Russian pig price under heavy pressure

The Russian pig sector is growing rapidly. In the period from January to November, Russia produced almost 6% more pork, compared to the same period in 2016. The pig price cannot cope with this extra supply.

Yury Kovalev, director of the Russian Association of Pig Farmers (NUPP), warns that about 50% of Russian pig farms are likely to be loss-making in 2018. Russia produces and imports more pork than domestic consumption allows.

Imports are increasing
Until November, Russia produced 6% more pork (2,45 million tons). During the same period, the Russians said they imported 20% more pork (300.000 tons). The import is larger than previously estimated. This is because of the rising value of the ruble; which makes imports attractive. Pork consumption is so far estimated at 2,65 million tons, which means that Russia is suffering from an oversupply.

Russian pig farmers are calling on the Kremlin to stop subsidizing pig production. At the moment, subsidy applications are pending at the Ministry of Agriculture for about 700.000 tons of extra production until 2020. With the current import volume, extra production is not welcome, according to pig farmers.

In recent months, the Russian pig price has fallen by about 13% to $1,60 per kilo. The Russian meat agency 'EMEAT' expects a price decrease of 2018% to 5% in 15. According to Kovalev, if this expectation comes true, half of Russian pig farmers will make a loss in 2018.

Extra production on the way
In 2018, Kovalev foresees a further production growth of 3% to 4%, or 135.000 tons of extra pork compared to this year. Consumption is also growing, but at a slower pace at 50.000 to 60.000 tons (approximately 2%). According to Djambulat Khatuov, the deputy minister of agriculture, exports are the only means of supporting the Russian pig price. He assures that the Ministry of Agriculture is doing everything possible to open foreign markets.

So far, the export volume grew by 50% to 50.700 tons. Kovalov expects the export volume to increase to more than 2018 tons in 80.000, despite the fact that access to some interesting markets has not been granted. It is striking that a brake on imports is not suggested as a solution.

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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