Russia Market Access and Demand Analysis

Blair L. Fortner, Director Global Issues & Alliances 16305 Swingley Ridge Rd., Ste 200 Chesterfield, MO 63017 bfortner@ussec.org P: 636-449-6030; F: 636-449-1292

September 2, 2010

Prepared by:

Gary Blumenthal, Pres. & CEO 1300 Pennsylvania Avenue, NW Suite 380 Washington, DC 20004 P: 202.785.3345; F: 202.659.6891 Email: wpi@agrilink.com Yuriy Alatortsev DArtur TransConsult LLC With Thomas P. Redick GEEC Law

Table of Contents
EXECUTIVE SUMMARY ............................................................................................. 2 DEMOGRAPHICS ....................................................................................................... 8 AGRICULTURAL MARKET ANALYSIS AND PROSPECTS ................................... 11 MARKET DISAGGREGATION .................................................................................. 17 MARKET OUTLOOK ................................................................................................. 24 COMPETITIVE SITUATION ...................................................................................... 27 LAWS AND REGULATIONS ..................................................................................... 28 ISSUES AND RECOMMENDATIONS ....................................................................... 43 ADDENDUM .............................................................................................................. 45

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Executive Summary
This project details the demand opportunities in Russia for soybeans/soy products and the hurdles (trade policy barriers) to exploiting inherent demand. In addition to the detailed review of the markets dynamics (demographic and economic), plus the competitors and regulatory practices constraining or prospectively inhibiting U.S. suppliers, a critical component is the identification of prospects for U.S. soy and providing optimal approaches for overcoming the constraints. This report provides some detailed and creative insights on how best to overcome hurdles in the Russian market. Demand Driver: Income equals meat demand, which equals vegetable protein demand. Ignoring the hard recession of 2009 and the countrys incipient inflation, Russians have enjoyed an average 7 percent per annum GDP growth for the past decade. The situation is even better when calculated on a purchasing power parity basis the average Russian is able to increase consumption of goods and services. The nations economic well-being is in part tied to the price of petroleum, and while the nation has its problems with corruption and oligarchs, the government extracts substantial revenues from the industry. Russia is the largest consumer goods market in Europe. With 140 million people and some of the worlds largest oil reserves, U.S. multinational food companies have focused their investments in Russia. McDonalds told the Financial Times that Russia has been one of our top investment markets for capital expenditures. It plans to add 45 restaurants in 2010, including drive-through windows. PepsiCo and CocaCola report marketing success in Russia and unlike consumers in the U.S., Russian consumers never accumulated large debts and so they feel less inhibition to spend. Animal Protein: Despite its substantial wealth derived from extractive industries (petroleum and minerals), Russias population (circa 140 million) consumes nearly 40 percent less protein per capita than the U.S. Russians went from being the worlds 6th largest consumer of calories to 37th after the dissolution of the Soviet Union. The Russian government has sought to bolster domestic livestock production and increase consumption by reducing the dependence on imports of animal protein. These efforts have thus far led to mixed results. More recently, the domestic compound feeding and livestock/poultry production industries have begun adopting improved genetics, technology and livestock/poultry management techniques. It is now estimated internally that Russians are 25 percent deficient in protein but meat production is expanding. Soybeans and Products: While Russia aspires to grow soybeans, and everything else, its climactic conditions are semi-arid and soybeans are outcompeted for the more optimal growing areas by wheat and some corn. It is debatable that soybeans will expand sufficiently in a country more adept at growing
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 sunflowers and incentivized by neighboring EU policy (support prices plus biodiesel) to grow rapeseed as the alternative oilseed. Through policy manipulation (addition of a 5 percent duty), the government has discouraged soybean meal imports, which will bolster soybean imports. Russians consume sunflower oil and have substituted cheaper palm oil for the prior soybean oil imports. Note that recent Russian imports of soybean meal have predominantly come from Argentina (40 percent) and the Netherlands (40 percent). A survey of Russian feed and oilseed sector contacts, plus additional research indicates three factors for this preference: Cost: Russians are cost conscious and they buy the cheapest. One reason for the pricing may be exchange rates. Although the dollar had previously fallen in value versus the euro, though in the forex trade contend that dollar traders failed to discount inflation effects on the ruble as much as euro traders who were more cognizant of it. Also note that without hard identity preservation, it is difficult to know whether soybeans processed in the Netherlands were sourced from the U.S. or South America, though likely it was from wherever it was cheaper. Policy Concept: While Russia has become more market oriented, no one should confuse it for a full market economy. Years of the command and control approach remains within the fabric of the body politic. Moreover, since Russia lacks even the constraints of WTO membership, it has regularly used policy changes to achieve it own narrow goals. Thus U.S. pork and poultry producers have seen their tariff rate quotas reduced, over-quota tariffs increased, and dubious SPS violations assessed. We will not mince words, until and unless Russia becomes a member of the WTO, its policy framework is fraught with hazards for foreign suppliers. Issues and Recommendations: Following is a rank order are the largest potential issues facing U.S. soybean and soybean product exporters in the Russian market. Each issue is followed by suggested action steps: Biotech: Russia operates an opaque and hazardous GM approval process than bans domestic cultivation and leans sympathetically toward the EUs approach. They talk non-GM but many believe it is planted domestically and used solely for political purposes. The major leverage point is Russias aspiration to accede to the WTO. U.S. soybean growers should assert to U.S. officials that a bilateral agreement of Russias accession is conditioned on the adoption of a transparent, science-based GM approval process. This may have greater potential under the reset of U.S.-Russian bilateral relations recently adopted.

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 SPS/Quality Standards: In a similar vein, Russias overall SPS and technical standards are intentionally their own, complex, and thus easy to manipulate. Again, use the WTO accession process plus work with Russian export interests to help them see the advantages of clear, internationally recognized standards. Marketing/Utilization: U.S. soybean growers have no representation in Russia, an increasingly important soybean market. Representation is desirable and could work with major soybean importers like Sodrugestvo, with Russian Soy producers and others to optimize the use of soy in livestock production and other uses. Import Restrictions: No market is without risk and the effort to market U.S. soy in Russia requires a risk management plan. For example, it is know that when Russia imposes meat import barriers, there is suddenly an increase in demand for imported livestock, largely from Denmark, the Netherlands and Poland, which is a clue as to where there will be a sequential increase in soy protein demand.

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Macroeconomic Situation
During the Soviet era, the Russian agriculture sector was highly subsidized and inefficient. One classic agricultural story from the communist era involved the hazards of command and control economies. Moscows instruction to bread bakeries resulted in an over-production of bread. The solution was to turn bread into part of the feeding ration for livestock. With the collapse of the agriculture sector following dissolution, Russia became a net importer of many foodstuffs, especially of meat and other livestock products. In fact, imports in 2002 accounted for over half of all poultry consumption, with the bulk coming from the United States, and about a quarter of all consumption of beef and pork (mainly from the European Union). Russia has undergone tremendous change since the collapse of the Soviet Union. Over time it has become selectively more market-based and globally-integrated. More recently it has engaged in a push to become a member of the WTO. Still, several major industries are highly concentrated into politically-connected "oligarchs," which adds to the risk of state interference with imports. Russian industry can be broken into two types: globally-competitive commodity producers and other less competitive heavy industries heavily dependent on the domestic market. Globally competitive industries like natural gas, oil, steel and aluminum bring significant foreign exchange earnings and have helped GDP growth to average seven percent since the 1998 Russian financial crisis. The agriculture sector has shifted from being a net grain importer to a net grain exporter. Real disposable incomes have doubled and there has been an emergence of a middle class, all of which has fueled demand for better protein in the diet. It should be noted that Russias heavy reliance on commodity exports also means that the country is subject to boom and bust cycles. Russia was one of the worst hit countries by the 2008-09 global economic recession. It has emerged from the crisis but it faces many long-term challenges including a graying population, corruption and out-dated infrastructure. The Russian economy had been averaging 7 percent per annum growth for over a decade, resulting in the doubling of real disposable income. However, Moscow made the mistake in 2008 of deceiving the Russian people by claiming the country was immune to the unfolding economic crisis in advanced economies. As a commodity export dependence economy, Russia was far from immune and felt a sharp decline in 2009 (see graph below).

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Russia entered 2010 with the largest risk premium of any big emerging economy. In fact, the economy remained lackluster during the first half of 2010 but has more recently rebounded in industrial production. The IMF recently reduced its forecast of Russias deficit as a share of GDP by nearly two percentage points to 5.9 percent; Moscow forecasts it will be 5.4 percent. The country managed a $46 billion trade surplus in 2010 Q1, bank lending has risen and the consumer benefits from the rise in oil prices. But some analysts suggest that Moscow continues to over-rely on bullish oil price forecasts. While the International Monetary Fund recently raised its 2010 GDP growth forecast for Russia to 4.25 percent, up from 4 percent, it maintained its inflation forecast of 6 percent, which means negative real growth. Russias Inflation has declined as GDP growth has rebounded (see graph below), but not far enough to yield full benefit out of the economy.

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On a purchasing power parity per capita basis, Russians are advancing economically (see graph below). A Pew survey earlier this year indicated a third of Russian respondents believe the economic outlook for their country is good; that compares to just 24 percent responding in that manner in the U.S. (91 percent of Chinese in the survey were optimistic.)

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Demographics
Without doubt, one of the largest factors adversely affecting Russias economy and future soy demand is its population decline. The rate of population decline has begun to stabilize and, for the first time since 1995, Russia added 15-25,000 people in 2009 to hit a population of 141.9 million. However, lower birth rates and an average male longevity of just over 61 years of age due to high rates of alcohol consumption are adverse factors. Higher rates of protein consumption and consequently soy demand are associated with youthful populations requiring this body building macronutrient. Russias youth population is 20 percent smaller as a share of the overall population than Chinas. An additional factor of note is the higher population growth rate of Russias Central Asian cultures that are predominantly Muslim, and therefore consume less pork.

