Authorities Considering State Support for Russia’s Feed Sector

Russian President Vladimir Putin has ordered the government to consider lowering VAT on processed feedstuff from the current 20% to 10%, All About Feed reports

The country’s feed industry hopes this measure could be adopted as a part of a broader package of state aid to the Russian feed industry, which is currently suffering the tough consequences of the Covid-19 epidemic.

The Russian ruble has been nosediving since early March when the spread of coronavirus started, and oil price collapse following a spat between Russia and Saudi Arabia. Russian agricultural companies warn that coupled with some other negative factors triggered by the coronavirus pandemic this could sharply raise the cost of feed production in the country.

Russia is importing up to 90% of feed vitamins and amino acids, the Russian Union of Feed Producers has estimated. On some categories of feed additives, Russia has an absolute dependence on imports. Most feed vitamins and amino acids are imported from China and the European Union.

The market is waiting – the coronavirus and the exchange rate currency fluctuations could really impact the price for feed vitamins, amino acids, and other additives on the Russian market, Sergey Mikhnuyk, chairman of the Russian Union of Feed Producers told the Russian magazine Agroinvestor. 

When Chinese companies return to full operation, they will focus on meeting their own demands in feed additives. This could trigger the deferred demand effect, resulting in a shortage of certain feed additives that may occur and this would not be about price any longer, Mikhnuyk explained.

A source in the Russian feed industry who wished not to be named told Agroinvestor that the price for feed additives in Russia jumped by 30% in January and February of 2020 because of the Covid-19 pandemic. The coming months could bring additional price hikes, this time because of the continuing devaluation of the Russian ruble.

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