By U.S. Meat Export Federation Staff
In a decree issued Oct. 27, the Russian government expanded its food import embargo on certain products from the United States, the European Union, Canada, Australia and several other countries to include pork and beef offal and animal fat, as well as live animals imported for slaughter. The embargo, which was enacted in 2014 in response to economic sanctions imposed on Russia due to the conflict in Ukraine, already included pork and beef muscle cuts from these countries. The decree states that this restriction will remain in force through the end of 2018.
Because most U.S. pork products were already ineligible for Russia, the decree will have a limited impact on U.S.-Russia pork trade. The United States had exported about 300 metric tons of pork offal and 2,600 mt of pork fat to Russia through August of this year.
All pork products (including offal and fat) and live pigs from the European Union — historically Russia’s largest pork supplier — are currently ineligible for export to Russia due to restrictions related to African swine fever. This year Russia has reported no pork offal or pork fat imports from any of the other countries covered by the embargo.
So if the Russian government’s decree has so little effect on current product flow, why is it a significant development for pork trade? To answer this question, it is important to review the status of Russia’s ASF-related ban on pork imports from the EU.
The ban dates back to January 2014, before the economic embargo was imposed in August of the same year. Shortly after the ban went into effect, the EU challenged it at the World Trade Organization. In 2016, a WTO Dispute Settlement Panel ruled that Russia’s ASF-related restrictions are inconsistent with its sanitary and phytosanitary obligations under the WTO and that they constitute a disguised restriction on international trade. In February of this year, the WTO Appellate Body confirmed the panel’s findings, and gave Russia until early December to come into compliance with the Appellate Body ruling.
While these events may have raised hopes that European pork would soon return to Russia, informed observers felt that Russia would simply expand its economic embargo to prevent the resumption of offal and fat imports — and those predictions proved to be correct. Now even if Russia lifts its ASF-related restrictions on EU pork, as it has agreed to do, the embargo will still prevent any trade from occurring.
“The ASF-related impasse between Russia and the EU has been the most disruptive event in global pork trade that we’ve seen in many years,” explains Thad Lively, U.S. Meat Export Federation senior vice president for trade access. “It forced European suppliers to redirect the large volumes of pork previously going to Russia to other markets and further intensified competition in several of the world’s major destinations for imported pork — including China, Japan, South Korea, Australia and the Philippines. While the economic embargo is an entirely separate issue, once Russia removes its ASF-related restrictions, the embargo will continue to block EU pork exports to Russia. So the closure of the Russian market to EU pork is a situation that USMEF does not see changing anytime soon.”
In 2013, Russia took more than 480,000 mt of pork and pork variety meat from the EU — down from the 2011 peak of 520,500 mt, but still accounting for 18% of the EU’s total exports. At that time, the EU held about two-thirds of Russia’s imported pork market, followed by Brazil (18%), Canada (10%), Belarus (3%) and Chile (2%). The United States held about 11% of the Russian market in 2012, but shipped only a minimal volume of pork to Russia in 2013 due to beta agonist-related restrictions. U.S. exports to Russia resumed on a limited basis in the spring of 2014, with exports reaching 35,000 mt ahead of the August embargo.
Today the Russian pork import market obviously looks quite different, with Brazil holding nearly 90% of the market with the remainder split between Chile, Belarus and Serbia. But Russia is also a substantially smaller destination for pork, with its total imports in 2016 reaching just 276,000 mt — down 63% from 2013 and nearly 70% below the 2012 peak of 891,000 mt.
Prior to 2014, Russia’s imports of pork fat were dominated by the EU and peaked at 290,000 mt (valued at $475 million) in 2012. In January through August of this year, Russia’s pork fat imports totaled just over 15,000 mt, and were mainly from Chile, Argentina, the United States and Brazil.
“This really underscores the impact of Russia closing its doors to most of the world’s major pork suppliers,” says Lively. “While Brazil is shipping more pork to Russia than in the past, it doesn’t begin to make up for the volumes lost from the EU, U.S. and Canada — making Russia’s pork processing industry far more reliant on domestic production and spurring continued expansion of the Russian pork industry.”