Experts assessed the prospects for rising meat prices in Bashkiria

Prices for MEAT and poultry in Bashkiria in March 2022 increased from 3% to 8.8%. Sausage products have risen in price by 4.7–6.2% over the same period. This was reported by the Territorial body of the Federal State Statistics Service for the Republic of Belarus (Bashkortostanstat). Compared to the leaders of growth - vegetables and SUGAR - the retail price of meat products grew moderately. This is due to high competition in this industry, Viktor Freidin, chairman of the Union of Meat Producers and Processors of Bashkiria, told RBC Ufa.

“I have always said that the formation of prices in the meat industry does not occur chaotically - you just want it and raised it. A large number of players are not consolidated. Can you imagine how many sausage factories, small workshops exist? A huge number of people produce beef. There is no such situation as with metal: there are several plants around the country, one raised prices - and they all raised. It doesn't work that way here. Therefore, in these sectors - meat, dairy - prices are rising, but they are growing objectively. Approximately this growth is happening now, ”Freidin said.

The HEAD of the executive committee of the National Meat Association, Sergei Yushin, in a conversation with RBC Ufa, said that prices were growing on the wholesale meat market in February and March 2022, but in the last two weeks they have been declining.

“Currently, wholesale prices for chicken carcasses are at the level of 2018. The price of pork has also risen, but now the price is noticeably corrected. This is due to the fact that in the first three months the volume of production of all types of meat in RUSSIA increased by 7.5%. At the same time, poultry meat increased by 9.5%, and pork - by almost 6%. Beef increased by 3.5%. And of course, these additional volumes, and even during the Lenten period, which also affects demand, dictate the price reduction that we see. And it happens against the background of the fact that the cost price continues to grow more slowly, but grow. Prior to this, the cost of production grew at a high pace, ”said Yushin.

According to Viktor Freidin, in addition to high competition, the growth of prices in the meat market is constrained by the low purchasing power of the population and religious posts among the Orthodox and Muslims. In early May, the expert predicts a slight increase in the cost of meat products due to the holiday weekend.

“There will be May, there will be barbecues, trips out of town, this will lead to a certain increase in prices,” says Freidin.

The chairman of the Meat Union of the Republic of Belarus believes that the new sanctions have not greatly affected the producers of meat products, since Russian companies are little dependent on European imports of raw materials. This also applies to sausage casings - a number of media called interruptions in their supplies the reason for the future reduction in production in Russia and rising prices.

"This is not true. The natural casing, which is made from the intestines, is mainly of Chinese origin. From Europe, she practically did not arrive. Polyamide sausage casings are produced mainly in Russia. What has influenced the rise in prices more are spices that are produced or packaged in Europe. This is especially true of complex spices with pepper, SALT, algae extracts. But in general, now this does not drastically affect production. Yes, some products will move from one shell to another, the appearance will change - but no more, ”says Freidin.

Sergei Yushin cites the following figures: over the past five years, pork has risen in retail prices by 15%, chicken meat - by 25-30%. Now in central Russia, these main types of meat have begun to become cheaper. Although the relationship between producer prices and the retail cost of products is not linear, the expert says.

“It is difficult to say what the dynamics will be next, especially due to the fact that wholesale and retail prices do not always run in parallel – and this is an absolutely normal situation. Wholesale prices may rise, while retail receives supplies at the old prices and does not raise the price on the shelf yet. Then our prices may fall due to seasonal factors or due to oversupply, and the price on the shelf may not decrease. Retail is working more inertly. And it would not be very pleasant for us, consumers, if every two hours or every day prices either fell or rose. And in the wholesale link, this is exactly what happens, ”said Yushin.

Experts interviewed by RBC Ufa agree that there is no need to fear a shortage of meat in the country. Firstly, because the most "mass" types of meat - pork and poultry - Russia provides itself. And secondly, the main suppliers of imported meat did not impose sanctions.

“The poultry that we buy in stores is completely domestic production. But the meat that is used in the production of sausages is the so-called mechanically deboned poultry meat, in other words, minced chicken. We do not have enough of it, we partially import it into Russia. We also almost completely provide ourselves with pork. But for some products of the delicacy group, separate parts of the carcass were imported - the neck, carbonade, etc. But these are small amounts. As for beef, the situation is similar. The beef that we buy in the market or in stores is all domestic. Imported - only for meat processing, sausage production. But it has never been shipped from European countries. Argentina, Uruguay and Brazil have not imposed sanctions. Most of the imported meat comes from these countries,” says Freidin.

According to the expert, imported beef may rise in price due to higher transport costs, worsening logistics and the depreciation of the ruble.

Sergei Yushin notes that now everything depends on the balance of purchasing power and supply. If producers continue to increase production volumes, then prices will not rise quickly.

“Another factor is that the state is now planning huge social payments. We calculated that the first wave would amount to about 400 billion rubles through various social benefits, whether it was an increase in pensions, payments to the military, but most importantly, to families with children. These are very significant resources. They, of course, must be provided with a corresponding increase in supply. The demand for poultry will be additional, because this is the most affordable protein, people refuse the same fish in favor of poultry. We must ensure that production increases accordingly to meet growing demand without raising prices,” says Yushin.

Another problem, according to the expert, is the growth of production costs without an increase in selling prices. This leads to the fact that manufacturers can start working at a loss.

“If enterprises are forced to trade below cost, then, without any doubt, production will decrease, supply will fall and prices will still rise. Therefore, the price must be economically justified. In the first quarter of this year, poultry enterprises operated with extremely low profitability. Some worked in the negative. And this does not make us happy, because it is obvious that someone can stagger, the financial situation will worsen. And given that today all our suppliers of ingredients, feed, veterinary drugs and other things have switched to prepayment, we need more working capital,” said Sergey Yushin.

Due to low profitability, a number of meat enterprises may close this year, and this will lead to a reduction in supply in the retail market, the expert added.