The Russian government is ambitiously implementing an almost $1-billion investment project in the agricultural sector in order to develop and secure domestic beef production that was severely damaged during the Stalin era.
In Russia’s southern region of Bryansk, which borders Ukraine and Belarus some 200 miles to the southwest of Moscow, the country’s biggest meat importer, Miratorg Agribusiness Holding, has so far launched 16 open range cattle ranches. By the end of 2014, the company plans to expand the number of ranches to 33 with an overall stock of 250,000 Aberdeen Angus, which is considered by many to be the best beef breed.
Live cattle stock is being imported from Australia and the United States by ship to the ports of Novorossiysk on Russia’s Black Sea, and St. Petersburg, and then hauled on semi-trucks to the farms.
Russia spends $3 billion annually on imported meat products and is the world’s largest beef importer. Russia plans to domestically produce 85 percent of its meat, including poultry, by 2020.
Each ranch located in the Bryansk region holds upwards of 7,000 head of cattle and there are presently 56,500 Angus roaming the fields, including 2,800 calves that were born in May and June of this year. Miratorg plans to expand the herd to 80,000 head by the end of 2012.
Home on the Range
Each of the farms in this conglomerate in Bryansk is headed by an American rancher, selected for his knowledge, professionalism, skills, and his ability to share his wisdom with Russian farmers and students. There are more than 1,600 people from farmhands and veterinarians to construction workers and animal husbandry specialists working in Miratorg cattle farms throughout the region. As the business expands, so will job opportunities for local residents.
On a recent trip to a farm outside Bryansk, RIA Novosti spoke with Anthony Stidham, who is a third-generation rancher from Ada, Oklahoma, working on a three-year contract. Stidham, 48, has been living on the ranch for 18 months and is also the “district head” in the area, supervising six ranches.
Stidham, whose wife and twin daughters remained in the United States, says he was pleased with the chance to get to come to Russia and share his know-how with enthusiastic farmers.
“It just sounded like me,” Stidham said when asked why he would come to Russia to do the same thing he does in Oklahoma.
“It’s exciting to work with large herds like this here in Russia, because they’re not as big in the States.”
Stidham spends most of his time on the six ranches he supervises and does not speak Russian. He is, however, surrounded by farmhands and specialists who speak English, one of whom always doubles as a translator for him if needed.
Part of the project includes educating local farmers in cattle breeding and herding. Stidham is very active in this and also delivers lectures in agricultural colleges in the Bryansk region. Many university students have already had the chance to come to one of the ranches and complete their internships.
“I’ve even had students from the United States come here as interns,” Stidham said.
Asked why an American student would come all the way to Russia to do his internship when there are thousands of farms in the Midwest, Stidham said there were more opportunities for the students to get “hands-on experience.”
“The sizes of the farms in Russia are much larger than those in the U.S. So if a student is learning how to artificially inseminate cows, there are limits to the number they can practice on in the States, but here we can line up hundreds for them in one day.”
Most of the cattle on the ranches that Stidham supervises are from Oregon, Wyoming and Montana. Stidham said the Angus breed was selected because it can withstand Russia’s severely low temperatures, which can drop to around minus 30 degrees Fahrenheit in winter.
Slaughter houses are presently under construction in the region and meat processing should be on line by the end of 2014.
Russian Beef Market and WTO
With Russia about to join the World Trade Organization, many fear that the country will not be able to compete and the agriculture industry may come under extremely difficult times.
Tariff quotas on meat imports into Russia will remain until 2020, by which time the country should be able to be more competitive on world markets.
“Russia, just as any other WTO member, can use instruments to protect its market if there is unfair competition,” Moscow-based National Meat Association head Sergei Yushin told RIA Novosti.
According to the National Meat Association, Russia consumes less than 38 pounds of beef per capita annually; just half the consumption of the United States.
Russia presently imports most of its beef, 93 percent of which is frozen, from a handful of countries, mainly from Brazil with 42 percent of the import market, according to a report published on TheBeefSite.com. Other major exporters are Paraguay (14 percent), Uruguay (13 percent), Mexico (6 percent), the United States (6 percent), and Australia (5 percent). Russia imported 150,100 tons of beef in the first quarter of 2012, according to the same report.
Yushin said he hopes Russia will extend the “zero-base tax” on profit for the beef industry to help support local producers.
“If funds remain in the companies with good market stability, then they can be used to get new loans [to expand], which means more work places and tax income for the state [through income tax],” he said, adding that this would improve not only living standards, the demographic problem in rural areas and the health of those living in small villages, but would also have a great affect on slashing crime since there would be more jobs created.
Yushin said many issues in regard to taxation and subsidies have been resolved, though they still remain to be set into law. Many bills have been initiated by the agrarian committee before the lower house of parliament. One of the most discussed issues is on profit tax, and in particular how long the existing standards will remain before being phased out, resulting in the increase in those taxes.
“The National Meat Association’s opinion is to retain the benefits on profit tax throughout the transitional period after joining the WTO up until 2020,” Yushin said.
Russian Deputy Prime Minister Arkady Dvorkovich said on Friday the country should maintain its zero-rate profit tax for Russian farmers indefinitely.
"The zero tax on profit should be imposed with no time limits," Dvorkovich said during a government meeting.
The Russian government has approved a 2.28 trillion ruble ($69.7 billion) state program for agriculture development in 2013-2020, in an attempt to support domestic agriculture, after the country's accession to the WTO.
Previously the government had planned to end the zero-rate profit tax for farmers from 2013 when it was to be set at 18 percent, rising to 20 percent by 2016.