Primary Economic Indicators Geography Area: total: 17,098,242 sq km land: 16,377,742 sq km water: 720,500 sq km Coastline: 37,653 km Climate: Ranges from steppes in the south through humid continental in much of European Russia; subarctic in Siberia to tundra climate in the polar north; winters vary from cool along Black Sea coast to frigid in Siberia; summers vary from warm in the steppes to cool along Arctic coast. Terrain: Broad plain with low hills west of Urals; vast coniferous forest and tundra in Siberia; uplands and mountains along southern border regions. Land use: Arable land: 7.17% Permanent crops: 0.11% Other: 92.72% (2005) Irrigated land: 46,000 sq km (2003) Natural hazards: Permafrost over much of Siberia is a major impediment to development; volcanic activity in the Kuril Islands; volcanoes and earthquakes on the Kamchatka Peninsula; spring floods and summer/autumn forest fires throughout Siberia and parts of European Russia. People Population: 139,390,205 (July 2010 est.) Population growth rate: -0.465% (2010 est.)
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 Economy GDP (purchasing power $2.116 trillion (2009 est.) (up from $1.589 trillion in 2005) parity) in USD: GDP (official exchange $1.232 trillion (2009 est.) (up from $740.7 billion in 2005) rate): GDP - real growth rate: -7.9% (2009 est.) 5.6% (2008 est.) 8.1% (2007 est.) 6.4% (2005 est.) GDP - per capita (PPP): $15,100 (2009 est.) $16,300 (2008 est.) $15,400 (2007 est.) $11,100 (2005 est.) GDP - composition by Agriculture: 4.7% (down from 5.4% in 2005) sector: Industry: 34.8% (down from 37.1% in 2005) Services: 60.5% (2009 est.) (up from 57.5% in 2005) Labor force: 75.81 million (2009 est.) Labor force - by Agriculture: 10% occupation: Industry: 31.9% Services: 58.1% (2008) Unemployment rate: 8.4% (2009 est.) up from 6.4% in 2008 Population below poverty 15.8% (November 2007) line: Household Income or Lowest 10%: 1.9% Consumption by Highest 10%: 30.4% (September 2007) percentage share: Inflation rate (consumer 11.7% (2009 est.) (down from 14.1% in 2008) prices): Investment (gross fixed): 20.2% of GDP (2009 est.) Agriculture - products: Grain, sugar beets, sunflower seed, vegetables, fruits; beef, milk Industrial production -11.9% (2009 est.) (down from 4% in 2005) growth rate: Exports: $303.4 billion (2009 est.)(down from $471.6 billion in 2008, but up from $245 billion in 2005) Exports - commodities: Petroleum and petroleum products, natural gas, wood and wood products, metals, chemicals, and a wide variety of civilian and military manufactures Exports - partners: Netherlands 12.2%, Italy 9%, Germany 6.9%, Turkey 5.9%, Ukraine 5%, China 4.5%, Poland 4.3% (2008)
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 Imports: $191.8 billion (2009 est.) down from $291.9 billion in 2008 but up from $125 billion in 2005 19th largest importer in the world Imports - commodities: Vehicles, machinery and equipment, plastics, medicines, iron and steel, consumer goods, meat, fruits and nuts, semi-finished metal products Imports - partners: China 12.9%, Germany 12.6%, Japan 6.9%, Ukraine 6%, US 5.1%, Italy 4.1% (2008) (Since 2005 numbers, China has become largest import partner, however, unlike 2005: the US has made the top 5 list of import partners at 5.1%.) Exchange rates: Russian rubles (RUB) per US dollar - 32 (2009), 24.853 (2008), 25.581 (2007), 27.191 (2006), 28.284 (2005) Source, CIA Factbook, June 2010

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Agricultural Market Analysis and Prospects

Background Despite a land mass nearly double that of the U.S. (see table below), Russias agricultural potential is limited by climatic conditions and soil factors. Its arable land base is actually smaller than that available to Americas farmers. Russias agricultural potential has been further depleted by policies such as overly intensive farming, over-use of chemicals and inappropriate crop choices. Agronomic practices have not always taken into account soil moisture retention, which is particularly critical due to the geographys counter-seasonal rainfall conditions. Post-Soviet era conversion of collective farms to private ownership has progressed slowly due to limits on the sale of agricultural land and the political sensitivity of the issue. Square Miles Total Land Area Percent Arable Arable Land Area Source: CIA World Factbook In the 1990s, Russias agricultural production fell sharply (see graph below). The output of every major cropsugar beets, potatoes, grains, vegetables, and sunflower seeddropped by 50 percent or more, and livestock herds shrank significantly. USA 9,161,966 18.01 1,650,070 Russia 17,377,742 7.17 1,245,984

Output began to increase as reforms were adopted beginning in 1999 and Russias trade balance has subsequently grown positive. It is important to note that farm infrastructure remains inadequate, there are credit deficiencies, and instead of developing incentives for independent entrepreneurship, federal and subnational jurisdictions continue to subsidize inefficient agricultural practices. There is also ample
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 corruption. Grain remains the largest crop, occupying more than 50 percent of cultivated land. Other key crops are sugar beets, sunflower seed, and vegetables. Russian policy evolved more recently as a result of the 2008 global price spike in agricultural prices. The government offered to host a Global Grain Forum to discuss feeding the world. Russian officials envisioned their country playing a central role in that goal. However, by the time the Forum was actually held in May of 2009, the world was in the throes of a major economic recession and Russian farmers were furious at the banks for failing to provide adequate levels of credit.

Livestock Situation Since Russia is predominantly consuming soybean meal as animal feed, it is important to assess the livestock situation. As noted in the recent visit to the U.S. by President Medvedev, there is an effort to diversify the economy, particularly into high technology and agriculture. Russia has made progress in its effort to modernize its agriculture sector and once again become a bread basket for the world. The country has shifted from being a net grain importer to a net grain exporter. Efforts to rebuild its livestock production have met with more mixed results. The government has sought to funnel more financial resources into meat production and has used import restrictions to reduce the adverse price impact of foreign suppliers. The Russian Poultry Union now claims that investments in its industry are paid back in seven years for new poultry facilities with 55,000-100,000 MT capacity, or four to five years for renovated facilities. Russian meat production has rebounded from its low point in 1999 (see graph below).

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Despite the governments efforts and policy changes, Russias meat imports have continued to grow (see graph below).

Analyses by USDA and the OECD indicate that Russia is uncompetitive in livestock vis--vis the world market. The country is highly competitive in energy dependent agricultural inputs, and it can be competitive in grains, but it suffers a comparative disadvantage in producing meat. FAO predicts that among the developed nations, the Russian Federation is set to remain the worlds largest net meat importer by 2017. As noted earlier, Russia predominantly uses soybean meal for its livestock ration and the graph below evidences the correlation, particularly as rations are more broadly improved.

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Live Animals Russias imports of live animals have continued to grow through the years as the country rebuilds its livestock sector following the post-Soviet decline. Imports are generally to improve genetics, particularly for dairy cows and pigs. The increased importation of live animals also occurs when the tariff-rate quota (TRQ) limits are reached, or when Russia imposes restrictions on meat and poultry imports. Breeding stock is predominantly provided by Poland, Denmark and other European sources.

Animal Product Imports and Exports In addition to country TRQ allocations, the ability to export meat to Russia has been affected by animal disease outbreaks. Russias Veterinary and Phytosanitary Surveillance Service (VPSS) has frequently used the existence of animal diseases, both large and small, as a rationale for blocking meat imports. It should be noted that Russia is also a net importer of animal fats, edible offal, milk and bird eggs.

Protein Consumption Protein is at once a fundamental biological building block and the most expensive macronutrient (in most places). As a result, the demand for protein is highly elastic and shows a strong correlation to income (see graph below). Extra income in poorer nations is nearly always directed toward increasing protein availability.

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This dynamic may be distorted in some cases due to religious reasons (e.g. India), extraordinary geographic conditions (e.g. Argentina), or government policy distortions. Beginning in the early 1970s, the USSR sought to improve living standards by increasing high-value, meat consumption. Because this was supposed to improve standards across the board, the government did not want consumers to have to pay the actual high cost of livestock production. Therefore, massive government subsidies were used to cover this gap. By 1990, the USSR state budget subsidies to the agro-food economy were dominated by the livestock sector and equaled about 11 percent of the GDP (World Bank). As a result of government subsidies, Russians consumed an average 3,300 calories per day, which placed the USSR amongst the top six countries in the world. According to data from the Russian Academy of Sciences and Russian Statistics Committee, the policy resulted in the consumption of 91.6 percent of recommended protein per capita. Note that consumption of animal protein was around 60 to or 70 percent that of the U.S. or Germany. Following the dissolution, food consumption in Russia fell to 37th in the world according to FAO. As noted by Russias International Congress, Policy in the area of healthy nutrition in Russia must respond to the 25 percent deficit of protein in the food diet of the Russian population. The previous over-consumption of livestock products relative to income level is evidenced in Eastern Europe where real GDP now readily surpasses that of the Soviet era level, and yet consumption of livestock products is below Soviet era volumes. In 2000, Poland, Hungary, and the Czech Republics real per capita GDP was, respectively, 43, 12, and 10 percent higher than in 1990 (PlanEcon-a), while per capita consumption of meat was 4, 12, and 24 percent lower, respectively (FAO). The drop in production and consumption of livestock products was inevitable and Russias restructuring of its agricultural production, livestock production and consumption now better reflects the nations real national product and income.
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Compared to the early 1990s, Russias livestock sector (animal inventory and production) has contracted to half its former size and the corresponding fall in feed demand has been matched by a one-third reduction in grain output. Despite the drop in meat consumption, Russians continue to have a traditional dietary preference for meat, dairy and eggs. Therefore, although meat consumption has declined, it will rise as income improves.

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Market Disaggregation
Although more variable, Russias production of sunflower far outpaces its production of soy or rapeseed (see graph below).

The Russian market for oil meals has been growing (see graph below) along with livestock production (see further below).

