As we write somewhere over the Atlantic Ocean, on our return from Russia. We contemplate the last two weeks of travel and try to come to some conclusions or at least observations on what we saw in the Russian Swine Industry.

Observations

• Slaughter hog price is $2.50 a kilo in central Russia ($1.25 US live weight per pound), in Siberia $3.00 a kilo ($1.40 US live weight per pound), and maxing out in the far east- Vladistock at $3.50 a kilo ($1.60 US pound).
  
  
• Feed is $130.00 a ton in the grain growing areas.
  
  
• Good producers are making over $100.00 per market hog.
  
  
• Challenges of producers include many diseases in their swine herds. 30 per cent birth to market mortality is considered average. Part of this we imagine is circovirus. Circovirus vaccines have not been registered in Russia, where they expect companies that make the circo vaccine, shares to bump up.
  
  
• Another disadvantage during the recent financial crisis, banks jumped interest rates in some situations from 15 per cent to 30 per cent. It was take it or leave it. This actually has lead to liquidation in the sow herd. We never thought we would see liquidation levels of what some have estimated at 20 per cent in Russia with profits of $100.00 per head. If we made $100.00 per head in America we would think we had died and gone to heaven.
  
  
• The $100.00 per head profit is stimulating some activity to look at expansion from existing producers. Subsidized loans are being offered by the government to build swine operations. We expect any expansion will be relatively slow as it takes so much time for permits, construction, etc...
  
  
• We exhibited at the Moscow VIV show which is focused on the livestock and poultry industry.
  
  
• At VIV we saw almost 100 per cent European and Asian companies related to the swine industry. Only 6 American based companies. We find this a little strange because Russia is like America, it builds in scale. The North American barn system is more suited to Russia than the European in our mind. It’s all a classic case of you don’t sell to people you don’t talk to. You’ve got to show up!!!
  
  
• The scale of Russian agriculture is interesting. We were standing around our exhibit. Fortunately, we fell over a couple of Russians. We started talking with the one. He says he’s a shareholder in a large agriculture enterprise. We asked how large. Answer: 900,000 acres. They have a few thousand sows now. They want to get more. Our sales force fell out of their chairs and jumped to attention. We never knew they could move so fast.
  
  
• The Russian economy is picking up. Their financial crisis is mostly over. We were in a Moscow patio restaurant. In a 180 degree angle we counted 32 large construction cranes. There is major building activity.
  
  
• The high price of hogs in Russia will certainly lead to pork imports. The quantity is the issue. Import quotas and tariffs are at levels protecting Russian hog production. We expect they will remain in place as the Government wishes to make Russia self sufficient in pork. High profits will stimulate expansion.
  
  
• H1N1 is a factor in Europe and Russia. When we landed in Germany coming to Russia, we had to fill out forms before we landed pertaining to our sickness level. As we left the place we were met by people in white lab coats, masks, plastic gloves, etc... They looked serious and took our forms. Most passengers had a good laugh. When we landed in Moscow before anyone could get off the plane, the local health officials came on the plane. They had a list of where passengers came from. North American passengers then had the joy of getting their temperatures taken in the ear. We had switched seats with a guy who was German. He got the North American treatment. All was good.

What all of this means is we are not sure but unfortunately the fear of a pandemic no matter how ludicrous is alive and well. There is no way the constant use of the Swine Flu terminology has not hurt demand to some degree. In a commodity industry like pork with relative inelastic demand even a 3 per cent decline in demand can be large in lowering prices.

World Pork Expo

This week we will be at the World Pork Expo. We will report our observations. The Annual World Pork Expo will be held 3-5 June 2009 at the Iowa State Fairground in Des Moines. Thousands of producers and industry professionals from all over the world are expected to be in attendance. Visit the Geness tent at booth # 5109 East of Varied Industry Building.

Winnipeg Free Press

Flying pigs a good sign

Figure 1: Boeing 777 Cargo Jet on runway in Winnipeg. Boris Minkevich, Winnipeg Free Press.

WINNIPEG – Turns out that pigs can fly -- and they did it in style early this morning.

It was hog heaven for almost 900 pigs when they were loaded onto a nearly brand new Boeing 777 cargo jet and flown out just after midnight to fly non-stop to Germany.

It was the first time this giant cargo jet -- which only began flying for companies late last year -- had ever flown into Winnipeg.

After going the pig equivalent of first class, the breeding hogs were then to travel in a much lower class of travel -- a truck -- to a facility in Russia where they will produce more swine.

Mike Van Schepdael of Manitoba-based Genesus Inc., which produces the hogs, said the cargo jet will save time for the pigs

Figure 2: Pigs are heading to Russia. B. Minkevich, Winnipeg Free Press.

Figure 3: Containers of pigs at airport. Boris Minkevich, Winnipeg Free Press.

Figure 4: Containers holding pigs are loaded onto a Boeing 777 cargo jet. Boris Minkevich, Winnipeg Free Press.

"Normally what we do is we ship them, whether it's to Korea or Russia, by truck to Toronto, Chicago or Calgary so they can get on a plane there," Mr Van Schepdael said.

"It takes close to 24 hours to truck them to Toronto and you have to feed and water them. Now we can have them fly out of Winnipeg. It's a lot easier for the pigs."

Mr Van Schepdael said the company is already planning future 777 flights for shipping out hogs.

"This is good for Winnipeg," he said, noting it's cargo shipments like this that will also help the creation of CentrePort.

Earlier this month CentrePort, an inland port, was given a major boost when the federal and provincial governments announced $212 million to build a four-lane freeway to connect the airport and CentrePort land with Inkster Boulevard and the Perimeter Highway.

Geoffrey Robinson of Sea Air International in Toronto, the company which arranged for the Boeing 777 to come to Winnipeg to pick up the pigs, said the hogs will take up 10 of the 27 cargo platforms inside the plane.

"If there was a premier executive class for pigs, this is it," Mr Robinson said."They'll have food and water during the flight -- everything but an in-flight movie."

Christine Alongi of the Winnipeg Airports Authority confirmed that aside from a passenger 777, which touched down last year to offer tours to Air Canada and Boeing employees, no other plane of that type has landed here.

"This saves shipping days for this company," Ms Alongi said.

"It's important for people to know Winnipeg can accommodate aircraft of this size. It's also good for CentrePort -- it shows the beauty is our geographic location."

Kelly Funke of the Manitoba Pork Council said pigs have been flown out of Winnipeg before, but in smaller planes and in fewer numbers. "This is fairly huge and it is cool to be using such a new large plane," Ms Funke said.

"It speaks to the quality of genetics here in Manitoba. We always believed we are head of the pack and this supports us.”