Simon Grey, General Manager Russia, CIS and Europe, Genesus Inc.
Current pig price in Russia is 109 Roubles ($1.39) per live kg. Thinking about it, it’s a strange thing that when doing a market report we are looking at farm gate price rather than retail price. When all said and done, we are part of a chain that produces a product for the consumer who eats our product either purchased from butcher or supermarket to be cooked at home, or eaten in a restaurant or other foodservice outlet. In Russia it’s even stranger as a high percentage of pig producers are fully integrated companies that have farms, slaughter/processing, and retail. Producers who sell to consumers!
Let’s look at other industries that sell to consumers. Apple, Airbus, BMW are famous well known brands, but this point really applies to the vast majority of consumer-focused companies. They all start with the final product. They make it fit for purpose, safe but most importantly desirable.
Desirability is what drives sales and also perceived value for money. Once the product is designed, it is then produced at the lowest cost of production for that product!
As farmers, we think this very sensible and logical way to do business is in fact a very stupid way. We believe we have a much better business plan. We believe that producing a product with the lowest cost of production is the way forwards. We do not care about the quality of the end product, we do not care if it is desirable, we just want it to be produced as cheaply as possible because it is being cheap that drives demand from the consumer.
If only other companies realised they were totally wrong and we were right. Phones, planes, cars, etc. would all be much cheaper. Who needs high-definition screens on phones, who needs comfortable seats and carpet in cars, who needs heated homes. The list is endless. The reason consumer-focused companies work the way they work is that they know that being desirable is what gets them sales and that sales drive profit.
For our consumers, what is desirable? What makes people buy our products over and over again? What makes people pay more for one product than another (neck vs ham)? It seems a fairly obvious answer. Taste and texture. The neck is tasty and tender due to the higher level of fat. Ham is tasteless and dry due to very low levels of fat.
One of my Russian colleagues was sat on a plane on a business trip recently. She got talking to the couple sitting next to her (consumers). They asked what she did and she of course explained she worked in the pig industry supplying genetics. She got absolutely slated by them. “What have you done to pork, it used to be really tasty, now it has no taste and is dry”. This I hear time and time again in Russia and other ex-soviet countries. I have been told in restaurants to avoid pork because it is dry. We should be deeply embarrassed that we get these reactions from the consumers of our product.
I know many people in the Russian pig industry. It is incredible how many do not buy the product their own company produces but chose Genesus Duroc from one of our Russian partners. Even some competitors in the genetics business do the same. The same people eat tasty pork for supper and then go to work the next day to continue producing the lowest cost product, blindly focussing on leaner pigs, lower FCR, etc. regardless of the negative effect on the quality of the end product and consumer desirability.
The most ignorant thing of all this is that it actually costs no more money to produce tasty pork than it does lean dry tasteless pork. This is a myth created by those who only have ultra-lean, dry, tasteless genetics. I have never heard a salesperson say that their product is bad, and advise not to buy it.
As farmers we are very conservative, we avoid change, we do things “because that’s how we’ve always done it”. We chose our genetics based upon what we want, what we think will give us the lowest cost of production, even in many cases what the live pig looks like. Maybe it’s time for a change. Maybe we should follow the obvious and become consumer-focused, make our product more desirable so people want to buy more of it and even pay more for it?
We already know they do. They pay more for neck than ham. They pay more for belly than ham. They pay more for sausages with added fat than ham. We know it and then ignore it..clever us.
Categorised in: Featured News, Global Markets
This post was written by Genesus