Restrictions on pet food imports from some European countries, thoughlessened, are roiling the market.

Russia has partially withdrawn GMO-related veterinary diet restrictions on petfood imports from the Netherlands, Germany and Spain, but the domestic marketremains in a state of unprecedented uncertainty.

After banning more of such imports from European countries over the past year,Russian veterinary watchdog Rosselhoznadzor decided to meet importers halfway,authorizing pet food imports from the European countries for three months,starting at the end of June 2021. The intent was to avoid a shortage ofcertain products on the domestic market, according to Tatyana Kolchanova,general director of the Russian zoobusiness union.

“Rosselhoznadzor is putting a lot of effort into establishing effectivecommunication channels with foreign regulators to ensure that suppliedproducts match the Eurasian Union’s veterinary requirements,” Kolchanova said,adding that the unwillingness of foreign veterinary services to liaise withRosselhoznadzor was the main reason why the restriction was introduced in thefirst place.

“As far as we are concerned, some progress in the negotiations has alreadybeen achieved, and we hope to see the restrictions abandoned in theforeseeable future,” Kolchanova said.

Still turbulence in Russian pet food market

Not everyone shares this opinion. Kirill Dmitriev, chairman of the petbusiness committee at the Russian business union Opora Rossii, said theRussian pet food market is passing through a period of significant turbulence.

“Everyone is impacted. Even the biggest companies are experiencingdifficulties with importing pet food or raw materials, let alone smallbusinesses,” Dmitriev said, adding that several importers and specializedretailers may be on the edge of bankruptcy.

In June, the Russian zoobusiness union forecasted a wave of bankruptcies among12,000 Russian retailers, 3,000 veterinary clinics and 130 pet food importers.According to Dmitriev, this forecast is gradually coming true.

Russian companies produce 80% to 85% of pet food consumed in the domesticmarket, but this is primarily attributed to the budget segment, Dmitriev said.Premium, superpremium, holistic and medicated pet foods are mainly imported.These segments generate around 70% of revenue for specialty retailers sincegeneral food retailers remain the main channel for selling pet food in theeconomy segment of the Russian market, he explained.

“I used to run a company importing pet food from Europe. With no positivechanges, I will have to cut staff in October,” Dmitriev said, adding that therestrictions caused an upward price rally for Western pet food in Russia, andthe first examples of bankruptcies are already happening among specialtyretailers.

Threat to health of Russia’s pets?

Rosselhoznadzor’s partial withdrawal of import restrictions in June has nothelped much, since only a few brands were granted permission to resume importsunder “enhanced veterinary control.”

“There is no clarity why Rosselhoznadzor resumed imports from some companiesand kept restrictions in relation to others,” Dmitriev said. “Moreover, thereare cases when even one factory producing several different product brandsfound that only one to two of a dozen of its brands are allowed to be exportedto Russia. This doesn’t make sense to us.”

In this environment, some specialty pet food retailers had to limit sales,especially of prescription foods, to one package per person. There areconcerns that pets in Russia may begin to die once retailers ran out ofwarehouse stocks. A petition launched at asking the Russianauthorities to resume pet food imports to prevent massive deaths among petshad been signed by 70,000 citizens as of August 26.

Changing pet food trade flows

Rosselhoznadzor’s restrictions barred the way to the Russian market for somecompanies but opened a window of opportunities for others. “We see a rise insupplies of pet food from new destinations, primarily from Asia: China, Korea,Japan and others,” said Kolchanova.

In 2020, pet food sales in Russia totaled 200 billion rubles (US$2.8 billion),Mars Petcare estimated. Imported pet food accounted for roughly US$700million. While everybody was confident the Russian pet food market would keepgrowing around 10% per year, there is now a great deal of uncertainty aboutwhat will happen with imports.

“There is no point in establishing new agreements to import pet food from thecountries not subjected to veterinary restrictions yet, given that there is notransparency in Rosselhoznadzor’s action,” commented a member of the Russianpet food industry. “Nobody can tell you why France has avoided restrictions,and nobody will guarantee you it will keep avoiding them.”

“I don’t know over what reasons Germany and the Netherlands are banned, andFrance and Italy are not,” Dmitriev said. “To me, this looks like a politicalaffair. It also seems that Rosselhoznadzor has partly withdrawn restrictionsuntil [2021 Russian Parliament] elections. We don’t know what will happenafter that—we may see new restrictions put in place.”

In the first half of 2021, France exported 18,045 tons of pet food to Russia,the Russian Federal Customs Service estimated. Other estimates include 13,258tons from Italy, 11,452 tons from China and 7,535 tons from Belguim. All majorsuppliers increased deliveries by 20% to 80% compared to the previous year.

“This [growth in export from alternative destinations] is a natural phenomenonbecause the market doesn’t like a vacuum,” Dmitriev said. “I’m absolutely surethat the trend of rising supplies from new countries will continue, providingthat no major changes from Rosselhoznadzor happen in the near future.”

According to Rosselhoznadzor, the European Commission has canceled an onlinemeeting at which the Russian veterinary restrictions were to be discussed, andhas not proposed a new time for a meeting. Currently, some Russian companiesare working on an appeal to the Russian Federal Antimonopoly Service andfederal courts, hoping to force Rosselhoznadzor to abandon or at least softenthe restrictions, Dmitriev said.

Image: Russian veterinary watchdog has restricted prescription pet foodimports from some European countries. | Vladislav Vorotnikov

Source: Petfood Industry – Vorotnikov is a Russia-based journalist coveringthe pet food and feed markets.

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