Russian meat processors face crisis

Sept. 23, 2014

Import restrictions in Russia are causing severe problems for the country’s meat processors.

Import restrictions in Russia are causing severe problems for the country's meat processors.

Restrictions on imports were introduced in early August, leading to an increase in the price of raw meat. That problem has been compounded by the fact that the government unofficially banned price rises on finished meat products in the retail sector in order to avoid social unrest, Global Meat News reported.

The issue came to light following the release of an open letter to the country's President, Vladimir Putin, in which the National Union of Meat Processors (NUMP) asks for urgent assistance. According to the letter, almost all meat processors have become unprofitable since the import restrictions were imposed.

Pork and poultry producers have raised their selling prices by 12-14 percent since August 6. When added to price rises earlier in the year, it means that the price of raw meat has gone up by an estimated 62-67 percent in 2014, the letter said.

The sharp increase in the cost of raw materials means that meat processors will be unable to avoid serious losses in the long-run. "This will lead to some businesses going bankrupt, with a reduction in budget revenues and social tension likely to follow," the NUMP warned.

Still, the organization does not want to see a significant hike in retail prices because of the potential impact on sales.

"We have to sacrifice part of our profitability to smooth the rise in prices, so that consumers can adapt to the new conditions," stated Anatoli Kosinsky, head of the NUMP.

Tax breaks are one measure that would provide immediate assistance, the NUMP said.

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