World meat industry news

Russia not only got rid of import dependence on pork, but also actively increases its export. Strong export growth in the first half of the year promises a record high in 2023. Russia's next ambitious goal is to become one of the top five pork exporters in the world. Under what condition will it be achievable?

In the first six months of 2023, Russia shipped over 74 thousand tons of pork and pork offal abroad, which is 57% more than in the same period last year in physical terms and 86% more in monetary terms. This was reported in the federal center for the development of exports of Russian agricultural products (Agroexport, owned by the Ministry of Agriculture).

However, these data do not include data on the EAEU countries for May-June. If we add these data, then the numbers are even higher. According to the National Pig Breeding Union, for six months, the export of pig products in the first half of the year amounted to 116.6 thousand tons against 83.3 thousand tons in 2022.

“We practically don’t have imports anymore, but not because it is closed, but because over the past 15 years a whole industry has been created, production has grown every year, and we have almost completely gone from import dependence,” says the general director of the National Union of Pig Breeders Yuri Kovalev. From the number one importer in 2012, Russia for six years (in 2018) reached one hundred percent self-sufficiency in pork meat, increasing production to 4.5 million tons. Russia is already in the top 5 pork producing countries in the world.

Now Russian pig breeders have moved from import substitution to an export-oriented strategy. “For us, export is now the main direction for growth. Back in 2019-2020, Russia reached about 200 thousand tons of exports, which is approximately 5% of our total production. In 2023, the export of pig products can reach 220-230 thousand tons and 500 million dollars,” says Kovalev.

The main strategic challenge for the Russian pig industry in the next 10 years is to become one of the top 5 pork exporters in the world. According to the results of sales in 2020-2022, Russia has already entered the top 10 world exporters.

“In order to enter the top five largest exporters of Russia, it is necessary to at least double exports to 350-400 thousand tons, that is, up to 10% of domestic production,” the source says.

Why does the expert consider this level comfortable for the industry? “Sending for export 5-10% of total production is a global weighted position. So that if something suddenly happens to exports due to the epidemiological, economic or geopolitical situation, this does not have a significant negative impact on the domestic market in the form of a collapse in prices,” says the director general of the National Union of Pig Breeders.

Becoming one of the top five exporters in the world is an ambitious but realistic goal, but on the condition that Russia manages to open up new markets in Southeast Asia.

First of all, we are talking about the opening of China as the largest consumer and importer of pork, as well as entering the markets of the Philippines and Thailand, with which there are no geopolitical contradictions, says Kovalev. China, according to the NSS, in 2023 will import 2.1 million tons of pork, the Philippines - 600 thousand tons. The list of the largest importers also includes Japan, Great Britain and South Korea, however, it is hardly possible to break into these markets for Russian pork, including for geopolitical reasons. These countries are close friends with the US and buy American pork. Competing in these markets is understandably pointless.

Unfortunately, China is still closed to Russian pork due to the presence of the African swine fever (ASF) virus. China has closed imports from all countries, including European ones, where this virus was found, which is rapidly spreading around the world. For example, in 2019, the virus reached Germany, and China closed the import of German pork. “China is really afraid of this plague, there are no geopolitical problems here. But China understands that sooner or later it will still have to open its market as this virus continues to spread. It is already in most of Europe, has already reached America, although it is not yet in Brazil and the United States. Many have already understood that even this virus can be traded. It is impossible to close the whole country if the virus is present there. There is such a thing as regionalization. This means that pork can be allowed to be imported from regions where this virus is not present. We have absolutely ASF-free regions. Vietnam and Hong Kong have already recognized our regionalization. The Vietnamese market opened for us in 2019. Today we are already one of the main suppliers of pork. For two years, we have occupied almost 40% of all imports of pig products into the country. We won our place from our main competitors - Brazil, the USA and the European Union. This proves that we can supply the Asian market, that we have absolutely competitive products both in terms of quality and cost,” says Kovalev.

India, unfortunately, is not a big consumer of pork, it is not their kind of meat. China is another matter. “China consumes half of the world's pork production because pork is everything to them.

China itself produces 55 million tons of pork. They have the most modern production, another thing is that they do not have enough territories and feed. They are now building 26-story pig complexes in the mountains and buying huge amounts of soybeans, including in America, to feed their pigs.

While producing 55 million tons, which the Chinese themselves consume, they lack another 2-3 million tons per year, which they buy. It's not much, and it's hard to call it a dependency on imports. Rather, they need imports simply to balance the market, in order to buy more when there is not enough. Therefore, China will always import 2-3 million tons. We, in fact, do not want to get half of this, but only 5-10% of this imported pie,” says the interlocutor.

There is hope that China will still allow a number of regions of Russia where there is no ASF to supply pork. Negotiations are being held at the highest level. At least at the end of 2021, China allowed the supply of pork from France even in the event of an outbreak of African swine fever from unaffected regions. Germany, a larger supplier of pork than France, is still in talks with Beijing to resume exports.

As for the high export growth rates in the first half of 2023, the main reason is the lower base of last year, the head of the National Union of Pig Breeders notes. The recovery of exports is also helped by the weakening of the ruble and lower domestic prices.

The main buyer of Russian pork is Vietnam (bought twice as much - 46 thousand tons in the first half of the year), Belarus is in second place with a small lag (41.2 thousand tons), Hong Kong is in third (3.8 thousand tons) . The fourth and fifth places are occupied by Kazakhstan and Mongolia (4.2 thousand and 4 thousand tons).

The geopolitical situation in 2022 affected pork exports relatively slightly. Last year, pork exports sank, but not because Western countries refused to buy our pork. Russia did not supply it to the European Union - the Europeans did not let us into their market.

The fall happened mainly in the first half of 2022 due to problems with logistics, the lack of containers due to the refusal of Western carriers to transport domestic products. But already in the second half of the year, these problems were resolved and exports were restored. Therefore, the decline is relatively small for the year - by 10% to 170 thousand tons. Last year, exports to Ukraine fell sharply (by 80%). Exports to Vietnam have halved, and this is the main buyer of our pork. On the other hand, some of the losses were offset by increased exports to Belarus, which tripled to 80.3 thousand tons in 2022 (NSS data).