DOW JONES NEWSWIRES

  Average retail prices for meat and poultry in Russia increased by more than
23 percent in 2008 while the increase in overall food prices jumped nearly 18
percent, according to a U.S. Department of Agriculture attache report posted
Wednesday on the Foreign Agricultural Services Web site.

  Meat market analysts expect this trend to continue in 2009 as the Russian
government continues to take protectionist measures to limit imports of meat
and poultry.

Executive Summary

  According to the Russian State Statistic Service (Rosstat) average retail
prices for meat and poultry increased in Russia by more than 23 percent in 2008
while the overall growth of food prices in general jumped by nearly 18 percent.
 Demand for beef and pork is expected to decrease due to higher prices as
Russian consumers begin substituting them for cheaper proteins such as chicken
meat and eggs.

  The Russian government continues to implement protectionist measures against
imported agricultural products such as increasing import duties on butter,
soybean meal and dry milk powder, using tariff rate quotas to limit meat and
poultry imports, delisting U.S. and European Union meat and poultry plants
ostensibly for not meeting Russian requirements and other such actions.
Alongside the protectionist climate in Russia, the Russian Ruble decreased by
35% against the U.S. Dollar during the last 6 months making imported
agricultural products much more expensive.  All of these factors are leading to
higher prices throughout the production/import/wholesale trade/retail trade
chain.

Incomes Falling, Prices Rising

  Rosstat figures demonstrate that disposable income grew just 2.7% in 2008
after jumping 12.1% in 2007.  In addition, Rosstat reported that inflation in
January 2009 reached 2% with much of it attributed to the rise in meat and
poultry prices.  2008 poultry and meat price growth were the most significant
compared to other food products.

  The Russian government continues to implement protectionist measures against
imported agricultural products such as increasing import duties on butter,
soybean meal and dry milk powder, using tariff rate quotas to limit meat and
poultry imports, delisting U.S. and European Union meat and poultry plants
ostensibly for not meeting Russian requirements and other such action.  Along
side the protectionist climate in Russia, the Russian ruble decreased by 35%
against the U.S. dollar during the last 6 months (1 USD = 23 Rubles in Sep 08
compared to 36 Rubles in Mar 09) making imported agricultural products much
more expensive.  All of these factors are leading to higher prices throughout
the production /import/wholesale trade/retail trade chain.

  Ministry of Agriculture officials have publically vowed to limit meat and
poultry imports in order to protect domestic meat and poultry producers during
the global financial crisis.  Outgoing Minister of Agriculture Aleksey Gordeyev
has accused imported meat shipments on numerous occasions of driving down
farmgate pork prices and expressed the need for serious measures to limit meat
imports even if it means increasing prices for Russian consumers.  A major
cause of concern of Russian government officials is the ability of new pork and
poultry producers to repay their subsidized loans financed under the National
Priority Project for Agriculture.

  Increasing beef and pork prices will likely lead many Russian consumers to
substitute more expensive red meats for poultry meat and eggs.  Demand for pork
is lower than for poultry and some importers are switching from buying hams and
other premium cuts to cheaper pork offals and trimmings which are growing more
popular with consumers who watch food prices rise on a monthly basis.  With
rising demand for poultry in 2009, prices are expected to go up for both
domestic and imported products.


  To view full report, click here:
 http://www.fas.usda.gov/gainfiles/200903/146327404.doc