Numbers of cattle continue to decline while beef prices continue to rise

1 march 2016 | Rossiyskaya Gazeta

The Analytical Center's Expert Elena Razumova has cast doubt on the data published by the Institute for Agricultural Market Studies, according to which the last six months of 2015 saw an increase in the number of cattle and poultry at farms. In her opinion, after Russia banned imports of western groceries in response to western sanctions, the breakthrough in agricultural output the Government hoped for never materialized.

Elena Razumova
Elena Razumova
Department for Expert Analytics

 “The output in industrial agriculture fell by 0.3% in the 9 months of 2015 while the output of private rural households fell by 3.2%,” Ms. Razumova said in an interview with Rossiyskaya gazeta. According to her, it was only farms that managed to boost their output by 8.5% but their share in total domestic agricultural output is quite insignificant (8%). “There are only few agricultural producers that can make money off cattle breeding and the market is now getting skewed towards the premium segment. In addition, since March 2015 production costs in agriculture have been rising much faster than consumer prices, meaning that the profit margin earned by the producers and importers of beef has been shrinking. Any radical changes in the situation are very unlikely so in 2016 we are most likely going to see further declines in the number of cattle while beef prices will continue to rise,” she said.

The expert is convinced that the state support the Government plans to provide to the agricultural sector, which is a little over RUB 7 billion, is, on the whole, a drop in the ocean. “The estimated costs of building a small cattle breeding facility are RUB 500-700 million while larger facilities can cost as much as RUB 4 billion. Only major industrial producers have that kind of money and, given the long production cycle in cattle breeding, investments only start paying back in two to three years.” Ms. Razumova believes.