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Disease instability and politics threaten Russia’s global aims

Vladislav VorotnitkovBy Vladislav VorotnitkovMarch 1, 20173 Mins Read
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Last year, Russia produced 3.39 million tonnes of pork, to overtake Vietnam as the world’s fifth most prolific producer.

The figures helped the domestic pork market reach a self-sufficiency level of 91%, Yuri Kovalev, the chairman of Russia’s Union of Pork Producers (RUPP), told the Grain Feed Veterinary 2017 trade show in Moscow last month.
Russia has been striving towards so-called food security for almost 20 years, with a target of 85% self-sufficiency on each type of meat. Although pork has surpassed that mark, Kovalev said further developments would make Russia an even bigger global player.

The aim is to produce 3.865m t of pork in 2020, a 14% increase on 2016, promoting Russia to the world’s fourth largest producer, leapfrogging Brazil.
It will not be easy though. Take into account the limited growth potential for domestic pork consumption and RUPP’s forecasts that self-sufficiency will not grow beyond 95%, and Russia faces a challenge to increase its export volume almost tenfold to 350,000t.

They have made a steady start; an estimated 38,000t of porkmeat was exported in 2016, almost double the 2015 figure – primarily to former Soviet states.
New government subsidies and a weaker rouble should help, while an initiative to reimburse around half of the capital costs in the construction and the re-construction of pig farms is designed to make Russian pork prices more competitive on world markets.

The Russian Finance Ministry has also started to purchase dollars to rebuild reserves depleted by falling oil prices and international sanctions – this mirrors the Government’s desire to devalue the rouble, increasing exporter competitiveness.
A 9.6% fall in domestic pork prices was the first hint of oversupply, and the trend may gain momentum throughout the year as a number of new facilities come online. Russia will be eyeing increased exports to maintain high margins. But due to the instability caused by disease events, such as African swine fever, Russian pork is not even allowed into key export markets.

Negotiations over an export deal to China continue to stall, with no resolution in sight. In the long-term, it would be intriguing to see how agricultural holdings in the far east of Russia are affected if Asian borders remain closed.

For example, RusAgro and Merci Trade are building units with joint capacity for 120,000-130,000t of pork per year in the Primorsky Krai region of the Far Eastern federal district, which has 6 million citizens and consumes almost 150,000t of pork, 110,000t of which is produced there. From these pig farms, in Vladivostok, it is only 200km to the Chinese border and about 9,000km to Russia’s European frontier.

So, it’s inevitable that these projects face hugely increased logistics costs if trade barriers are not lifted.
Vladivostok’s role as the key seaport in this part of country could offer some solace for those seeking to export overseas, so a way to overcome the challenge may be found.

Another debate at the Moscow trade show centred on how to improve efficiency. Russian agricultural industries are hampered by a lack of investment in science, receiving just 1.6% of state aid allocated to research and development activity. Agricultural science is near the bottom of the list of priorities.
Why is this a potential problem? The productivity gap between pig farms in Russia and Europe has been neglected, mainly due to veterinary restrictions and, latterly, the food embargo, which has essentially protected the Russian industry. But, at some point the food embargo will be lifted, posing the question of whether the industry will be able to preserve its recent achievements.

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Next Article Ulster farmers positive about Cranswick’s takeover of processing plant
Vladislav Vorotnitkov

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