Russia is about to experience a situation that hasn't been reported in this market since 2010 as sales price for pigs are lower than the cost of production! Production continues to increase, domestic consumption is static, and feed raw material prices are increasing by 20% to 25%.
Current sale price is fluctuating weekly between 100 and 110 Roubles per kg (US1.36 to $1.50) with the average cost of production stated to be at about 92 Roubles ($1.26), said the latest report from Genesus Inc.
While increasing pork exports may be difficult for Russian producers due to ASF issues, a campaign to encourage pork consumption may be the key to avoid a disaster in the sector. "Domestic market - this is the quickest and easiest market for increased sales! Look at the success of chicken meat, which has more than tripled consumption in Russia in the same market and at the same time pork has stayed almost static," says Simon Grey, General Manager Russia, CIS and Europe, Genesus Inc.
Large scale producers in Russia have expanded in the last couple of years hoping that they can access the Chinese market or several other markets in Southeast Asia.