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 Because Russia is a more efficient producer of sunflower, it is the predominant oil meal being produced domestically (see graph below), but some expansion is also occurring in rapeseed and soybean meal production, though a significant share of the latter is from imported soybeans.

To satisfy the rising demand for soybean meal for feed, imports had been growing substantially until 2008 (see graph below) when a 5 percent duty was imposed.

Russia imported soybean meal from six countries during January - May 2009. Cumulatively, almost 80 percent of the imported meal came from Argentina and the Netherlands (see graph below). Without IP, it is difficult to say whether the meal from the Netherlands was crushed from U.S. or South American beans. Depending on time of year and price, Russia may also import soybeans and meal from Paraguay, USA and other countries.

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 Russian meal buyers indicate that they prefer imported meal to the meal being made by Sodruzhestvo. The reason provided is logistics. Even though the Belarusian Railroad decreased its applied tariff for transporting soybean meal from Kaliningrad by 20 percent, it is still costly to deliver meal from the North-Western part of Russia (Kaliningrad). However, the competition is getting tougher and tougher.

SUPPLIERPREFERENCE
ChinaistheworldslargestagriculturalimportmarketandtheU.S.hasan18percent market share. Russia is the second largest agricultural import market after China and yettheU.S.suppliesjust6percentofitsfoodimports.RatherthananyresidualCold Waranimosity,RussianbuyerssaytheypurchasemealfromEuropeandSouthAmerica forthreereasons: 1. Cost:SouthAmericapricesmoreaggressivelyandsomeeconomistsnotethat the ruble suffered greater depreciation against the dollar for the Russian inflationratethanitdidagainsttheeuro. 2. Proximity: The hand to mouth supply chain operates more efficiently with WesternEuropeduetoitsproximity. 3. Relationships: Western European businesses went into Russia immediately afterthedissolutionandhavestayedthereasakeystrategy.

The following graph depicts the monthly variation and the ultimate annual decline in Russias soybean meal imports as a result of a 5 percent duty.

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Meanwhile, the import market for vegetable oil in Russia has shifted from a preference for soybean oil early in the decade to a subsequent shift toward lower cost palm oil (see graph below). While soybeans comprise the second largest crush after sunflower, it accounts for only 3 percent of edible oil consumption. The increase in domestic soybean production plus imports for crush should mean an increase in oil for consumption in the years ahead. The key consumers of domestically produced soybean oil are local margarine and fat plants, plus other food processors that use the oil as a raw material for margarine, mayonnaise, food fats and other products.

While the 5 percent duty applied to soybean meal imports mostly affects South America and Europe, the U.S. has once again become a supplier of soybeans to Russia since the duty was implemented against meal. The U.S. has supplied 90,000 MT of soybeans in MY 2009/10, which is nearly three times the amount of meal shipped (Russia does not buy oil from the U.S.), and it is projected that the U.S. will sell 150,000 MT of soybeans to Russia in 2010/11.
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Russia has been a major importer of beef, pork and poultry meat. While imports have moderated, Russia remains the worlds largest market for imported broiler meat.

A key issue is the countrys own capacity for livestock production. Through the adoption of improved technologies plus import restrictions, domestic production of pork and poultry has been increasing (see graph below).

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 Other Soybean Products Russian domestic production of lecithin is miniscule so the majority of the product is imported. Imports are mostly pure lecithin, which is free of neutral oil and the phosphatidylcholine content can be as high as 25-30 percent. Production of soybean flour is limited. Production of soybean concentrates is at an early stage; however, Russian soybean flour is gaining the market gradually. Whereas in 2002 imported soybean flour on the Russian market was 100 percent, domestic soybean flour already accounts for 28.5 percent. The annual Russian consumption of soybean flour is around 12,000 tons and around 25,000 tons of textured soybean flour. Russia produces around 75 percent of consumed flour and 70 percent of textured flour. There is neither domestic production nor processing of soy concentratesit is a 100 percent imported product to date. The key supplier of these products to the Russian market is China because its more attractive pricing pushed EU suppliers and suppliers from other countries out of the market. However, some high tech concentrates that China does not produce, or produces with poor quality, are being produced and supplied by other western-based companies.

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Market Outlook
Despite the challenge of its demographics, Russias strong natural resource base and other attributes will enable the country to eventually return to strong GDP growth, although likely with an accompanying high inflation rate. The question is whether Russias transformation to more efficient agricultural production, and particularly in its livestock sector, will keep pace with the growing consumer demand. Based on experience to date, one must assume that the government will continue to stoke the industry with subsidies and import protections (including SPS barriers). The agricultural sector outlook for the remained of the decade is as follows:

Soybean Sector The processing of soybeans into oil and meal and cake (depending on the process of crushing) at domestic crushers will continue to show expansion. The processing of soybean-based food proteins (soybean meal, textured soybean proteins, concentrates, isolates) plus the production of directly consumed soybean products (milk, tofu, etc) is expected to expand from a current small base to around 150,000 tons of soy proteins a year. The increased consumption of these products follows global trends but Russia currently has neither the domestic volume nor the quality of soybean products to satisfy buyers. Demand is encouraging the construction of new processing facilities in Russia. Soybean meal imports may increase despite the import duty due to the expanding livestock demand. For reference: about 80 percent of the domestically produced soybeans will be processed into soybean oil and meal. Of all meals, less than 5 percent will be processed into food proteins (second stage of processing). Less than 10 percent of all soybeans will be processed into traditional soybean products. The balance will be used for seed, carryover, etc. However, soybean production in Commonwealth of Independent States (CIS) countries is increasing and there is a potential that neighboring countries will also supply soybeans and products to Russia in the nearest future. The Customs Union will make their commodities more competitive than those from the U.S. for example. Additionally, the genetically modified organism (GMO) issue is very important and is a potential threat to U.S. and Argentine suppliers.

Livestock Sector Demand for pork and poultry will continue to grow (see graph below).

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Russian pork and poultry production will expand, while beef will decline (see graph below).

The countrys importation of pork and poultry will decline, while beef imports will increase to fill the gap left by declining domestic production. It is expected that EU and South American suppliers will capture beef market share.

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Economic Outlook Since petroleum prices are critical to Russias economic well being and consequent livestock/soy product demand (see graph below), oil prices are a key indicator to watch. Oil prices are influenced by the overall global economic growth rate but the current intermediate term estimate is that oil will rise from its current $75/barrel range to $95/barrel by early 2011.

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Competitive Situation
Because of artificial barriers created by the monopoly suppliers, governmental authorities, strict sanitary rules applied to imported product the price for feed has been recently increased 10%.

Soybeans The Customs Union (Russia, Belarus and Kazakhstan) countries are currently deficient in soybean production but the goal is to improve the situation. There is already a view that selling soy products outside the Customs Union undermines the food security objectives of the newly created organization. Some would like to see a 100 percent duty imposed on soy product exports. Note that an export duty of 15 percent (30/MT minimum) was already imposed by the Governmental (Decree #84) on rapeseed exports. Kazakhstan, which produced only 80,000 tons of soybeans in 2009 and consumed 200,000 tons, is viewed as a primary site for expanded soybean production within the Customs Union. In the near future, demand for soybeans in Kazakhstan alone may exceed half a million tons. The shortage of soybean meal is several million tons cumulatively in the Customs Union and any effort at self-sufficiency will take several years.

Rapeseed Until recently, soybean oil was the #2 oil in Russia after sunflower oil. However, EU subsidies for biodiesel production coupled with EU demand for rapeseed in general has increased the incentive for rapeseed production in Russia. Rapeseed area is likely to expand in Russia over the near term and there may be more winter rape as well.

Sunflower Meal While sunflower meal is lower in protein than soybean meal, it is readily available. Any switch away from sunflower meal and toward soybean meal will be gradual.

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Laws and Regulations

Russian Agricultural Policy Ultimately, the government in Moscow views agriculture as a strategic industry. With its Central Black Earth region and the addition of Ukraine, the Russian empire was a major grain exporter during the Tsarist period and the current government is determined to restore it to its previous glory. Although modest by European terms, Russia has increased agricultures share of the federal budget to $3.6 billion (RUB107.6 billion), twothirds of it dedicated to interest rate subsidies for farmers. Interest rate subsidies were increased this year by 30 percent over 2009 levels. In 2005, the Russian government identified agriculture as a national priority area that would receive increased funding along with health, education, and housing. From 2005 to 2007, state support to agriculture from the federal and regional governments together rose 87 percent in nominal rubles, and 52 percent in real (inflation-adjusted) rubles (Rosstat). According to the government, the main objective of agricultural policy is to revive the livestock sector, which is getting the bulk of the new agricultural subsidies. Russian support to, and trade protection for, livestock producers could continue to increase. The current domestic livestock development program calls for partial and then later 100 percent replacement of imported pork meat. The estimated date for self sufficiency in domestic meat production is 2020. The government is so certain of its future livestock competitiveness that Agriculture Minister Yelena Skrynnik, predicted that pork and poultry exports would sky-rocket 60 fold by the year 2020. She said, We're keeping pace with the times and the technological process. By our estimates, export volumes could be up to 400,000 tonnes of poultry and 200,000 tonnes of pork. That's $1.5 billion to $2 billion a year. Russia exported just 10,000 tons of meat last year and its meat production is expected to expand by 5 percent in 2010. President Dmitry Medvedev has stated that Russia may become a leader in the production of meat if it puts in place the essential infrastructure. We need to start with something. In that case, Russia will see big prospects to become an influential player at the international food market, he said. Earlier this year, the President signed a new food security doctrine stating that 85 percent of the meat consumed in the country is to be produced locally by the year 2020.

