore, in the coming years, China will remain the largest importer of Russian producers, and Russian beef imports to China will continue to grow at a high pace. At the same time, the role of exports in the structure of the domestic market will increase, since beef exports enable domestic producers to diversify sales channels and receive stable foreign exchange earnings,” predicts the head of the RSHB Center for Industry Expertise.

The highest growth rates of import volumes in physical terms were shown by Hong Kong (+245% to 234 tons in the first quarter of 2021), Saudi Arabia (+141% to 497 tons) and Uzbekistan (107 times to 256 tons).

“The increase in exports by Russian producers to Hong Kong can be explained by the fact that Hong Kong was opened for beef supplies back in 2019, and mainland China only in 2020. Some players have already managed to arrange deliveries through Hong Kong and did not change their “entry point” to the market. At the same time, the movement of Saudi Arabia from 5th to 2nd place in the ranking of the largest importers of Russian beef is due to the fact that manufacturers are now actively working to develop the Middle East market, such countries as Saudi Arabia, the United Arab Emirates, Qatar are in priority,” - Andrey Dalnov comments.

The negative dynamics of deliveries from Russia was shown by Ukraine (-44% to 78 tons in Q1 2021), Vietnam (-42% to 415 tons in January-March 2021) and Ghana (-22% to 295 tons).

“More active diversification of the geography of deliveries is hampered by the remaining restrictive barriers, bureaucratic procedures for accessing the markets of other countries, as well as fierce competition,” says Andrey Dalnov.

According to the results of the first three months of 2021, beef production in Russia remained at the level of last year, amounting to 314 thousand tons. Production in agricultural organizations increased by 1% to 139.4 thousand tons against 138.4 thousand tons a year earlier, in farms - increased by 8% to 32.4 thousand tons. Imports of beef meat for this period year on year decreased from 70.1 thousand tons to 55.9 thousand tons.

“According to our forecasts, in the coming years, production will grow at an average rate of 1.5% per year, primarily due to an increase in production volumes in agricultural organizations and farms engaged in the cattle breeding segment,” adds the head of the Center for Industry expertise of Rosselkhozbank.

JSC "Rosselkhozbank" is the basis of the national credit and financial system for servicing the agro-industrial complex of Russia. The bank was founded in 2000 and today is a key lender to the country's agro-industrial complex, is one of the largest and most stable banks in the country in terms of assets and capital, as well as one of the leaders in the reliability rating of the largest Russian banks.

And this fact will be taken into account when preparing the monthly analytical report Meatinfo.ru