Road Trip to RussiaThe last week we spent in Russia we participated in the Livestock and Poultry exhibit VIV Moscow and we also toured some customer farms. Our Observations:
- We thought Christmas had come early after we spoke to hog producers. Santa Claus arrived with Live Hogs $1.38 US live weight a lb. (85 rubles/kilo). Cost of production should be the same as the USA with similar feed costs. Who wouldn’t like making over $100 US per head.
- Russia, a country of 145 million, is currently importing over 30% of its domestic pork needs. Tariffs and Import Quotas lend strong support to hog prices.
- We understand that approximately 50% of Russia’s hog production is done by backyard farmers. These hogs are mostly consumed by the people producing them and few go into regulated slaughter plants. With market hogs around $300 a piece, its strong incentive for this type of production in a country where a worker makes less than $1000 per month.
- One of the major issues of unregulated backyard swine production is the ongoing outbreaks of Africa Swine fever in Russia. The economic consequences of this disease are a major fear of commercial producers. Russia government officials are working diligently to stop Africa Swine Fever but with thousands of backyard open swine locations it’s nearly an impossible job.
- VIV Moscow is a very large exhibition. Companies in the livestock and poultry industry attended from all over the world. There were dozens of companies from China in the equipment and feed ingredient business. You can see why China is successful exporting, they are aggressive. There were a handful of companies from North America. Sad in many ways to see so few. Russia is an ideal North American market. Similar climate and similar scale of projects. Genesus was the only North American Swine Genetic Company that participated.
- The high profits in the swine industry and low interest Russia government loans are encouraging new sow barn construction. We spoke to several groups with plans for barn construction. Government officials we spoke to expect 800,000 new sow spaces built in the next several years. These new facilities are for expansion and the expected evolution from backyard production.
- Last year Russia had a severe drought. In some areas yields were 35% of norm. We saw hundreds of thousands of hectares (acres) of cropland in the Kuban region, 1,000 miles south of Moscow) an area many consider the breadbasket of Russia (between Caspian and Black sea). What we saw was excellent crops, wheat, corn, sunflower, and barley. If weather holds Russia’s crop production is back to normal.
- We met with a high ranking official. He told us that there is over 40 million acres (20 million hectares) of potential cropland in Russia is not being used. With world grain prices as they are more and more of this land will come into production. Many tracts of land are being leased for forty nine years at $7 an acre. Once this land comes back into production it will be probably keep producing at the low land usage costs. Went by a Claas combine depot, must have been 150 combines there. Great place for John Deere, Case, Agco, etc. Russia needs equipment to crop farms.
- Had a good trip from a personal and company perspective. Signed contracts for 12 planeloads of Genesus breeding stock. The demand for updated technology and management in Russia is paramount. Swine Genetics are a component needed to drive to rapid modernization.
Russia producers should be making $100 plus per head. There will be new sow barn construction. The crops we saw were excellent, with the high global grain prices encouraging maximum yields and more cropland coming into production.
Categorised in: Pork Commentary
This post was written by Genesus