Overview of Russian Agribusiness Sector #3

Highlights of Russian Agribusiness sector prepared by the Office of Agricultural Counsellor of the Embassy of the Kingdom of the Netherlands in Moscow. - 29 March 2021

Fears of AI human-to-human transmission in Russia

The Russian Union of Poultry Producers (NUPP) has issued a statement ensuring customers that poultry products on the grocery shelves are safe for consumers despite the rising avian influenza (AI) fears.

In late February, Russia reported the first case of bird flu (H5N8) being passed from birds to humans. Seven workers at a poultry farm in Russia’s south were infected with the H5N8 strain in an outbreak dating back to December 2020. This incident is believed to the first confirmed case of H5N8 poultry-to-human transmission in the world.

Anna Popova, head of consumer health watchdog Rospotrebnadzorwas quoted as saying that the new AI strain could mutate further, leading to a possible human-to-human transmission.

Russian poultry farmers warned that concerns regarding the AI infection could impact poultry consumption in the country. In the statement, the NUPP ensured that, with all sanitary measures in place, the virus would not make it into the supply chain. Broiler meat and other poultry products are safe to eat when properly prepared. .

Sergei Lakhtyukhov, chairman of NUPP, called AI in Russia “accidental and self-limiting”, adding that both market regulators and business unions are constantly monitoring the presence of AI to ensure the safety of customers.

Agriculture Ministry to allocate 5 bln rubles through 2025 to support Russian poultry farming breeding base

The Agriculture Ministry plans to allocate 5 billion rubles by 2025 to subsidize capital costs for the creation of breeding units in poultry farming to reduce dependence on imported breeding material, primarily hatching eggs, Deputy Agriculture Minister Elena Fastova said at an industry business forum on FMCG inventory management.

At present, Russia is 30% dependent on pedigree material in poultry production. The implementation of measures provided for in the program will reduce this figure to 10%, the deputy minister said.

According to estimates by Deputy Industry and Trade Minister Viktor Yevtukhov, the creation of Russia's breeding base will require about 20 billion rubles.

Due to the spread of bird flu in some regions of Russia and rising grain prices, production of poultry products fell this year and prices went up. To support poultry farmers, the Agriculture Ministry is providing for an increase in the maximum limit for privileged short-term loans for poultry industry enterprises from 1 billion to 1.5 billion rubles for one borrower, and extension of soft investment loans for up 12 years for enterprises hit by bird flu. Another support measure could be partial compensation of costs per 1 kilogram of goods produced and sold.

Furthermore, on November 26, 2020, the subcommittee on customs and tariff regulation decided to raise import duties on hatching eggs to 5% from January 1, 2022 and to 15% from January 1, 2023.

The Ministry of Agriculture expects that the production of poultry meat and eggs in Russia will fully recover by May of this year, which will further help to stabilize prices.

For its part, the Federal Antimonopoly Service has begun inspections of chicken producers to determine whether price increases are justified and whether they are abusing their dominant position.

Recycling fee on agricultural and special machinery

Russia agri export

The Association of agricultural machinery dealers Askhod sent a letter to PM Mishustin objecting to the proposed increase in the recycling fee on agricultural and special machinery. The Ministry of Agriculture supports this position saying that the increase in the recycling fee would result in a steep growth of prices for agricultural machinery. According to the Ministry’s estimates, foreign tractors accounted for 30% of the Russian market in 2020 and foreign combines 25% of the market last year. If the proposed increase in the recycling fee is adopted, agricultural producers will have to increase their spending on purchases of tractors by 4.8 billion roubles and on purchases of combines by 2.5 billion roubles, the Ministry estimated.  Taking into account these estimates, the Ministry of Agriculture sent a letter to the government asking to postpone the recycling fee increase.

Russian govt extends support measures to those manufacturing biopolymers in agro-industry

The Russian government has extended state support measures to the manufacturers of biopolymers and biodegradable plastics in the agricultural industry, with the corresponding instruction having been signed on March 22, 2021, and posted on the government's website.

It is mentioned in the government’s press release that the receipt of biodegradable materials is now possible with advanced recycling of agricultural raw materials, including wheat, sugar beets, and corn. Enterprises engaged in this activity will now also have access to preferential investment loans issued at a rate up to 5% per annum from two to fifteen years.

The list of manufactured products for which the government offers support has been updated and supplemented with a number of items, including ethylene polymers and polyacetals.

The decision should assist in boosting the production of biopolymers and biodegradable plastics, reducing dependence on similar foreign materials, as well as in conserving and preserving the environment.

Russia to halt feed, feed additive imports from Spain as of March 17

Russia's plant and animal health watchdog will halt imports of feed and feed additives from Spain after repeatedly finding them to contain undeclared GMO components, Rosselkhoznadzor said.

A request to halt shipments of feed and feed additives (including plant-based and products of chemical and microbiological synthesis, which are imported without veterinary certificates) intended for Russia has been sent to the relevant Spanish authority, the watchdog said.

Shipments will be suspended until materials are provided on an investigation into all violations related to the discovery of undeclared GMO components.

Russia names German regions that can supply seed potatoes without pre-delivery control

Rosselkhozbnadzor has named the regions of Germany from which seed potatoes can be shipped without control before delivery in Russia.

Germany's Food and Agriculture Ministry has provided information about potato production zones being deemed free of organisms included in Eurasian Economic Union's list of quarantine pests & diseases , according to Rosselkhoznadzor.

This means that shipments of seed potatoes from these administrative areas to Russia can be carried out without pre-delivery control by the Russian side.

Rosselkhoznadzor recalled that since 2013 it has proposed to the European Commission and national quarantine and plant protection organizations of countries that export seed potatoes that they carry out procedures to recognize zones, areas and districts that produce them as being free of organisms that are subject to quarantine in Russia and the Eurasian Economic Union, but found no support.

Only in 2021 did Finland, Scotland and then Germany carry out the procedure to recognize "pest free areas" in accordance with international standards for phytosanitary measures (ISPM), Rosselkhoznadzor said.

The embargo on food imports, including vegetables and fruit from the European Union, that Russia imposed in 2014 does not apply to seed potatoes. They can be imported only after pre-delivery inspection by Russian experts.

Export duties on sunflower oil and sunflower seeds

Economic Minister Reshetnikov said that the government would probably introduce the export duty on sunflower oil starting from 1 September 2021.The duty rate will depend on a level of export price. The government also intends to raise the export duty on sunflower seeds starting from 1 July 2021 bringing the rate of duty to the prohibitive level of 50%.

Heineken localized the production of beer bottling equipment in St. Petersburg

Transnational brewing companies have a growing interest in the Russian draft beverage market. Thus, Heineken localized the production of beer bottling equipment in St. Petersburg, hoping to increase the share of premium brands in this segment by at least 10%. Potential consumers are skeptical about the new product, noting that similar solutions from other manufacturers can be cheaper and easier to operate.

Heineken began to produce a portable installation for dispensing Blade beer in St. Petersburg.

The volume of investments is € 3 million. The device is connected to an outlet, compressed air is used to dispense beer, supplied between the outer and inner layers of the keg. The device does not require flushing or installation, an eight-liter disposable keg with Brewlock technology, which does not require a CO2 cylinder, is installed in the device.

LAN-Team Moscow

Sources: Izvestia, Kommersant, Poultry World, Interfax, finmarket.ru, foodmarkets.ru