Market Report Russia – January 2018
Simon Grey, General Manager Russia, CIS and Europe
This is the week that Russia celebrates the New Year and then Orthodox Christmas on 7th January. It means most of Russia is on holiday. For slaughter plant’s it is a very short week and for some also a holiday!
The last full working weeks pig price was 93 Roubles ($1.57) per kg live-weight. As has been the case throughout 2017 efficient Russian Pig Producers have made good money. Currently good producers will be making $50 to $70 per head profit.
So, what does 2018 have in store?
In November Russia was found to be guilty of breaking WTO rules on the blocking of meat imports from various countries. Russia accepted the ruling, but the embargo on pig meat product imports remains in place.
Russia has a very powerful pig lobby. 19 of the 20 pig producers have some sort of connection to government. Food security is very important to Russia and with the new era of lower oil prices, developing export markets for products other than oil is also very important.
Russia, by far the World’s largest country, has incredible potential to produce a lot more food. It also does have the potential for this food to be produced at low cost!
Presidential elections will be held in March. Nobody expects any policy changes in the lead up to the election. With Mr Putin having great popularity in Russia it seems most likely he will be re-elected and become the longest serving Russian President. For Russian pig farmer’s this is a good thing.
African Swine Fever continues to be a major issue within Russia. There are monthly outbreaks. 2017 saw the first outbreaks of ASF in Belgorod which is Russia’s major pig producing Oblast (State). 3 of the 4 largest Russian pig producers have a lot of production in Belgorod and have been affected. This is a potential risk to food security and certainly a problem when it comes to establishing Russia as a major exporter of pigmeat.
It seems to me that this is one issue that requires very firm action. A lot of measures have been put in place for commercial farms. Bio-security is very strict and far stronger than I have seen anywhere else in the world. It even extends to having to heat treat the food pigs are fed on. Despite all of this the outbreaks continue.
Most outbreaks it seems, are traceable back to domestic production. Although this sector has fallen dramatically over the past few years there are still a lot of ‘house’ pigs in Russia. For people living in villages on low incomes it has always been a way of getting food. However, unless this is dealt with effectively, but simply putting the same rules in place for all pigs, then it is difficult to see how ASF can be eliminated.
For Russia to be able to become a major exporter of pigmeat ASF must be eliminated. Buyers looking for a large and sustainable supply will be weary buying from regions that can have outbreaks and be closed down at any time!
In 2018 Russian pig producers will want to expand within the domestic market. 2017 saw good growth in domestic pigmeat consumption. There were several economic factors for this (improving economy). However, consumption in Russia, a natural pig meat eating country still lags well behind others in Europe that were once part of the Soviet Union.
The driver of consumption is quality and price. In most market’s globally value for money (the perceived offset of price Vs quality) is a driving factor. Pork needs to be more attractive to the consumer than poultry, beef, lamb and fish.
First and foremost, it needs to taste good. No matter how cheap a piece of meat is, if it is dry and tasteless consumers will not buy it (more than once).
Although many companies no longer use it, the official Russian grading system for pigs still has the top grade for pigs that are under 100kg at slaughter and have less than 10mm backfat! This is absolutely not what the Russian market requires. Russian’s favourite cut of pork is neck! Why, because it contains more fat and is therefore more-tasty!
A new modern grading system, similar to the one proposed by the USDA that actually pays more for pork that is better to eat (darker and with more marbling), seems perfect for Russia!
Categorised in: Featured News, Global Markets
This post was written by Genesus