Pork Commentary: Russian Road Trip - Week 326 August 2014
RUSSIA - We just spent our third week in Russia, writes Jim Long. It is a big country and we have seen much of it, he says, and as we all know, swine farms are not in cities so we have been much of our time in the rural areas.
Third Week Observations
- Continued to meet with swine producers and the story is the same. Profits in the $200 - $250 US range.
- Land holdings of groups we visited are massive. Last week one group 220,000 acres, another 300,000 acres. Good farmland – double cropped.
- In the South of Russia land still sells for $1,000 to $1,500 US an acre. Growing crops have been profitable in many regions.
- We were also West of Moscow this past week and saw thousands upon thousands of acres of empty pastureland that used to grow grain before the collapse of the Soviet Union. Some of this land now coming back into production but to a limited degree. We saw massive elevators sitting empty for lack of grain built in Soviet times. This area comparable to Western Canada or Northern US plains but with trees.
- African Swine Fever can be devastating. We met people who had several thousand pigs affected and had to have them destroyed. They calculate a $25 million US loss. A real risk in pig production Russia, there is insurance to be bought but expensive and varied collection results. African Swine Fever is a real damper on pig production investment in Russia.
- Last week four McDonald’s were closed in Moscow for sanitary reasons. There was speculation in the Moscow Times Newspaper that it was tied to the Ukraine issue and US policy as McDonald’s is a symbol of US power. (Our comment: Hopefully there is no claim McHappy Meal Toys are unsafe)!
- One producer told us there were financial losses in pig production until February this year then things have taken off while at the same time feed prices have dropped. It’s a roller coaster business and many don’t know what will happen next. There is much speculation Chicken will be added to pork sausage to stretch out pork supply due to the import food ban.
- Brazil can still ship pork to Russia but we were told by Russian buyers there is no imported pork to come from Brazil. It’s not like there is some magical switch that makes pork as there is biological timeline.
- Russia is looking to be self-dependent on food production and we suspect the imported food ban is being partially initiated to trigger such a move. Russia needs to add approximately 600,000 plus sows to be self-dependent on current per capita consumption. Another two million sows if per capita consumption moved to European levels. It will take gobs of money to do it – billions upon billions of dollars. With start-up and new buildings, farrow to finish running $13,000 - $14,000 US per sow.
- On a business note – Genesus production and customers in Russia are doing well. We expect a healthy surge in the Genesus production base in Russia over the coming months that will with help be the next genetic and technology herds of the expanding Russian sow herd.
- We have been to 52 countries. Almost all to visit pig producers. Russian pig producers like all other places are easy to talk to, down to earth people who welcome you warmly. All producers whether in USA, China, Mexico, Thailand, etc. have the same issues hog price, feed price, labour, disease issues, etc. All pig producers are a Band of Brothers. We speak the same language we have the same concerns. It’s a good industry with good people. It never gets tiring when you are around such interesting people. We wonder if many of the world’s issues beyond the pig industry could not be settled by sitting down talking and finding commonality first rather than differences. We suspect many issues could be solved. First you have to show up and talk
|Author: Jim Long, President & CEO, Genesus Genetics|
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