Trade Policy The Russian Federation exists within a framework of generally recognized principles and standards of international law and is part of a number of international trade agreements and free economic zones, customs unions, etceteras, all with ensuing consequences.
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Currently the trade policy of Russia is being exercised through the mechanism of customs and tariff regulation (export and import customs duties) and non-tariff regulation (quotas and licensing) of foreign trade activity. Officially, other methods of governmental regulation of foreign trade activity are not allowed. However, in practice there are political issues where in addition to tariff and non-tariff regulations, both the Federal and local governments use various mechanisms to stop, hamper, hinder, limit or totally prohibit imports. When WPI contacted Valery Khromchenkov, the Russian Attach for the Agroindustrial Complex in Washington, he responded only half tongue in cheek by saying, What is confusing? We adopt either the American barrier or the European barrier, whichever is the better barrier. By law, such limitations should only be imposed for the following: 1. For the purpose of ensuring the national security of Russian Federation including but not limited to food security; 2. Fulfilling international obligations of Russia taking into account the situation on the domestic commodity market; 3. Protecting the domestic market of Russian Federation. Among those means of protection one can find a large number of technical, pharmacological, sanitary, veterinary, ecological and quality standards and requirements related to imported items and/or commodities. Laws impacting market access include: Customs Code of Russian Federation adopted by the Duma on April 25, 2003 and approved by the Federation Council on May 14,2003 N 61- dd. May 28, 2003(as amended) The Law of Russian Federation on Customs Tariff dd. 21.5.93 N 5003-1 (as amended). The Law of Russian Federation on measures to protect the economic interests of Russian Federation when doing foreign trade dd. 14.4.98 N 63- The Law of Russian Federation on fundamental principles of governmental regulation of foreign economic activity dd. 08.12.2003 N 164- The Governmental Decree #718 dd. November 27, 2006 (as amended) on Customs Tariff of Russian Federation and Range of Products applied when doing foreign trade. The Law of Russian Federation on Special Economic Measures dd. December 30, 2006 #281- Law on State Regulation of Genetic Engineering (1996). Consumer Law (December 2004 GMO in food products content must be labeled, threshold is not mentioned here, but later decrees set it at the 0.9% used in the EU). Law on State Environmental Assessment (1995)

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 Law on Protection of Environment (2002, GMOs are subject to a mandatory environmental assessment). Veterinary-Sanitary Requirements of Agriculture Ministry (1999, ban on import of meat produced from GMO fed animals). Political and strategic documents: Ecological Doctrine of Russia (August 2002).

Note that foreign trade (both import and export), plus trade taking place on commodity exchanges are exempt from the Fundamentals of Governmental Regulation of Trade in the Russian Federation that took effect on 1 February 2010. That law strictly guides domestic transactions between suppliers and retailers and is intended to protect against monopolistic or manipulative supply arrangements.

Trade Barriers Russian policy during the 2000s has resisted, rather than promoted, the countrys move toward an open trading regime. Some of the troubles seen in U.S. meat exports to Russia could lie ahead for expanded shipments of soybeans to Russia, but there appears to be ample latent demand that could be tapped. Moreover, Russian needs might drive government involvement in creating fairer trading mechanisms, through ad hoc commercial deal-making or WTO accession initiatives. Meat and Poultry Restrictions: In 2003, the Russian government established restrictive tariff rate quotas (TRQs) for imports of beef and pork, and a pure quota for poultry, converted in 2006 to a TRQ. In January 2009, the size of the TRQs for pork and poultry were lowered further and the out-of-quota tariffs rose, to 75% and 95%, respectively. During the 2000s, Russia also has imposed many sanitary-based restrictions, and often complete bans on imports of meat (especially poultry) and other livestock products. In December 2008, the United States and Russia signed a protocol aimed at resolving various emerging trade issues between the two countries in order to continue U.S. livestock and poultry exports to Russia through the end of 2009. By December 2009, however, Russia had escalated these trade issues in a series of actions that threatened to shut out U.S. livestock and poultry exports. These actions, in part, followed on Russias statements throughout 2008 and 2009 regarding its concerns about antimicrobial use in U.S. meat production. Russia has continued to cite various food safety concerns, including concerns about antimicrobial residues and the use of chlorine rinses on U.S. meat exports, and identified several U.S. poultry and meat processing companies as ineligible to export meat to Russia. In 2008 and again in 2009, Russia announced that it was banning poultry imports from several U.S. establishments due to safety concerns. In addition, throughout
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 2008 and 2009, Russia refused imports of pork products from several U.S. plants because trace amounts of antibiotics were found in some of the meat tested. As part of these actions, Russian officials signaled that U.S. permits to import poultry and pork under that countrys quota system might be restricted. (Russia also banned pork products for most of 2009 from several countries, including the United States, following reports about the H1N1 influenza virus in April 2009.) In December 2009, Russia announced that it would implement its previously proposed ban on poultry imports treated with chlorine washes from all exporting countries, effective January 1, 2010. This action was expected to effectively ban all U.S. poultry exports to Russia since chlorine-based pathogen reduction rinses are commonplace in U.S. poultry production. (A similar European Union prohibition has kept U.S. chicken out of Europe since 1997.) An agreement between the U.S. and Russia on poultry pathogen treatments was reached in June 2010 with the net effect being an end to the use of chlorine by U.S. suppliers despite the lack of scientific evidence against it. The sheer size and therefore importance of the Russian market (18 percent of total U.S. poultry exports; $820 million of sales annually) forced capitulation by the U.S. poultry industry. Additionally, there were delistings, as of late 2009, of virtually all U.S. pork plants that exported to Russia (purported to be mainly due to concerns about findings of trace amounts of antimicrobials on pork). These delistings were reportedly resolved earlier in March. Also in December 2009, reports emerged that Russia would reduce its 2010 import quotas for U.S. pork and poultry below 2009 quota levels. Russias import quotas for U.S. beef, however, would be increased above 2009 levels. Quota allocations for U.S. pork and poultry are expected to be reduced even further in both 2011 and 2012. Many U.S. producers believe that Russias food safety restrictions, including those regarding antimicrobial use, are not science-based, but are instead intended to protect and promote Russias own growing domestic pork and poultry production. Some further point out that Russias perceived zero tolerance regarding antimicrobial use is the most restrictive among all U.S. trading partners. For U.S. poultry and meat producers, the economic stakes of Russias import actions are significant. In addition to the aforementioned poultry sales, Russia has purchased $330 million worth of U.S. pork and nearly $70 million of beef products. All these export products had been experiencing strong growth in the Russian market. Members of Congress with important poultry and meat industry constituents have been monitoring events and ongoing negotiations between the United States and Russia to resolve these disputes.

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 RBK Customs Union: Russia, Belarus and Kazakhstan all aligned their tariffs and non-tariff measures (NTBs such as licensing, TRQs, etc.) and other measures. Tariffs are generally along Russias previously applied rates but 1,000 tariff lines (mostly agricultural products) will increase while just 400 lines will decline. More NTB changes are likely. June 9, 2009 heads of the governments approved at the meeting of the Intergovernmental Council of the EurAsEc stages and dates of the formation of the Customs Union, according to which the common customs area is created (decision 9). Heads of states defined at the meeting of the Intergovernmental Council of the EurAsEc on November 27, 2009 the start date for the common customs territory July 1, 2010 (decision 24), simultaneously with the coming into effect of the Customs Code of the Customs Union. Single measures of customs and tariff and non-tariff regulation will be taken towards third parties on the common customs territory; import customs duties will not be levied, bans and restrictions will not be lifted, zero valueadded tax rate and excise duty exemption as well as uniform legislation on customs affairs will be in effect in the mutual trade between the states-members of the Customs Union. Representatives of the Russian FCS took active part in the preparation of the customs legislation of the Customs Union Customs Code of the Customs Union, including the Protocol on the Introduction of Amendments to it, international agreements of the states-members of the Customs Union and Commission of the Customs Union, provided for by the Customs Code of the Customs Union. The fundamental document regulating customs legal relationships in the Customs Union is the Customs Code of the Customs Union. It contains the uniform conditions and procedure of recognizing people performing customs activity, definition and concretization of forms of customs control, principle requirements for the performing of customs operations by the participants of the foreign economic activity and customs bodies, legal meaning of the customs procedures. Owing to the necessity of abolition of customs clearance on the internal boundaries of the Customs Union from July 1, 2010, a Protocol on introducing amendments to the Agreement on the Customs Code of the Customs Union has been developed. With the coming into effect of the Customs Code of the Customs Union on July 1, 2010 new notions will be put into practice, some legal relationships will be regulated in a new way, the principles of control will need reconsideration.

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 For instance, goods conveyed within the mutual trade between the states-members of the Customs Union will not be placed under the customs import and export procedure, which will lower cost loading on persons performing commercial activity on the territory of the Customs Union. Procedure of the internal customs transit which was contained in the Customs Code of the Russian Federation is expelled. Now conveyance of goods is open from the outer boundary of the Customs border immediately to the location of the recipient independently of the state in which he is situated; and the carriers including customs have the right to transport throughout the whole territory of the Customs Union without undergoing national control on the territory of each of the states-members of the Customs Union. Therewith railway carriers are contracted out of the security payment as a goods delivery guarantee. Provisions of the Customs Code of the Customs Union are aimed at the facilitation of the procedure of customs clearance and customs operations for the participants of the foreign economic activity. For example, an institution of an authorized economic operator has been introduced, for which the following simplifications are stipulated: Release of goods before declaring the payment, which is a free delay of payment from 10 to 40 days; Possibility of temporary storage of goods and performing of customs operations connected with the goods release on the territories of the authorized economic operator; Possibility to formalize transit of goods without security payment as a guarantee of customs payments. The activity of the authorized economic operators will be registered and requiring security payment (1 million euro). Therewith the amount of such security payment may be reduced to 150 thousand euro provided that the authorized economic operator produces goods or exports them, and meets the criteria defined by the Commission of the Customs Union. To contribute to the export of high-technology goods the shortened and close list of documents for declaring is established, the foundation for large-scale implementation of electronic declarations has been laid down. In comparison with the Customs Code of the Russian Federation the periods of different customs operations performed by the customs authorities have been reduced. For instance, the timeframe for release of goods is reduced from 3 to 2 days, especially those exported from the customs territory of the Customs Union and exempt from export customs charges to 4 hours; therewith a maximum term of release of goods prolongation is fixed to 10 days starting from the day of customs declaration registration, and conditions of
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 such prolongation are also clearly defined the necessity of holding or finishing of forms of customs clearance; customs authority transit declaration registration from 2 hours to 1 hour. Increased are the terms of: Submission of goods to the customs authority with the advance declaration from 15 to 30 days; Processing of goods on the customs territory from 2 to 3 years; Allowing putting under the customs re-export procedure goods, formerly put under the customs procedure of release for internal consumption from 6 months to 1 year. The terms of the processes which were without time limits before have been fixed. These are the terms of: Organization by the customs authority of the customs escort (within 24 hours on the decision); Registration or lack of approval of the customs declaration (no more than 2 hours on the declaration; in the Customs Code of the Russian Federation this term is defined as the day of the receipt of the customs declaration by the customs authority); Performing by the interested persons of the operations connected with the placement of goods for temporary storage or their customs declaration (3 hours on the submission of goods). Substantial changes have been made in the activity connected with keeping the registers.

