Zero import duties considered for feed additives in Russia

10-04-2020 | | |
Import duties on feed additives may soon be scrapped in Russia due to Covid-19. - Photo: Misset
Import duties on feed additives may soon be scrapped in Russia due to Covid-19. - Photo: Misset

Russia may soon introduce zero import duties on agricultural products and raw materials with the aim of limiting price growth for essential goods on the domestic market.

That was mentioned in the Russian Gazette, an official publication of the Russian government. In the publication, the Russian ministry of agriculture appealed to industry associations to prepare proposals for these zero import duties.

Introduction of zero import duties

The pig industry has been pushing for zero import duties on breeding materials, which is currently subjected to a 5% import duty. Yuri Kovalev, director of the Russian Union of Pork Producers (RUPP), expressed that in a statement in the Russian Gazette. RUPP has also asked the government to temporary exempt soybean meal, feed additives and amino acid imports from paying custom duties on these products.

Against the background of the Covid-19 pandemic, prices for these products have increased by 15-20%. There is no need to abandon import duties on pork, since there is an excessive supply on the domestic market, Kovalev added.

Pig industry in a difficult financial situation

Russian pig farmers raised concerned that their industry will get stuck between a rock and a hard place. Pig prices are low and might even fall deeper, whereas prices for feed additives are rising. Quarantine measures introduced by Russian president Vladimir Putin late March, including a nationwide retail lockdown and a self-isolation regime, could undermine people’s purchasing power and thus negatively impact retail prices. Retail prices on the pig market have kept falling and may fall even below the levels originally forecast for 2020, Kovalev warned in an interview to the Russian magazine Veterinary and Life.

On the other side of the spectrum, a recent slump in the exchange rate of the Russian rouble due to falling global oil prices has led to an increase in premix prices in Russia by 30-45%, Kovalev said.

The Russian ministry of agriculture said that the price for pork (in kg slaughter weight) was 143 roubles (US$ 2) by the end of March. Pork prices have gradually fallen over the past few years. RUPP forecast that they may fall further by 8-10% in 2020.

New pig and feed construction projects jeopardised

Kovalev said that RUPP is concerned about new construction projects for pig farms and feed mills in Russia. The food industry is allowed to continue operations during the quarantine, but things are different for construction companies. Currently there are projects underway in Russia’s pig industry with an overall investment value of 100 billion roubles (US$ 1.5 billion). Fears are growing that they might be put on hold because of the quarantine.

Kovalev added that the major problem is that these new construction projects have already been incorporated in Russian pig companies’ investment plans. Piglets have already been grown for some of these farms, plus the investors need to repay bank loans. RUPP is currently negotiating with the Russian ministry of agriculture on this problem, but consensus is yet to be reached.

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Vladislav Vorotnikov Eastern Europe correspondent