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. Last Updated: 07/27/2016

Farmers Banking on Homegrown Beef

LOTOSHINO, Moscow Region — Mention foot-and-mouth disease and cattle farmer Viktor Legezin squirms.

Although no cases of the disease that has raised an uproar in Western Europe have been reported in Russia, Legezin is taking no chances.

"That's the last thing we need here," said the squat farm head.

Legezin has banned everyone other than his staff from entering the long, low barns where he fattens bull calves on the 10,000-head Kirov state farm, located about 155 kilometers west of Moscow.

Now a reporter wants to look inside. After much persuasion, Legezin reluctantly consents. But the point is made: The economic success of the farm and his 460 staff depends on the livestock staying healthy.

Farmers like Legezin are hoping that the food-and-mouth crisis sweeping Europe will boost sales, which have fallen to miserably low levels over the past 10 years as state subsidies dried up, costs soared and a flood of cheap imported meat hit the market. A recent Russian ban on European meat and dairy imports has fueled their expectations, but with farms producing about half the amount of meat as in Soviet times they clearly lack the means to feed a meat-hungry population.

A light rain was falling during the recent visit to the Kirov farm. Inside the freshly painted barns, rows of bull calves were contentedly munching on hay. Weighing about 50 kilograms each, they will be kept for about 20 months longer indoors as they are grown into the killing weight of 500 kilograms.

Six hundred young calves arrive at the 10,000-hectare farm each month, and 600 fattened ones are sold for about 50 rubles a kilogram.

Legezin, who has been director of the farm since 1987, complains that he makes only a few rubles' profit on each kilogram. The farm's profit for last year was about $800,000, he said. The 460 staff get paid an average of 2,500 rubles ($86.60) a month, a fairly high salary for the region.

Legezin took heart from meat industry forecasts that prices would jump 15 percent or more after the government banned European meat last week. He said prices would need to reach 60 rubles to 70 rubles a kilogram to allow him to increase production.

But local meat companies are continuing to look overseas instead of at local farmers to fill the hole left by banned European imports, he said.

"My meat is no worse than meat from Europe, where they have foot-and-mouth and mad cow disease," he said bitterly.

The main problem with Russian meat, according to the nearby Motodel sausage factory, is that there isn't enough of it. Meat factories would have to pay higher prices for Russian meat to give farmers the cash needed to produce more meat, a move that would mean prices for sausages and other products would jump.

"People don't have the money to pay more for meat," said Motodel spokeswoman Yelena Komosa.

Motodel pays 45 rubles to 50 rubles a kilogram, she said.

Last year, European beef cost about $1.15 (33.50 rubles) a kilogram, which was comparable to domestic beef prices.

That amount is just above the 43 rubles a kilogram that the Meat Union, whose members are the largest players in the meat industry, estimates is the production cost for a kilogram of beef.

However, government officials say the ban could last from six months to a year, meaning it would be only a matter of time before farmers get the higher prices they are waiting for. Meat supplies are expected to drop, not only because of the ban on European imports but also because meat exporters around the world are aggressively seeking the highest bidders for their diminishing stock.

There were signs that meat prices were already on the rise before the ban. Average prices rose 4.3 percent in January and 3.3 percent in February, according to the State Statistics Committee. Beef and pork prices rose more than the average in February, with beef up 4.9 percent and pork up 3.6 percent.

European countries last year exported to Russia 221,089 tons of beef, or 59.6 percent of all beef imports, the Meat Union said. Altogether, 2.2 million to 2.4 million tons of meat was imported last year, or about half of domestic beef, pork, poultry, sheep and goat meat production.

One of the incentives for importing European meat has been heavy EU subsidies that aim to make exports competitive on the Russian market. Food aid from the EU and the United States has also kept meat prices low.

In Moscow and St. Petersburg, Russian suppliers account for perhaps as little as 30 percent of the meat market, said Nathan Hunt, president of U.S. meat exporter Skylight Inc.

Hunt said Russian meat processing companies are for now dragging their feet about paying higher prices for imports. "I think they'll have to eventually — they're trying to hold off," he said, adding that the companies have enough stored meat to last four to six weeks.

Hunt said a major problem with Russian meat is not its quality but quantity.

Under Soviet planning, Russia produced more than twice as much meat as today. But as subsidies ceased, soaring production costs combined with a cash-poor population have made the meat a tough business.

Meat Union spokesman Viktor Yatskin said farmers would need about $1 billion a year in investment for at least 10 years to raise production to a level that could replace imports.

"If the nation wants to produce a certain quantity of meat we can do it, but everything has its price," he said.

Kirov farm's Legezin said that in Soviet times the Moscow region had 600,000 milking cows. Now it has only 300,000. The 18,000 bull calves in the Moscow region are also a far cry from the 100,000 it had a decade ago.

Also, many farmers these days are favoring the production of milk to meat because it provides a quick sale, unlike the months needed to fatten cattle for slaughter. Tamara Korkina, supervisor of a ramshackle dairy and potato farm in the village of Alyoshino about 60 kilometers north of Moscow, said that in Soviet times farm workers used to fatten bull calves for slaughter at 300 kilograms in weight, a process that took about 10 months.

Bull calves are now killed within a few days of birth on the dairy farm and their meat is sold for dog food, Korkina said.

"The cost of fattening a calf is greater than the price of the meat," she said.