Besides national registers supranational registers have emerged. They will be maintained by the Commission of the Customs Union. In general, new opportunities for persons performing activity within the customs affairs are as follows: a) Considerable opportunities are established for the development of cooperation of the customs bodies with the persons, performing activity in the field of customs affairs by means of information technologies (e.g., a customs representative may have access to the information systems of customs authorities, used for the automated information processing and electronic data transfer necessary for customs purposes). b) Presence of civil liability insurance is now not a prerequisite for enrolling persons on the register of customs carriers. Therewith necessary conditions for enrolling on the register of customs carriers are supplemented by the requirements to have no unpaid customs charges and fines as well as facts of imposition of administrative sanctions for delinquency in the field of customs affairs within 1 year from the date of application to the customs authority on the date of application.

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 A person being under the process of liquidation or reorganization is now to be expelled from the appropriate register of persons performing activity in the field of customs authority. The amount of security payment has been reduced: For a customs representative from 50 million rubles to 1 million euro (about 40 million rubes); For a customs carrier from 20 million rubles to 200 thousand euro (about 8 million rubles).

Under the conditions of shifting to novel requirements for doing business transition period is provided for in regard to persons performing activity in the field of customs affairs. Customs brokers, carriers, owners of warehouses of temporary storage, customs storages and duty free shops, formed before coming into effect of the Customs Code of the Customs Union, have the right to perform activity in the field of customs affairs within 6 months from the Codes coming into effect. For the development of the Customs Code of the Customs Union the Implementation Plan on the Enactment of the Customs Code of the Customs Union prescribes to elaborate 16 international agreements of the states-members of the Customs Union (the Russian Federation is responsible for the development of 11 ones) and 17 decisions of the Commission of the Customs Union (the Russian FCS is responsible for the development of 10). In the Russian Federation the Russian FCS is the federal authority of executive power, responsible for providing implementation of the Plan (Commission of the Government of the Russian Federation dated 31.12.2009 2 7824). The Customs Code of the Customs Union shifts to the international agreements regulation of the questions connected with free economic zones and free customs warehouses, conveyance across the customs border of goods for personal use as well as goods conveyed by pipelines and by transmission facilities, procedure of assessment of import and export customs duties, peculiarities of using vehicles of international transportation for internal conveyance, enrollment of items of intellectual property to the single register of the Customs Union etc. Decisions of the Commission of the Customs Union besides questions of register activity, forms of customs documents and customs value will regulate procedure of customs expertise, procedure of introducing amendments and additions to the customs declaration, peculiarities of sending goods in the international mailing, several questions of applying customs procedures etc. In the course of work on the preparation for the coming into effect of the Customs Code of the Customs Union questions have been elicited for the regulation of which it is indispensable to approve additional
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 international agreements and decisions of the Commission of the Customs Union, which were not prescribed by the Implementation Plan on the Enactment of the Customs Code of the Customs Union. Examples include the regulation of the conveyance of goods and vehicles between Kalinigradskaya region and the rest of the customs territory of the Customs Union, as well as questions of changing terms of customs duties payments. Consequently, projects of 18 international agreements and 25 decisions of the Commission of the Customs Union are developed. Of all the developed international legal acts 8 international agreements of the states-members of the Customs Union were approved at the meeting of the Commission of the Customs Union on April 16, 2010 (decision of the Commission of the Customs Union dated April 16, 2010 214). The other agreements and decisions of the Commission of the Customs Union are being finalized. Their consideration is planned for the next meeting of the Commission of the Customs Union on May 20, 2010. Besides the development of the international normative legal base for the Customs Union active work is being held on the harmonization of the national legislation with the international agreements. Project of the Federal Law on the Customs Regulation in the Russian Federation has been prepared and have passed the procedure of interdepartmental coordination. It is intended to replace the current Customs Code of the Russian Federation. In this draft there are regulations whose implementation is immediately shifted to the national legislation of the states-members of the Customs Union. Thus, the bill regulates questions concerning: System of customs authorities of the Russian Federation, their duties, competence and responsibility; Procedure of appeal against the actions of the customs officers; Informing and consulting; Procedure of maintaining registers of persons performing activity in the field of customs affairs; Computation, paying and recovery of customs duties; Peculiarities of performing certain forms of customs control; Disposal of goods, converted into federal property; Peculiarities of customs declaration, customs procedures and conveyance of certain types of goods.

Besides the revising of the Customs Code of the Russian Federation work on matching the contractual legal framework of the Customs Union and the subordinate legislation and acts issued by the Russian FCS is being performed.
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Thus, by July 1, 2010 the new system of normative legal regulation of customs legal relationships in the Russian Federation was to have been formed. It will consist of 6 stages: the Customs Code of the Customs Union, international agreements of the states-members of the Customs Union approved according to it and the decisions of the Commission of the Customs Union, the Federal Law On the Customs Regulation in the Russian Federation, subordinate normative legal acts of the Russian Federation and Federal Customs Service passed according to it. Export Duties: Export duties for commodities sold within the Customs Union jurisdiction may be cancelled even earlier than 2012, according to Russian Vice-Premier and Minister of Finance Alexey Kudrin. Import Restrictions: Russia applies a wide range of import restrictions on food products including tariffs, license requirements and tariff rate quotas. Its average applied tariff on imported agricultural products is 14.2 percent. With the economic crisis as a rationale, Moscow increased the duty on several imported agricultural products in 2009 including soybean meal, rice, baby formula, corn and manioc starch, sugar, cheese, concentrated milk and cream, and tropical oils. The over-quota tariffs on poultry and pork were nearly doubled to trade prohibitive levels. Meanwhile, excise taxes are applied to a number of luxury goods, including tobacco and liquor. U.S. suppliers also complain that Russian customs officials have requested proof of declared values, particularly for commodity products in which transparent world prices have recently declined. Customs practices vary greatly depending on region or port, are frequently changed and are often unpublished. Additional Threats: Russian watchdog Federal Service for Veterinary and Phytosanitary Surveillance may impose AT ANY TIME a clause where in order to ensure the food safety, etc. etc. etc a ban can be placed on ANY country and ANY factory (US, Canada, Poland, Ukraine) UNTIL the moment when the commission from the FSVPS visits the factory and approves it or reinstates the permit for exporting ANY commodity to Russia. This has been the case for hundreds of countries and companies during recent times and this trend is likely to continue. In very many cases the reasons for such unscheduled inspection is political rather than legitimate economic (e.g., food security, international law requirements, and quality standard requirements). 2010 USTR Report on SPS Measures and Russia: USTR asserts that Russias SPS standards are extremely prescriptive with detailed requirements for foreign facilities and production processes. These requirements are not always based on science or consistent with international recommendations or guidelines. Russian government resolutions directing respect for international standards, guidelines, and
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 recommendations of the WTO reference bodies on animals (OIE) and plants (the International Plant Protection Convention, or IPPC) be respected could prove helpful, but in practice they are not always followed, and often no justification is provided for departures. The situation poses significant negative effects for U.S. exports. Moreover, Russia, Kazakhstan and Belarus have entered into a Customs Union with the goal of harmonizing their SPS measures. Systemic issues related to the certification of agricultural products include the requirement for phytosanitary certificates for shipments of processed products like soybean proteins, corn gluten and distillers dried grain. However, due to the nature of their processing, these products do not present a pest risk and consequently do not receive phytosanitary certification from the U.S. Government. Thus several requirements of various certificates are unattainable or involve information that is not available to U.S. officials. There have also been implementation problems with several of the agreements reached between the U.S. and Russian governments on import requirements. The United States has not agreed to provide certificates for fodder grains, soybeans, soybean meal and animal feeds of plant origin on the basis that such certifications are unnecessary since these products do not pose any animal health risks. As a result, Russia permits imports of these products only on a casebycase basis. These may limit the export of U.S. grain and oilseed products to Russia. WTO Accession: Although Russia began its quest for WTO membership as far back as 1993, little action was taken until 2000. More recently, Russian President Dmitri Medvedev has been more aggressive in the pursuit of WTO membership and the government has reportedly changed at least 100 laws or adopted new customs codes to bring it into alignment with WTO requirements. The process ran into a glitch in June 2009 when President Vladimir Putin asserted that Russian would not enter the WTO without its Customs Union partners, Belarus and Kazakhstan. More recently, President Barack Obama committed to resolving all outstanding bilateral issues over Russias accession no later than end September, 2010. Russia is as close as it has ever been to WTO membership but issues remain such as limits to agricultural subsidies. In the two key areas of import tariffs and domestic support, Russia in its accession negotiations has been asking for bound commitments above the existing levels (a bound tariff or support amount is a maximum allowable level in the future). Russias current average agricultural import tariff is around 18 percent, up from 10 percent in 2000. However, Russia is negotiating for bound agricultural tariffs above actual applied tariffs. On domestic support, Russia is asking for annual bound tariff support of $9.5 billion, which compares to its 2007 actual support level of $5.7 billion (Russia and World Trade Organization; Rosstat).
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If Russia were to join the WTO soon, its negotiated bound levels of tariffs and support might be above the current levels. Accession on such terms would not liberalize Russian agricultural trade and support policies, and thereby not increase imports. The United States and other foreign suppliers would nevertheless benefit because the bound levels would provide a cap on any future rise in tariffs and support. Russias agricultural trading partners might gain the most from Russias WTO accession by having an official forum for challenging the countrys sanitary and phyto-sanitary import restrictions.

