By John Helmer, Moscow
Australian meat imports to Russia have been banned by an order of the Russian veterinary and phyto-sanitary service, Rosselkhoznadzaor (RSN). The order was issued on March 31, and halts a trade which earned Australian meat exporters almost $200 million last year. The Russian action came twelve days after the Australian Foreign Minister, Julie Bishop, announced that President Vladimir Putin may be banned from entering Australia to attend the G20 summit meeting, scheduled in Brisbane in November.
The RSN announced [1] that it has found traces of a growth hormone or steroid called Trenbolone, first in chilled Australian beef, then in beef offal, and now in frozen beef. RSN official Alexei Alexeyenko said the comprehensive ban was imposed after RSN judged that certifications from the Australian government’s veterinary authorities could not be trusted. This followed negotiations between RSN and their Australian counterparts between December and February, and after the Australians had given fresh undertakings. According to Sergei Dankvert, the head of RSN, the Australians had promised to exclude from their exports to Russia meat with trenbolone traces, but this hasn’t happened.
Australian beef products represent about 5% of Russia’s annual beef import volume of about 610,000 tonnes. The main suppliers are Brazil, Paraguay and Uruguay. Frozen beef is mostly used in the manufacture of sausage [2].
For Australia, however, Russia is a major market for beef exports, ranking third after Japan and South Korea; fourth if the Middle Eastern countries are counted together; and ahead of exports to the European Union. According to Meat & Livestock Australia (MLA), the volume of beef exports to Russia in 2013 was 24,410 tonnes – with a sharp rise over the 2012 volume for beef, and an equally sharp decline for offal.
Source: http://www.mla.com.au [3]
Australian farmers also export lamb and mutton to Russia. RSN may take action against these imports, but so far it has not. Altogether, according to the MLA data, beef and sheep meat exports to Russia earned Australia about A$195 million last year.
The MLA is now reporting that “in January and February of this year, the volumes have already plummeted. “Exports of sheep meat (lamb, mutton) to Russia have also been cut by more than 30% this year; in 2013 they amounted to 3,789 tonnes. Australian offal exports have been zero this year; in 2013 they came to more than 13,000 tonnes.” The organization doesn’t explain why. Asked to comment on the trenbolone traces reported by RSN, MLA spokesman Belinda Roseby refused to respond.
Australian studies reported [4] in the Russian media indicate that the hormone levels in meat products are not harmful for human consumption.
Figures issued by Russian Customs are slightly different for both tonnage and value. They show that in 2011 Russia imported 88,000 tonnes of Australian beef for US$303.2 million in declared value. In 2012 this fell to 54,865 tonnes, worth $191.4 million. Last year overall sales fell to 51,292 tonnes for $188 million. In the first quarter of this year, Russian Customs say the volume was down to 10,800 tonnes for $2.1 million.
According to Gazeta.ru, the ban on Australian beef “may be linked, not only to the prohibition of drugs on the territory of the Customs Union, but to Russian support for local producers. Now in Russia there are a number of projects which can compete with foreign products. It is no wonder that Russian producers and distributors of premium meat categories support the ban introduced by Rosselkhoznadzor. ‘Domestic meat without hormones and stimulants will be the same quality as foreign, and in terms of price would be more affordable for the consumer.’”. Gazeta predicts that New Zealand or South American suppliers will fill the gap left by the exclusion of the Australians.
Gazeta cites Alexei Gandeyev, a steakhouse chef in Moscow, as saying that he has run blind tasting tests for Australian beef compared to beef from Lipetsk, as well as from South America. For quality and taste, he said, there is no detectable difference between the Russian beef and the imports. The standard of cutting and packing, he claimed, is still inferior for the Russian products.
A spokesman for Miratorg [5], one of Russia’s largest commercial beef producers, said the company “fully supports the efforts of Rosselkhoznadzor to ensure veterinary and biological safety of food supplied to Russia from abroad. Trenbolone is a powerful anabolic steroid used to increase muscle mass and appetite of cattle. The drug has many side effects including those critical for human health.”
He noted that the use of hormones by foreign meat producers is intended to give them a significant cost advantage. “It should be understood that in addition to the dangers posed by growth stimulators for human health, they give producers cost gains of up to 5%. And combining growth hormones and growth stimulants, foreign manufacturers are seeking cost reduction of 15% to 20%. This gives them a huge advantage over Russian farmers.”
Miratorg is now introducing to its farm herds specialized cattle breeds such as the Aberdeen Angus, the spokesman said. The share of such breeds in the Russian herd is currently about 10%. In Australia, he said, the share is 85%. “Domestic meat without hormones and stimulants will be the same quality as foreign, and in terms of price more affordable for the consumer.”
Sergei Yushin, head of the executive committee at the National Meat Association, said the ban on the import of Australian frozen beef “will have little practical impact on the Russian market this year, as imports of frozen beef are falling, while the share of imports from Australia is relatively small – in 2013 about 4.5%. However, for the Far East market deliveries [from Australia] are important.”
