Pork Commentary: Russia Road Trip Week 215 September 2016
RUSSIA - Our Russian road trip continued last week. We had the opportunity to get more insight on where Russia’s cropping situation is at, writes Jim Long, President and CEO Genesus Genetics.
A mild winter and a warm, wet summer means Russia is poised to harvest its largest wheat harvest ever, and in doing so retain its title of the world’s top wheat exporter.
The total grain harvest this year is expected to reach 115 million tons, according to figures Sove-Con based in Moscow. Of this, 41 million tons are expected to be exported.
Russia has the world’s fourth largest acreage of arable land with an estimated 84 million acres (40 million hectares) still unused – an area about the size of Iraq, land that is suitable for arable farming.
The most fertile areas are in Russia’s center and south, as well as Siberia.
Land is low priced especially compared to Europe and America. Land prices in the central Black Earth region, one of the country’s best crop growing area (and the worlds) are between $600 and $700 per hectare ($300 – $350 per acre US).
In our travels the last two weeks we visited agri-businesses that had large swine operations but also large land holdings. Almost all had over 100,000 acres of intensive cropping.
The large grain production capacities of Russia and Swine Producers leads to most of large swine enterprises growing their own feed. The value of swine manure on land that was mostly under fertilised in the past is leading to increased yields.
Russia has obviously the ability to produce grain in surplus and then turn to pork as an added value product. The Russian government stated the goal is self-sufficiency in food production including pork. This year it is expected Russia’s pork production will increase by 15 per cent. There will be further expansion in the future in the push for self-sufficiency and potential exports.
One of the major expansions will come from Rus-Agro who we visited last week and are using GenesusGenetics. Currently 90,000 sows, they produced 198 thousand tons of pork in 2015. Their new expansion in the far east of Russia is planned to produce 300,000 tons when completed. A huge project which includes large tracts of land devoted to corn, grains, and soybeans to feed the hogs.Currently in the Far East Rus-Agro has 26.5 thousand hectares (60,000 acres) in cultivation.
The project has the capital raised with China, Korea, and Japan as target export markets.
Last week we visited Ariant based in the Central Ural Region. All Genesus Genetics. The operation has 44,000 sows currently and is expanding, packing and processing, and over 700 company stores that sell their pork as a featured product. Currently harvesting at a 145 kg average weight (315 pounds), the advantage of Genesus’ rapid growth rate and meat quality is being leveraged in their branded retail operations; while the heavy carcass is optimizing profitability. It is really exciting for us to see a real farm to fork food chain as far as we know there is no other similar operation of scale like this in the world. It is a testament to the vision of ownership to develop a true farm to fork quality program that is being warmly welcomed by consumers.
Russia is expanding. It’s expanding in scale, it is expanding with an infrastructure that when debt is paid down should have global cost competitiveness. We have been doing business in Russia for several years. We have seen the evolution of swine production knowledge and expertise. The industry had to jump 30 years in a decade. It has been rapid and mostly successful. The high profits aided by sanctions that have kept most pork out has been instrumental in development. Sanctions have been announced to continue to the end of 2017. We wouldn’t bet the farm pork will flow free easily to Russia anytime in the near future.
On the path Russia is on we expect a handful of pork powerhouses will remain with swine production, grain production, and packing and processing. They will battle for the domestic market and we expect will emerge with significant pork exports primarily to China, which it borders. Russians are similar to Americans – not afraid of scale, they do scale, and have a knack in creating uniform systems. 10 billion people in the world by 2050. We will need food, and the Russian pork industry will be a player.
It’s been a long month for Spencer and me. USA, Hong Kong, Malaysia, Singapore, Thailand, China, Russia, and France. 21 flights in all. We met a lot of nice people, and talked to many swine operations. The one thing in common is the hospitality of the swine producers we met. Every country, every meeting, we had interesting discussions about our industry. It’s not an easy business, there are lots of challenges for producers to chase profitability and stay competitive. Every country, every producer has similar concerns.
We are fortunate to see the world. It’s a big place when it’s all said and done. It appears all people have similar perspectives. More in common than nought.
I am fortunate to be exposed to so many countries and cultures but just as importantly to share it with my son.
|Author: Jim Long, President & CEO, Genesus Genetics|
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