Barrier Case Studies The following provide good examples of bans on meat imports from Poland, meat and dairy from Ukraine, and now meat and dairy from Belarus. The modus operandi is that any time Russian trading partners fail to agree to the Moscows terms, there is imposed almost instantly a ban on importation of a particular commodity, typically one that is sensitive to partners exports. Poland: In recent years, Russia has imposed for no obvious reason a ban on imports of Polish meat. In reaction, Poland used its member state veto power in Brussels to block the EU-Russian summit on issues of partnership. This ban lasted for more than a year and almost disrupted supplies of all EU meat to Russia, which threatened billions of dollars of losses to the EU in general. Russia is a huge market for EU meat. The Polish government always maintained the ban was politically motivated. The dispute not only strained relations between the two countries but prevented the start of talks on a new partnership agreement between the EU and Russia. The breakthrough was announced following a meeting in Moscow between Russian agriculture minister Alexei Gordeyev and his Polish counterpart, Marek Sawicki. It had been expected. First, Poland said it would no longer oppose Russia's application to join the Organization for Economic Cooperation Development, a grouping of the world's most industrialized nations. Then Mr. Tusk said his government would be willing to listen to Moscow's concerns about the missile defense shield Washington wants to build in Poland. The lifting of the meat ban could also have implications for the rest of the European Union. Poland has been unilaterally blocking the start of talks on a new partnership deal between the EU and Russia. In the past, Warsaw has said it would consider dropping its objections if the meat ban was lifted. Ukraine: When Ukraine failed to agree to Russian terms on various political issues, an immediate ban was imposed on imports from Ukraine of hard cheese, meat and other dairy products. Ukraines hard cheese exports to Russia accounted for 95 percent of all its hard cheese exports.

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 Belarus: Relations between Belarus and Russia recently deteriorated to an unprecedented degree and are accompanied by fierce confrontation. Signals of the Federal Service for Veterinary and Phytosanitary Surveillance to Minsk may indicate an upcoming trade war and the aim of the Russian authorities is to minimize all forms of economic support to Belarusian President Alexander Grigoryevich Lukashenko. The supply of meat to Russia by Belarusian producers has significantly increased in recent months. According to the Federal Customs Service, imports of meat to Russia in January-May 2010 rose from 399.2 tons to 429.2 thousand tons, or by 7.5%, compared with last year. According to the National Statistics Committee of Belarus, during January-April of 2010, exports of meat and meat products increased by 23.9% up to 66.8 thousand tons, of which 66.6 tons were exported to Russia (99.7% of total export volumes). However, the Belarusian meat products possess a very modest place on the Russian market. For this reason, a ban on the import of meat and meat products from Belarus that would be caused by another trade conflict between allied countries, like the recent "milk war", may not affect Russian consumers.

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The Case of Sodruzhestvo Company

The Sodruzhestvo Company (Sodrugestvo), which is the major importer of soybeans into Russia for crushing, is credited with achieving a government imposed 5 percent duty on imported soybean meal. The duty, which was made permanent via resolution #1019 approved on December 16, 2009, is credited with crushing any competition (see impact below) that Sodruzhestvo felt from imported soybean meal. The government had to first get approval for the duty from its Customs Union partners, Belarus and Kazakhstan. The company purportedly was seeking a 10 percent import duty. Background: Sodruzhestvo is run by Stephane Frappat, a Frenchman with acute knowledge of the global soy market. The company is very well located in a special economic zone in the Baltic port of Kaliningrad where it is capable of receiving vessel loads of soybeans for further processing at its facilities and then ships meal across Russia and duty free to Belarus and Kazakhstan. The current crushing capacity of the company is 740,000 tons of soybean meal per year. The company competes against domestic soybean meal producers that include 15 large companies, most of which are located in the soybean producing areas of the Far East of Russia, Siberia and some in Krasnodar. Companies like Sodruzhestvo and AmurAgroCenter are growing at 40 percent a year. AmurAgroCenter is now producing around 115,000 tons of soybean meal per year. These companies are crushing beans for meal rather than for oil. Meal is the money maker and because soybean oil must compete against large volumes of more popular sunflower oil, much of the soy oil gets exported. Domestic soybean production is expanding but cannot keep pace with demand. More recently, Sodruzhestvo has taken a minority stake in North Dakota Oilseed Mills, LLC, and a joint-venture with Northwood Mills, LLP, and a canola crushing plant based in Northwood, North Dakota near Grand Forks. Methodology: The company is strong enough to lobby its own interests directly without having to go through the Russian Soybean Association, which is a weak link in the chain and does not have sufficient leverage. Sodruzhestvo has a very strong leverage in Kaliningrad Oblast where it is the largest employer. Recently, when there was a dispute with the border troops in Kaliningrad related to receiving foreign vessels, Sodruzhestvo threatened to close down the factory. The problem was resolved very quickly with the government yielding. Their threat would have left 1,000 people jobless and the loss of tax revenues to the local budget would have exceeded $50 million (RUR 1.5 bn) per year. The Russian Railroad Service would lose a client that pays $76 million (RUR 2 bn) per year for rail freight of meal and products. By 2014, the company plans to invest another $500 million (RUR 15bn) into expanding the sea terminal, building a sea port elevator and a third crushing plant.

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 Government Rationale: The Russian government most likely agreed to pursue this policy because the result was the creation of more domestic added value product and the jobs associated with it. It should be noted that the same working group on customs and tariff regulation of agricultural commodities that recommended the soybean meal tariff increase also imposed a seasonal import duty on rice (0.23/kilo). This was triple the previous duty rate. Market Impact: Russias imposition of a five percent tariff has not only been blamed for the decline in meal imports, but for increasing the market dominance of Sodryshestvo, its primary crusher of imported soybeans. Sodryshestvos market share grew from 13 percent in 2007 t 70 percent in 2008. The duty is blamed for increasing imported meal prices by $30-40/MT (FOB Saint-Petersburg), an increase of between 5-7 percent. While imported soybean prices rose just 0.4 percent, soybean meal prices charged by Sodryshestvo reportedly rose by 31-35 percent. Soybean meal import volumes dropped 40 percent during the first year of its imposition. Note that soy meal produced from domestically grown soybeans only meets one-fifth to onethird of the 1.5 to 2.0 MMT in demand. Meanwhile, Sodryshestvo has doubled soybean crush capacity and may add sunflower crush. Geopolitical Impact: Soybeans enter Russia duty free and the imposition of a permanent duty mainly reduced imports of soybean meal from Brazil and Argentina. To settle complaints from Brazil, Moscow negotiated a SPS agreement with Brasilia on how soybeans would be handled on importation. One view is that Russia was more willing to negotiate with Brazil was because it has lower quantities of GMO beans compared to Argentina or U.S., and there is Russian sensitivity on the GMO issue. Associated Measures: Russian oilseed crushers have also complained about cheap imported tropical fats and oils. At their behest, the Interagency Government Commission on Protective Measures in Foreign Trade recommended and the government approved (resolution #337) a temporary 10 percent duty on imported tropical oils. However, on behalf of domestic confectioners and other users of vegetable oils, there was a delay in the imposition of the duty until June 1, 2009 and it was removed as of January 1, 2010. The temporary duty was an attempt to respond to the demands of the domestic sunflower industry. The problem with it was the fact that Ukraine imports and processes palm oils and fractions and is then able to ship the oil duty free to Russia. Additionally, palm oil is not a direct substitute for sunflower oil in many applications.

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Issues and Recommendations

Biotechnology The GMO issue has the potential to upset U.S. soy export potential to Russia more than any other issue. Russia is sympathetic with the EUs approach to agricultural biotechnology. It does not allow GMO cultivation, and it operates a costly, time consuming and opaque GMO approval process. While Russia is not a party to the Cartagena Protocol on Biosafety (Biosafety Protocol or BSP), it has ratified the Convention on Biological Diversity, and its biotech crop (GMO) approval process appears to mirror EU policies in some respects (e.g., 0.9% mandatory GM food labeling law). Russia does not post its regulatory approvals on the Biosafety Clearinghouse (BCH), as other CBD members but non-parties to the BSP, like Canada and Australia, routinely post approvals on the BCH. Three biotech soybean varieties have been approved for feed use only. Each of those soybeans was approved in the EU (Roundup Ready, Liberty Link and Roundup Ready 2 Yield). Technology companies prefer to avoid Russias approval process. Biotech imports and innovation are not a priority for Russian agricultural science and instead the Russian Soybean Association is pursuing a GMO-free and organic soybean production scheme involving 25,000 hectares. The City of Moscow is pursuing a Soya S standard to get Muscovites to consume up to 20 grams of GMO free soybean proteins a day per capita. Note that the potential of the EUs asynchronous approval process choking feed availability in Europe could add complications to Russias GM soymeal purchases. To increase US soybean exports to Russia, USSEC could take two approaches: 1) Encourage Russian adoption of biotech as the most effective way to achieve its greater food self-sufficiency and export ambitions; or 2) allow it to go the route of increased organic production, thereby preventing a major competitor from developing in the global feed and livestock markets, particularly the EU. Recommendation: Use the current WTO accession discussions between the White House and Moscow to obtain a commitment for a transparent, science-based GMO approval process with definitive timelines that includes equivalence/mutual recognition. Highlight how the EUs asynchronous approval situation is going to complicate feed availability throughout the continent, and hinder Russias livestock expansion objectives.

SPS/Quality Standards Russia has not harmonized its quality standards with any other international ones (ISO, EU, etc.) and this leaves open the opportunity for special interests within Russia to manipulate national quality standards in a most deleterious fashion for imports.

