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Genesus Global Market Report Russia, August 2020

31 August 2020, at 10:30am

Current pig price in Russia stands at 122.6 Roubles ($1.64) per kg liveweight (with VAT). The price has been rising steadily all year from the mid 80’s in January. During this time the Rouble has depreciated about 12 percent vs the US dollar.

Russia’s exports of pig meat are increasing, especially to South East Asia. Total quantity exported is expected to exceed 100,000 tonnes this year. This is the production from about 40,000 sows or about 2 percent of total sow herd. The increase is good news for producers, but with continued expansion in progress (well over another 100,000 sows currently under construction) more export and local consumption will be required to support the price.

Russia continues to hope for permission to export to China. Russia and China share a 4,209 km land border. Geographically, Russia is ideally located to supply considerable amounts of pork to China. As the world’s number one wheat exporter, it has the resources to produce a lot more pork (and other animal proteins). The major stumbling block is of course Russia is a country positive for ASF, which China will not accept. The reality is also Russia has limited supplies of pork to export today. Trade decisions today seem to be mostly political and devoid of a lot of logic and the economic rules of supply and demand.

Current price increase is driven by local demand. COVID-19 has significantly reduced overseas travels for Russians. Russian holiday destinations are full and many are staying at home. The government also gave 20,000 Rouble ($266) for each child under 16. This has boosted local consumption and therefore the price. Russia, despite being ranked fourth globally for total number of cases, has not seen the extremes in terms of lockdowns and internal travel restrictions. Our Russian employees report from their local regions, apart from schools closing and for a while restaurants, very little has changed in daily life.

The following comments are my own personal opinion

This year is so far one to go down in the record books, for obvious reasons. Globally, health workers are being hailed as lifesaving heroes. Many workers are being paid to stay at home and industries being given billions of dollars in support. Through all of this, pig farmers globally have been working 24/7 doing what we do every day in normal circumstances.

Today in the world, there are 822 million people suffering from malnutrition, and each year 9 million people die of starvation; 3.1 million children under the age of five die every year from starvation, this is just over 50 percent of all deaths of children under five. Please note here this is every year.

To put this into perspective vs COVID-19 (to date) 25 million cases and 0.8 million deaths and very low mortality rates for those under five.

For many many years, we have known the cure for starvation! We don’t need governments investing billions of dollars in research to find one. We don’t need economies devastated and whole industries on the brink of failure and whole populations effectively under house arrest. To cure starvation we just need farmers producing more food, and of course making a profit to do so! I am quite sure the drug companies chasing a COVID-19 vaccine are not doing it to make a loss and go out of business!

As pig farmers, wherever we are in the world, we produce food. We and our workers work very long hours, often in far from the best working conditions and for low pay. Without food we die, regardless of age, ethnicity, pre-existing health conditions or age! Perhaps farmers are the original lifesavers? We don’t want to be heroes, we don’t want countrywide standing ovations.

We have a very unusual business model. We have only one product that takes about 11 months to produce from start to finish. We also have a two- or three-week slot when we can sell this product and a very small number of clients to sell to (consumers don’t want to buy live pigs!). When we start the production process we have no real idea of what we can sell the product for, what it’s going to cost to produce, and even if we can sell it at all. Once the process is started, we can’t really stop it and we can’t suddenly increase production to take advantage of changes in demand.

To add to all of this, we are most of the time public enemy number one. We are polluters, responsible for global warming, exploiting, and mistreating our animals. Governments are continually legislating to make farms less productive and more expensive to run, reducing the amount of food we can produce and making it more expensive for the poorest families to buy. The government also creates trade barriers making it difficult or impossible to sell our product!

What do we want? Maybe the best thing is nothing. Governments just do nothing. Just let us do what we do, produce food in a sustainable way (making profit is the most basic part of sustainability) – the cure for 9 million deaths a year!