According to the latest United States Department of Agriculture  (USDA) GAIN report, the Russian cattle herd is forecast to decline by 1.5% in 2016, to 18.4 million head – a reflection of the long-term reduction on cattle inventories. Difficulties in obtaining long-term credits, low raw milk prices, and a decline in consumption have compromised the investments in new beef and dairy production projects in 2015, which are also likely to constrain the herd growth in 2016.

Despite the overall low beef supplies and high cattle prices in the Russian market, producers are struggling to increase production due to limited cattle stocks and reduced access to long-term credits, with Russian beef production forecast to also decline in 2016, to total 1.3 million tonnes carcase weight equivalent (cwe).

The Russian government have recognized that import substitution for beef will require a longer period of time and significantly higher investments to replicate the success of local pork and poultry producers. Minister of Agriculture “Alexander Tkachyov” recently noted that self-sufficiency in beef and dairy can only take place with continued strong government support to the sector over the next decade.

Meanwhile, Russian beef imports have declined substantially, with imports down by more than 30% between January 2014 and July 2015. The fall is a result of a number of factors including trade interruptions, price volatility in the meat market, considerable Ruble depreciation, and declining demand for beef as a result of the weak economy.

Despite the strong demand for live purebred dairy and beef breeding cattle, as well as for commercial cattle for beef production, no significant import growth of live cattle is expected for 2016 – mostly due to the overall weak economic outlook, depreciated Ruble and high global cattle prices.

Regardless of the ongoing economic crisis in Russia and increasing cattle prices around the world, several major dairy and beef producers are benefiting from the continued support of the Russian government, and will continue to invest in improving livestock genetics and increasing their herds.