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 Recommendation: If Russia truly has major food export aspirations, seek agreement with the Russian Soybean Association and other groups and government officials for the Russian government to adopt standards consistent with those utilized by the U.S.

Marketing and Utilization Russias feed compounding industry, supply chains, use of proteins in bakery products are all underdeveloped and therefore do not maximize the use of soybeans and soybean products.

Recommendations:

Put representation into the country. Assist Russian soy interests in developing these aspects of the industry. Show the government and livestock industry that achieving their desired self-sufficiency and export targets in animal proteins cannot be achieved without adequate soy protein in the feed ration, and that waiting for domestic production to expand will harm the meat industry.

Encourage the production and consumption of turkey as an alternative animal protein. Note that the government is involved in soy flour production and may protect this market against outsiders. However, soy isolates are imported from China and some are of questionable quality.

Import Restrictions Russia is quick to impose meat and livestock import restrictions whenever a disease outbreak permits. Recommendation: Global supply chains immediately adjust to the altered economics and so should U.S. soy producers. For example, look for opportunities to sell increased feed to Denmark, the Netherlands and Poland whenever Russia restricts meat imports since these countries have generally supplied live animals to Russia and will then be in a livestock replacement mode.

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ADDENDUM
Product Suppliers
Soybean Oil Suppliers Leaderland TTM B.V. Oils & Fats Packers Rotterdam B.V. Elburg Global B.V. Imcopa International S.A. (Brazil) These companies supply 80 percent of Russian soybean oil imports. Soybean Lecithin Suppliers Sodruzhestvo-Soya (domestic) ADM Company Cargill Inc. DSM Group The above companies supply 80 of the lecithin. Solae, LLC (6.4%) Central Soya Company (3.1%) Soybean Flour and Textured Soybean Flour Suppliers Gislav-M (textured flour) (Moscow) TechnoMol (textured flour) (Moscow) Irkutsk Crusher (soy flour) Assoya (Association of Soybean processors in Krasnodar) (soy flour) PTI (Protein Technologies Ingredients) Company (soy flour) Vitaros (Dzerdzynsk) is a Kazak/Russia joint venture processing GMO-free soybeans for flour with plans for up to 8,000 tons of flour by 2011, and 13,000 tons of textured soy flour (texturate) by 2013. The company may eventually control half the market for these products. Soybean Meal Suppliers Cargill Inc. Shandong Wonderful Industrial Group Co. Ltd. Sojaprotein A.D. Linyi Shansong Biological Products Co. Ltd. Soybean Concentrates and Isolates ADM Company Solae LLC
Page | 45

 Solbar Industries Ltd. Cumulatively, the above companies account for 78.3 percent of all imports.

Page | 46

USDA Gain Report # RS1020 4/6/2010 Summarized

Chicken Meat USDA-Moscow holds its 2010 forecast steady at 1.975 million metric tons for production and pulls back imports to 750,000 metric tons. Broiler meat is taking a larger slice of the poultry TRQ over the past three years FAS sees no reason for this trend to discontinue as broiler meat has the greatest profit margins of all poultry shipped to Russia. Imports in 2009 were revised higher on end-of-the-year data and a strong second half. Total imports fell 20 per cent for the year as a whole as the economy caused the Russian broiler market to shrink. The EU fared the best of all broiler suppliers, increasing its share of imports by 7.8 percent of volume.

Turkey Meat Turkey imports fell by 40 percent in 2009, crowded out by chicken in the quota. Unlike chicken, the per unit value of turkey fell.

Consumption Consumer purchasing power is improving but remains weak. If production targets are met and the chlorine ban is resolved, domestic production growth should keep up with cuts to forecast imports to stabilize consumption and help curb potentially drastic price increases in 2010. Regardless of price hikes, consumer safety is important. Consumption will remain relatively flat for broiler and turkey meat in 2010 with upside potential as time progresses. Turkey is more and a newer product, but is being marketed as healthier, and is less expensive than beef, pork, and chicken.

Meat Industry Meat processors produced more inexpensive meat for consumers in 2009. According to Rosstat, processed chicken output in 2009 increased 17.5 per cent while other poultry increased 13.3 per cent. Total meat, poultry and offal output grew 16.0 per cent, and value-added products like semiprocessed meat and canned meat increased only 8.6 per cent and 2.0 per cent, respectively. Output of the most expensive consumer product sausage fell 6.5 per cent.

Page | 47

 Minister called for faster development of the meat processing industry.

Policy Shifting Attaining self-sufficiency through import substitution is the goal of the Government of Russia (GOR). 30 January 2010, President Medvedev signed Russia's Food Security Doctrine, proscribing Russia to reach 85 per cent self-sufficiency in total meat and poultry by 2020. Ministry of Agriculture has accelerated the goal for poultry to be reached within three to five years, while the Russian Poultry Union considers the feat accomplishable by 2011. The tariff-rate quota (TRQ) for meat and poultry was extended through 2012- with tighter access restrictions. Non-tariff barriers remain in place to continue an unpredictable and non-science-based trading atmosphere - includes chlorine ban that currently prevents the US shipping poultry to Russia.

Page | 48

00MT)
1987/ 1988 1988/ 1989 1989/ 1990 1990/ 1991 1991/ 1992 1992/ 1993 1993/ 1994 1994/ 1995 1995/ 1996 1996/ 1997 1997/ 1998 1998/ 1999 1999/ 2000 2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 2004/ 2005 2005/ 2006 2006/ 2007 2007/ 2008 2008/ 2009

ty

2009 201

26101 3844 2385 12289 11079 36868

19418 3814 1754 10604 12530 39864

22201 27,235 22,174 4663 2846 11977 12593 44004 2,451 1946 12326 16431 49596 1,969 1040 10372 10624 38900

26989 2135 1535 11241 13887 46170

26900 2447 1124 11600 9151 43500

27000 900 500 10700 6000 32100

15800 1700 500 8600 4100 30100

15900 1100 446 8300 5900 34900

20800 2700 1200 9400 7500 44200

9800 800 450 4600 3300 27000

10600 1100 900 4400 4800 31000

14100 1550 1100 6000 5450 34450

19500 800 550 7700 6600 46900

18700 1550 300 5700 7150 50550

18000 2100 1000 5200 4200 34100

17200 3500 1100 4950 2850 45400

15800 3200 450 4550 3600 47700

18100 3600 600 4900 3000 44900

15650 3950 425 5400 3900 49400

23100 17,9 6600 700 5800 4500 63700

3,9

54

43

617

ucts 0 0 0 0 4150 3399 0 0 4256 3499 991 0 4329 3480 984 0 3989 3190 978 45 3632 2784 785 37 3300 2432 540 35 3240 2103 440 30 2734 1865 340 25 2570 1700 290 20 2326 1570 200 12 2090 1510 280 9 1900 1490 350 8 1840 1500 380 7 1760 1560 430 7 1740 1630 500 9 1670 1710 560 12 1590 1725 650 15 1525 1735 900 17 1430 1805 1180 19 1370 1910 1350 25 1315 2060 1550 35

dVeal

12

1000

22

Broiler

17

Turkey

0 0 0

809 455 54534

820 460 55742

833 458 55715

729 394 51971

762 299 46776

732 313 46300

488 285 42800

419 217 39300

290 173 35800

280 165 34100

270 170 33000

260 185 32000

265 220 31900

270 260 33000

280 340 33500

280 335 33000

270 350 32000

275 375 32000

290 405 31100

300 435 32200

305 430 32500

id

325

ut

2 188 541 3067

2 267 675 2958

2 267 738 3789

0 258 717 3427

0 181 624 2895

0 165 505 3073

0 96 497 2765

0 122 421 2553

0 125 290 4200

0 110 279 2765

0 71 280 2831

0 125 297 3000

0 135 334 4150

0 148 342 3915

0 140 350 2670

0 115 423 3685

0 192 393 4850

0 276 555 4800

0 303 689 6450

0 523 807 6750

0 630 652 5650

0 752 744 7350

eed an

64

49 70 903

49 75 953

49 75 1023

49 75 987

49 75 900

32 58 894

20 58 720

20 40 650

20 42 920

21 28 650

12 25 649

27 48 750

35 55 1240

36 63 1250

38 72 1025

36 78 1365

50 68 1610

87 97 1815

89 120 2320

147 143 2465

195 187 2130

231 266 2565

seed

25

eed

1 768 73 330 885

0 768 73 360 935

0 780 73 370 925

0 780 74 340 895

0 780 75 365 870

0 520 46 340 986

0 520 30 340 685

0 520 34 250 618

0 520 32 200 880

0 520 33 130 631

0 172 18 149 610

0 156 41 277 730

0 152 53 280 1110

0 140 53 285 1120

0 105 56 320 920

0 80 53 353 1225

0 65 76 299 1450

0 85 130 429 1625

0 90 134 530 2081

0 95 221 632 2220

0 100 296 825 1917

0 107 352 1176 2306

15

erseed

22

MT)

odity

1987/ 1988/ 1989/ 1990/ 1991/ 1992/ 1993/ 1994/ 1995/ 1996/ 1997/ 1998/ 1999/ 2000/ 2001/ 2002/ 2003/ 2004/ 2005/ 2006/ 2007/ 2008/ 200 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201

2,940 1,670 2,190 3,055 809 1,159 83 564 666 474 168 335 839 413 100 100 300 0 100 0 0 0 50 12 20 20 25 4 150 200 50 119 801 423 1 108 128 185 2 306 464 193 14,900 9,860 9,100 10,849 13,645 14,470 5,000 2,167 5,316 2,631 3,120 2,490 5,083 1,604 5,000 13,575 10,750 6,050 6,025 4,271 2,765 111 112 231 85 524 870 150

201 251 439 272 189 0 4 11 7 0 7 0 6 172 49 629 1,045 1,026 1,197 1,282 534 99 496 226 306

