China has become the largest buyer of Russian beef as mentioned in the quarterly meat market report of RusAg’s Centre for Industry Expertise. According to the results of the first quarter of 2021, beef supplies to China increased 20 times, and share in total Russian beef export exceeded 55%. The top-3 exporters of domestic beef also included Saudi Arabia and Kazakhstan.
In 3M 2021, China1 topped the list of the largest importers of Russian beef2, while the leader of last year's rating was Vietnam. The volume of supplies to the largest Asian market increased by more than 20 times from 179 tons in January - March 2020 to 3.66 thousand tons in 2021. Exports of domestic beef in the same period increased 2.5 times from 2.6 thousand tons in Q1 2020 to 6.5 thousand tons in 2021.
"The need to compensate the fall in domestic pork3 production due to the outbreak of African swine fever in 2018-2019 opened the Chinese market for foreign meat producers," explains Andrey Dalnov, Head of RusAg’s Centre for Industry Expertise.
"The high export growth rate in Q1 2021 is explained by both: the low base effect and the competitive price, which provides popularity of Russian beef among Chinese consumers," adds Andrey Dalnov.
"The need to keep meat imports in high level will continue for at least the next 5 years as long as the effects of the African swine fever outbreak are felt. Therefore, in the coming years, China will remain the largest importer of Russian products, and imports of Russian beef 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, as beef exports make it possible for domestic producers to diversify sales channels and receive stable foreign exchange income,” forecasts the Head of the RusAg’s Centre for Industry Expertise.
The highest rates of import growth in physical terms were shown by Hong Kong (+ 245% to 234 tons in Q1 2021), Saudi Arabia (+ 141% to 497 tons) and Uzbekistan (107 times to 256 tons).
"The increase in exports to Hong Kong by Russian producers can be explained by the fact that Hong Kong was opened for beef supplies in 2019, and mainland China only in 2020. Some exporters have already managed to arrange supplies via Hong Kong and did not change the "entry point" to the market. At the same time, the shift of Saudi Arabia from 5th to 2nd place in the ranking of the largest importers of Russian beef is due to the fact that there is an active work on developing the Middle East market, countries such as Saudi Arabia, the UAE, and Qatar are in priority," comments Andrey Dalnov.
Negative dynamics of supplies from Russia showed Ukraine (-44% to 78 tons in Q1 2021), Vietnam (-42% to 415 tons in January-March 2021) and Ghana (-22% to 295 tons).
"A more active diversification of the geography of supplies is hindered by the continuing restrictive barriers, bureaucratic procedures for accessing the markets of other countries, as well as tough competition," says Andrey Dalnov.
In 3M 2021, beef production in Russia remained at the level of the previous year, amounting to 314 thousand tons. Production in agricultural organizations increased by 1% to 139.4 thousand tons compared to 138.4 thousand tons in 2020, in farms - increased by 8% to 32.4 thousand tons. Imports of beef for this period decreased from 70.1 thousand tons to 55.9 thousand tons year-on-year.
"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 in agricultural organizations and farms engaged in the cattle breeding segment," adds Andrey Dalnov.
1 Without Hong Kong, Macau and Taiwan
2 Including beef products
3 Pork products and sub products