Why meat prices in Russia are falling, while in the world they are growing at a record high

On the world market, the cost of meat is growing at a record high against the backdrop of sanctions against Russia. In the meantime, the prices for pork and chicken are even declining. Only beef is getting more expensive.

“Meat production in the world has never been so expensive,” writes Bloomberg. The main reason is the increase in the cost of feed and, in particular, grain. Feed corn futures prices are up 31% in Chicago in 2022, feed wheat prices are up 50% in the UK. In addition, avian influenza has decimated the number of chickens and turkeys in France, Poland and the United States . Producer losses will have to be included in the final cost, the Food and Agriculture Organization of the United Nations (FAO) admits. Since the beginning of the year, meat prices on the world market have already increased by 10%. Due to sanctions against Russia in the US and the EU, prices for fuel, logistics, and food have increased.

According to Rosstat, from May 14 to May 20, prices for pork and chicken meat decreased by 0.3%. Since the beginning of the year, the cost of chicken meat has increased by only 3.6%, pork - 2.5%. Moreover, the consumer price index since the beginning of the year amounted to 11.82%. Only beef has risen in price more than this - by 13.5%. Poultry and pork producers complain about extremely low profitability.

On the one hand, our production of poultry and pork is growing rapidly. For example, birds produced 8% more in the four months of 2022 compared to the same period last year. Such dynamics is ahead of low demand, explains the head of the executive committee of the National Meat Association, Sergei Yushin. Purchasing power is low, and because of the cold, people are less likely to fry kebabs in nature. On the other hand, due to export duties on grain in the domestic market, it is cheaper. In addition, it is difficult to export pork now: China is actively restoring its livestock, and competition is high. Under-exported volume puts pressure on prices. Duty-free import of 100,000 tons of pork into Russia is also now allowed, although only 12,000 tons have been delivered so far.

However, according to Yushin, prices may soon correct upwards, as demand will be spurred by indexation of pensions, child benefits, etc. In addition, due to low profitability, inefficient enterprises may leave the market, which will reduce supply on the market and lead to higher prices, the expert says.