246 0 32 861 108

199 4 0 440 341

56 0 0 203 51

1 1

ducts 1000MT 0 0 0 249 0 0 376 298 0 440 271 0 262 107 0 141 45 2 494 215 8 3 220 146 4 407 162 20 0 324 475 28 541 151 76 15 550 690 694 576 855 1,088 1,266 1,020 83 108 151 147 612 241 79 10 876 113 133 15 998 250 280 35 724 150 130 50 588 930 161 767 55 60 20 288 491 799 707 614 752 835 894 1,053 943 1,281 1,208 1,081 1,016 1,225 1,189 1,222 1,159 163 164 165 114 97 107 91 75 68 407 60 60 70 639 110 140 84 708 120 130 85 709 160 175 100 719 170 190 100 978 110 250 110 939 1,030 1,137 115 230 120 130 250 120 150 340 100

,Broiler ,Turkey dVeal )

8 9

0 1,074 1,079 1,095 1,035 0 0 0 377 12 0 292 12 0 309 15 0 237 13 0

uid

1 3 1

onseed ut seed ean owerseed

2 50 0 425 3

0 64 0 200 0

0 56 0 200 0

0 55 0 180 0

0 55 0 75 0

0 10 0 167 93

0 10 0 68 30

0 24 3 35 10

0 30 1 35 5

0 40 1 4 10

0 35 2 14 10

0 40 0 200 35

0 89 0 65 10

0 122 0 22 5

0 131 0 64 6

0 119 0 15 7

0 113 0 1 9

0 138 0 40 10

0 139 0 2 11

0 139 1 34 10

0 142 11 442 11

0 117 1 1 837 1,0 12

ed

nel

rseed

0 38 88 0 0 40 450

0 34 301 0 0 35 405

0 32 161 0 0 35 365

0 104 79 0 0 35 220

0 43 141 0 10 40 178

0 127 70 0 40 34 105

0 108 40 0 36 40 146

0 120 44 0 10 24 206

0 100 50 0 125 25 220

0 15 80 0 110 39 240

0 8 70 0 195 85 290

24 1 80 5 132 200 260

39 3 125 2 119 225 190

43 1 228 3 36 460 236

62 1 332 9 22 588 178

94 1 347 11 12 182 198

86 0 402 23 4 98 173

112 0 594 43 1 85 134

122 0 546 39 1 46 110

136 0 524 54 0 19 115

130 0 739 76 0 121 144

90 0 517 56 1 22 37

eed

ed n werseed

282 416 512 396 0 0 0 0 0 0 0 5 40 40 26 15 15 5 0 0 0 0 0 0 1,770 2,455 1,500 1,815 1,700 1,095 0 0 0 0 180 120

0 8 0 0 200 80

0 11 0 5 205 40

0 11 0 20 35 15

0 10 0 0 131 9

0 20 0 0 160 3

0 30 0 0 350 0

0 63 0 0 365 0

0 127 0 0 171 18

0 100 0 0 272 65

0 111 0 0 284 18

0 84 0 0 362 47

0 102 0 0 533 39

0 57 0 0 607 36

0 64 0 0 814 30

0 59 0 0 790 15

0 67 0 0 478 0

MT)
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

201

0 0 0 0 0 0 MT)

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 4 0 0

0 1 0 4 0 0

0 0 0 2 0 0

7 2 2 4 1 2

5 2 5 5 1 2

5 3 5 5 1 13

6 3 5 15 11 5

6 3 5 7 4 3

3 3 5 3 0 1

3 5 5 7 0 3

3 5 5 7 0 3

5 5 5 7 0 1

5 10 5 10 0 1

5 10 5 9 1 1

5 10 5 11 1 7

5 10 5 8 1 2

5 10 5 8 1 2

5 20 5 11 1 5

5 20 5 8 1 7

nd

E) t,

1988/ 1989/ 1990/ 1991/ 1992/ 1993/ 1994/ 1995/ 1996/ 1997/ 1998/ 1999/ 2000/ 2001/ 2002/ 2003/ 2004/ 2005/ 2006/ 2007/ 2008/ 2009/ 2010 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201

0 970

0 1,150

0 1,200

0 555

5 900

17 500

56 619

50 206

85 697

57 1,111

80 1,652

45 518

12 696

1 3,114

16

4,372 12,621

8,456 10,514 10,584 12,552 18,393 17,500 15,0

ts

ear 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

1992

46

3988.846

3810.303

3339.052

3196.251

3215.550

2924.450

2510.128

2216.312

2387.652

2544.611

2588.124

2535.259

2588.109

2466.894

58

26.82

25.63

22.49

21.56

21.73

19.81

17.05

15.11

16.35

17.51

17.9

17.62

18.08

17.31

8.3

73.48

70.23

61.61

59.06

59.52

54.27

46.72

41.4

44.79

47.97

49.04

48.28

49.53

47.42

37

154.58

152.89

132.12

127.95

124.99

112.38

98.92

89.94

94.08

98.35

99.82

99.84

99.84

95.95

59

10.91

10.41

9.13

8.73

8.8

7.96

6.87

6.08

6.58

7.05

7.21

7.1

7.28

6.98

3.3

11.99

12.03

10.34

10.06

9.7

8.69

7.72

7.1

7.32

7.57

7.66

7.71

7.62

7.34

tisticsDivision2010|08July2010

52

ar 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

992

76

2836.605

2338.887

2457.933

2422.640

1939.385

2173.086

2280.678

1943.394

1904.653

2162.121

2316.756

2132.963

2103.974

2308.780

58

19.07

15.73

16.55

16.34

13.1

14.72

15.49

13.25

13.04

14.88

16.02

14.83

14.7

16.2

66

52.25

43.11

45.35

44.76

35.9

40.32

42.45

36.3

35.73

40.76

43.9

40.62

40.26

44.38

41

94.32

83.37

88.32

88.07

76.81

82.88

81.66

69.84

65.88

68.81

73.51

68.05

65.71

72.39

.2

5.58

4.87

5.11

5.02

4.05

4.61

4.94

4.23

3.96

4.15

4.47

4.14

4.41

99

7.79

6.92

7.35

7.36

6.59

6.99

6.7

5.73

5.41

5.65

6.02

5.57

5.38

5.93

StatisticsDivision2010|08July2010

53

992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

897 1455.391 1599.136 1717.125 1436.522 1750.682 1512.600

979.988 1442.034 2140.868 2317.041 2341.169 2268.011 2505.733 2859.187

9.98

9.79

10.76

11.56

9.69

11.83

10.25

6.66

9.83

14.66

15.94

16.19

15.77

17.5

20.06

7.34

26.81

29.47

31.68

26.54

32.41

28.07

18.24

26.94

40.16

43.68

44.36

43.19

47.95

54.96

3.35

32.78

35.91

38.6

32.37

39.77

34.48

22.39

33

49.17

53.56

54.29

52.87

58.68

67.23

3.37

3.37

3.65

3.92

3.27

4.24

3.59

2.31

3.39

5.06

5.49

5.54

5.39

5.98

6.83

2.1

2.04

2.26

2.43

2.04

2.4

2.12

1.39

2.05

3.06

3.34

3.39

3.31

3.67

4.22

StatisticsDivision2010|08July2010

54

onnes) 1993 89,300 1994 225,500 1995 65,603 1996 1,395 1997 23 1998 13,255 1999 205,972 2000 40,927 2001 12,466 2002 64,387 2003 15,995 2004 1,232 2005 39,904 2006 3,118

00

0$) 1993 23000 1994 53600 1995 10333 1996 1388 1997 11 1998 3430 1999 49000 2000 8020 2001 4723 2002 12847 2003 4509 2004 340 2005 10043 2006 1158

00

OStatisticsDivision2010|08July2010

55

Black Sea region

Area, Th/ha 2010/2011 Product
Barley Barley Barley Barley Barley

Yield, mt/ha 2009/2010 July 2010/2011 June

1 2,36 1,73 1,79 2,23 1,3 2,36 1,91 1,79 2,23 1,3 1,79 1,98 1,76 2,36

Production, KMT 2009/2010 July

1800 260 13000 6000 10500 31560

Cha

2010/2011 June
2600 260 15500 6000 10500 34860 275 1200 5500 3900 13000 23875 125 760 2000 2885

2009/2010

L mon

ntry

July
1800 110 7500 3350 4700 17460

June
2000 110 8100 3350 4700 18260 90 450 1500 500 2600 5140 175 630 1000 1805 2000 145 9050 3400 5000 19595 90 402 1100 500 2100 4192 175 600 1000 1775

2600 260 17900 6000 11800 38560 275 1140 3950 4000 10500 19865 125 667 1900 2692

Corn Corn Corn Corn Corn

90 450 1350 500 2600 4990

3,06 2,67 3,7 7,8 5

3,06 2,67 3,67 7,8 5

3,06 2,84 3,59 8 5

275 1200 5000 3900 13000 23375

Rapeseed Rapeseed Rapeseed

300 630 1000 1930

0,5 1,21 2

0,71 1,21 2

0,71 1,11 1,9

150 760 2000 2910

Page | 56

Soybeans Soybeans Soybeans

1000 18 900 1918

850 18 900 1768 720 250 6100 500 4300 11870 14500 275 27400 8000 6450 56625

792 12 625 1429 720 250 5600 460 4350 11380 14700 348 28700 7800 6750 58298

1,15 3,89 1,67

1,18 3,89 1,67

1,19 3,75 1,68

1150 70 1500 2720

1000 70 1500 2570 450 400 7500 875 7000 16225 17000 650 57500 17500 20000 112650

942 45 1050 2037 450 400 6425 800 6500 14575 17000 737 61700 18000 20900 118337

: Sunseed Sunseed Sunseed Sunseed Sunseed

1100 250 6100 500 4300 12250

0,41 1,6 1,23 1,75 1,63

0,63 1,6 1,23 1,75 1,63

0,63 1,6 1,15 1,74 1,49

450 400 7500 875 7000 16225

Wheat Wheat Wheat Wheat Wheat

14600 275 26800 8000 6450 56125

0,96 2,36 1,98 2,13 3,1

1,17 2,36 2,1 2,19 3,1

1,16 2,12 2,15 2,31 3,1

14000 650 53000 17000 20000 104650

Page | 57