The Russian Federations planned expansion of pork production and reduction in imports has been threatened in recent weeks by additional outbreaks of African Swine Fever (ASF). The disease has been present since at least 2007 and has become an increasingly larger problem. Increasing pork and other meat imports are a logical short-term solution to maintain consumer supplies.

ASF is a virus that spreads rapidly with a high mortality rate for which there is no means of prevention or treatment. Eliminating infected animals is the only control solution. It is not transmitted to humans. According to reports by Bloomberg News, Russian veterinary officials said ASF has been discovered in 21 of Russias 83 regions and is progressively getting worse. In early January, a farm in southern Russia had to destroy over 30,000 pigs because of the disease, the largest outbreak to date. Outbreaks occurred in December in three other regions. It is spreading because of infected wild boars, small hog farms (about one-third of the hog supply) that are more subject to spreading the disease and failure to properly control movement of live animals.

Russia has a customs union with Belarus and Kazakhstan, and both have curtailed internal movement of live animals. One of the outbreaks in Russia is near the border with Kazakhstan and the government has restricted imports. Other Eastern European countries are concerned about the virus spreading farther in the region.

Any movement toward allowing additional pork imports for Russia would be a reversal of policies in recent years. According to the U.S. Agricultural Attach in Moscow, on December 31 of last year the Russian government announced for 2012 a tariff rate quota (TRQ) for pork of 400,000 metric tons (MT), down from 472,000 MT for 2011. A pork trimmings TRQ was set at 30,000 MT, up from 27,500 MT last year. A frozen poultry meat TRQ was set at 330,000 MT, down from 350,000 MT last year. A frozen beef TRQ was set at 530,000 MT and a fresh beef one at 30,000 MT, both unchanged from a year earlier. Adjustments will be made in some of the TRQs when Russia joins the WTO about mid-year. Some pork and beef enter at over quota tariff rates, and some quota-exempt pork is also imported.

The Russian government has been providing subsidies for larger farms to increase pork production. The U.S. agricultural attach reported large hog farms increased production by 7.5 percent in the first six months of 2011 compared to a year earlier. In 2010 most of the increased production came from 78 new, reconstructed and modernized hog farms, with 75 percent of the increased production occurring in just six of the 81 regions of the country. The pork and poultry industries received $300 million in subsidies in 2010 to offset feed costs.

In October the Foreign Agricultural Service of USDA projected 2012 Russian pork production at 2.02 million metric tons (MMT), up 2.8 percent from 2011 and 23.2 percent from the 1.64 MMT produced in 2007. If ASF continues to affect large farms like the one depopulated earlier this month, achieving a 2.8 percent increase in pork production will likely not occur.

Other meat supplies probably will not fill the entire gap in pork production. Domestic beef production is in a slow year-to-year decline as the dairy herd contracts; about 97 percent of beef comes from dairy animals. Production in 2012 will be down 1.4 percent at 1.39 MMT. Some efforts are underway to developed beef breeds of cattle, but they will have little impact on the current supply of beef. Beef imports will be up only 10,000 MT at 1.06 MMT. Young chicken meat production is expected to be up 230,000 MT in 2012 to 2.75 MMT, while imports will be down 36,000 MT to 354,000 MT.

Russia is still rebuilding its agriculture after the political turmoil of 20 years ago and low energy prices 10-15 years ago that limited funds available for further agricultural development. Russian political leaders had considered the country overly dependent on meat imports and began to channel funding into livestock and poultry production. Cutting the TRQs for pork and chicken meat was part of the effort to create a favorable market for domestic production. With beef production still declining, TRQs have been held steady.

Developing modern livestock industries will require animal health procedures that limit the spread of diseases like ASF. Problems in recent years with animal health issues in China and South Korea show how hard animal health issues can be to solve. Both countries relied on meat imports to replace the unplanned declines in domestic meat production. That is a rational use of import markets and increases efficiencies in domestic markets and for meat exporters.

In preparation for entering the WTO, the Russian government was required to make its future import policies for meat acceptable to current WTO members. Pork will have a favorable in-quota tariff of zero, but an over quota tariff of 65 percent. In January 2020 the TRQ for pork will be replaced by a flat tariff not to exceed 25 percent. For beef, the in-quota tariff will be 15 percent with the over quota tariff at 55 percent. Selected poultry products will have in-quota tariffs of 25 percent and over-quota tariffs of 80 percent. All sanitary and phyto sanitary (SPS) measures will be developed and applied in accordance with the WTO Agreement. Russia will join and actively participate in the Codex Alimentarius, the World Organization for Animal Health (OIE) and the International Plant Protection Convention and will apply international standards for SPS measures.

Now is the time for Russia to increase pork trade to limit costs for consumer and maintain the long-term pork market. As a major exporter of wheat and barley, trade in agricultural and food products by Russia is a normal business activity. Domestic industries should understand that maintaining adequate supplies for consumers gives better returns in the long-run than high prices due to shortages followed by long-term losses in market demand. If Russia allows for increased pork imports now, pork exporters can consider Russia one of many countries that may purchase meat based on market demands rather than strictly political decision making.

Ross Korves is an Economic Policy Analyst with Truth About Trade and Technology