Russia’s livestock industry enters 2026 facing mounting pressure from rising production costs, a deepening labor shortage, and significant structural shifts that are reshaping the sector. According to market participants and industry associations, 2025 was more a period of stagnation than development, and the outlook for the new year remains restrained.
Stagnation and the Decline of Small-Scale Farming
The key indicators of the industry in 2025 did not show sustainable growth. The cattle population continued to decline, and total milk production increased by only 0.3%.
The most alarming trend was the reduction in production within the farming sector, which had been the main growth driver for the past 15 years. For the first time in a long period, milk production in farms decreased significantly. Growth in large agricultural organizations only partially compensated for the decline in small-scale farming.
This confirms a broader trend: the industry is increasingly concentrating in the hands of large agribusinesses, while small and medium-sized farms face exhaustion of investment and operational resources.
Meat Production: A Mixed Picture
Total meat production across all categories remained essentially flat in 2025, with only a marginal increase. In the fourth quarter of 2025, output actually turned negative.
Poultry: The Largest Segment Stumbles
Poultry meat accounts for nearly half of total meat production in Russia. In the first quarter of 2026, production of poultry meat declined compared to the same period in 2025. This continues a trend that emerged in late 2025, when poultry production stopped growing.
Industry experts attribute the decline to shrinking profitability, epizootic factors, and supply gluts driven by intensifying price competition. Despite the short-term contraction, the sector retains growth potential, with modest full-year growth forecast under the baseline scenario.
Pork: The Resilience Story
The pork segment is demonstrating the strongest performance in 2026. In the first quarter, pork production grew year-on-year, with the organized sector expanding and even small farms showing marginal growth. This positive trend began in August 2025 and has been sustained into 2026.
Pork accounts for a significant portion of total meat production, making it the second-largest meat category after poultry.
Beef: A Structural Decline
Beef production continues its long-term structural decline. In the first quarter of 2026, production fell year-on-year. Household farms recorded the most significant slump, though the overall downward trend persisted across all categories. For the full year 2025, beef output shrank. Beef now accounts for a smaller share of total meat production.
Dairy Sector: Overproduction Amid Falling Prices
The dairy sector presents a paradox: increased raw milk supply combined with declining purchase prices. Farmers report falling milk prices during the autumn-winter period—an unusual pattern for the industry.
According to farmers, the decline in purchase prices is due to an excess of quality products and a slowdown in consumer demand. However, dairy products on retail shelves have not shown comparable price reductions.
Industry experts explain that multiple factors are pressuring the market:
- Demand recovery is slower than expected after a sharp rise in raw milk prices in 2024
- Commercial milk supply continues to grow
- The strengthening ruble has reduced exports and increased imports
As a result, dairy product stocks are exerting downward pressure on purchase prices.
Processed Dairy Products Show Growth
Despite the challenges in raw milk pricing, processed dairy production showed positive trends in 2025:
- Cottage cheese production increased
- Butter production rose
- Cheese production grew
Total processed milk production saw a slight increase. However, fermented dairy products declined, potentially reflecting changes in consumption patterns.
The Shift to Meat Production
Faced with declining profitability in dairy, some farmers are considering a shift to meat production. Beef, unlike milk, maintains higher price attractiveness, making cattle fattening an alternative for farms with adequate feed resources.
Livestock Population Declines
The livestock population has been declining across several categories. Recent data shows significant decreases in large cattle, including cows, and in sheep and goats. Pig populations saw only a slight decrease, reflecting the relative resilience of the pork sector.
Cost Pressures and Labor Shortages
An additional risk factor remains the increase in labor costs. Farm owners are forced to raise wages to retain workers, competing with rotational employment and the urban labor market. This further increases production costs.
Moreover, farmers point to increasing tax burdens and infrastructure constraints, including a lack of access to gas, which hampers local processing development and deprives farms of the opportunity to earn additional margins.
2026 Forecast: Price Increases and Further Concentration
Industry experts predict that in 2026 the industry is likely to continue along an inertia-driven scenario. Consumer prices for key dairy products are expected to rise, while purchase prices will grow more moderately due to persistent stocks and limited export opportunities.
The leading regions in milk production will maintain their key role. At the same time, in remote regions, especially in Siberia and the Far East, further declines in local production are expected, which will increase dependence on supplies from central regions and lead to higher retail prices.
Experts believe the general trend for most regions will be the reduction of small-scale farming against the backdrop of urbanization and population outflow. This will lead to further concentration of production in large complexes with higher productivity, altering the socio-economic landscape of rural areas.
The Russian livestock industry in 2026 is marked by a fundamental shift: growth is slowing, margins are compressing, and the structure of production is becoming increasingly concentrated. The industry is successfully feeding the country, but the cost is high for small and medium producers, who are being squeezed out by rising costs, flat demand, and weak prices. The coming year will likely see further consolidation, with large agribusinesses increasing their dominance while rural areas face the loss of smaller operations and the social fabric they support.