There will be a noticeable impact, he said, for affluent Russian consumers buying chilled beef in upmarket hotels, restaurants, and supermarkets. “In the premium segment of the market, a kilo of Australian beef costs from 60 to 130 dollars, and the market share of Australia accounts for about 6.5% of total imports of this product. Here there is practically no alternative for Australian beef. American beef is banned for import because of the use of the feed additive ractopamine, while beef from Europe or South America differs in taste and other characteristics.”
“In recent years, the culture of barbecue and steaks has rapidly penetrated into the lives of Russians. People with higher incomes have become accustomed to some Australian brands. And chefs do not yet know with what will replace the Australian meat. One of the outcomes – a move to the Russian beef of specialized breeds grown on Australian or American technology, but these products have not yet become a brand.”
A veteran meat trader from North America believes that “practically everything the Russians do regarding meat imports is politically motivated, especially in today’s environment. Australia wasn’t shipping much meat into the manufacturing segment, so that will continue to be South American. They were a major player in the high-end segment (hotels, restaurants, institutional) and it’s anyone’s guess who will fill that void. It’s getting harder and harder to find a steak in this country!”
The trouble with Australian beef started, according to the Russian government record, in December. Then on March 19 the Australian Government announced it was imposing financial and travel sanctions on Russia. Foreign Minister Bishop, whose West Australian constituency produces no beef, declared [6]: “I condemn in the strongest terms Russian President Vladimir Putin’s move to annex the Ukrainian territory of Crimea. The unauthorised vote in Crimea on 16 March, carried out while Russian forces were effectively in control of the territory, cannot form the legitimate basis for any alteration of the status of Crimea.”
Bishop went further [7] in a response to a question in parliament, reporting Australia’s vote against Russia in the UN Security Council. “Australia has stood with the international community in condemning Russia’s actions in Crimea. We joined with 12 other nations in the United Nations Security Council voting on a resolution that declared the referendum could have no validity. No member opposed this resolution, except Russia. Australia’s response to Russia’s actions is aligned with the action taken by the EU, the United States and Canada, who have also implemented a number of targeted sanctions and travel bans. Measures have been taken in close coordination with our friends and allies, including the United States, the United Kingdom, Canada and Japan.”
When the UN General Assembly voted on March 27, Australia followed the US and European Union in condemning Russia. The major meat exporters to Russia – Argentina, Brazil, Paraguay, and Uruguay – indirectly backed Russia by abstaining from the vote.
By then, Bishop had gone further and threatened to issue a travel ban against President Putin, excluding him from the summit conference of heads of government from the G20 states due in November. On state radio Bishop added [8]: “We are still deciding on further steps that we will take in relation to the G20.”
Yesterday, Bishop was asked if she believes there is a connection between her threat and the Russian beef ban. “Last year Australian meat exports to Russia earned almost A$200 million for Australian meat growers and exporters. If that is lost, does the Minister consider the sacrifice worthwhile for the advancement of Australia’s international interests? If so, what interests are those?”
Bishop replied: “Russia has not indicated that there is any connection between this ban and Australia’s sanctions. Australia recognises Russia’s right to determine its import requirements in a manner consistent with its WTO obligations. We are working with Russian authorities closely on this matter.”
According to an international meat market source, “I know [the Australians] were placed on ‘intensified monitoring’ [by the RSN] which is a way of punishing countries, usually for some political sin. Last week Dankvert announced that Canadian beef would soon be placed on the same regime. If the Australian experience is any guide, we can expect an all-out ban by the end of the year.”
Yushin for the national meat association cautions against political interpretations of RSN actions. “Russia opened 2 American pork plants and 4 coldstores for export to Russia right after the US sanctions had been announced. RSN opened a big Canadian pork plant also in the middle of the Canadian political rhetoric and participation in the sanctions.” The RSN announcement [9] to reopen the North American pork trade was issued on March 20, and confirmed today by Alexeyenko. “Import of pork from the United States is already authorized for enterprises that have made a commitment to produce products without ractopamine.” The first round of US sanctions against Russia was announced on March 17 [10]. The story of the growth stimulant ractopamine and the RSN decision to ban US meat with ractopamine traces can be read here [11].
When the ban was first introduced in February of 2013, the US Agriculture Secretary Tom Vilsack and the US Trade Representative Tom Kirk issued [12] a statement expressing “strong disappointment”, claiming there was no evidence of harm to human consumers, and attacking Russia for “refus[ing] to engage in any constructive dialogue” and for lack of “commitment to the global trading system”. Since last month, there has been no USDA announcement of the Russian action to lift the ractopamine ban, and the US press has not reported it. In the year before the ban was introduced, US pork and beef exports to Russia were worth $587 million [13].
“It is unlikely there is always politics in RSN actions,” Yushin adds. “Biased and unbalanced information from any source – political, mass media or business – more often than not impedes our attempts to find solutions in difficult and sensitive situations.”
A leading Moscow meat importer says he is switching all of his premium-beef import purchasing “to Uruguay, with a bit of Brazil.”