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All news / Russian pork market: trends and forecast

  • 31 Mar 2023, 11:39

Pork production continues to increase (+5% last year), although we managed to achieve self-sufficiency in this type of meat a few years ago. In 2022, a record consumption of pork per capita was recorded - 29.8 kg.

Despite the growth in production figures, 2022 is not a calm year for the pig industry. There were problems with the provision of feed additives, veterinary drugs, genetic material, equipment for pig breeding complexes. Logistical difficulties, the strengthening of the ruble and “covid” restrictions in consumer countries have limited export supplies. Difficulties in the financial sector reduced the availability of state support in the form of additional soft working loans, as well as investment loans for the SGC and enterprises for slaughtering and processing pork.

Last year, our country produced 4 million 226 thousand tons of pork in slaughter weight (+248 thousand tons compared to 2021).

The trend of recent years is more and more clearly visible - in the peasant farm and private household plots, the output is reduced, the main volume is provided by the industrial sector of pig breeding. Large vertically integrated holdings are, on the whole, more competitive and resistant to economic risks, better able to cope with epizootic threats (ASF).

So, in 2022, agricultural organizations produced 6.9% more pork (+243 thousand tons), namely 3 million 839 thousand tons. In household plots, output decreased by 10.2%, in peasant farms - by 14.9%, compared with 2021.

Similar dynamics continued at the beginning of this year. In the first month, industrial enterprises produced 315 thousand tons of pork in slaughter weight: compared to January 2021, the increase was 9.6% (+227.6 thousand tons). The number of pigs in the industrial sector increased by 7% (+1.7 million), while in household farms it continued to decline (-16.3%).

Consolidation of assets

Last year, the TOP-10 Russian enterprises accounted for 62% of the market for industrial production of pork products, 91% is produced by new modernized enterprises.

The leader in the production of pork is ABH Miratorg, its share in the total volume of industrial production is about 13% (in 2022 - 487 thousand tons in carcass weight). In second place is Sibagro JSC with a 7% share. This company has climbed into the TOP-5 in two years, having increased production capacity from 2020 by 151 thousand tons to 284 thousand tons in 2022. Closes the top three leaders of the Rusagro Group, whose share is 6.4% (246 thousand tons).

Market experts note that over the past three years, the growth rate in industrial pig production is generally more moderate than a few years ago. Among the reasons are the implementation of most major investment projects, the completion of the state support program and concessional lending in the sub-sector.

The Central Federal District is the leader in issuance

Pork production is unevenly distributed across regions, with the Central Federal District in the first place. In 2022, 52% was produced here (+7.9% compared to 2021), namely 2 million 184 thousand tons. In January 2023, the figures increased, reaching 58% (+12.1%).

In 2022, positive dynamics was recorded in almost all districts, and only in 3 it was negative. The North-Western District went into the minus (-11.6%), production decreased slightly, by 2.5%, in the South, by 1% - in the North Caucasus.

Belgorod region is the main donor region: in 2022, the surplus reached 592 thousand tons. In the Central District, the surplus amounted to 957 thousand tons, which made it possible to cover the deficit in the recipient regions: in 2022, only 20 (out of 80) regions were able to provide themselves with 100%.

How prices have changed

In 2022, pork prices on the domestic market were uneven. In February-April, analysts recorded a sharp jump in prices - for example, in March, half-carcasses of pork rose in price to a record of 201 rubles per kg. This was facilitated by logistical problems in the regions bordering Ukraine, an increase in demand from meat processors who sought to purchase raw materials for future use against the backdrop of an unstable situation with the exchange rate and the risk of stopping meat imports.

By the middle of the year, the situation leveled off, and the price dynamics in many respects became similar to previous periods. By December, pork half-carcasses noticeably fell in price and in December they were sold at an average of 167 rubles per kg on the market due to increased supply.

Compared to 2021, the cost of livestock and pork sides at the end of 2022 decreased by an average of 5%, but lumpy pork and offal rose in price (+7% year on year). In the Central Federal District, prices fell to 153 RUB/kg (-8.6% compared to January 2023). Over the year, pork half carcasses fell by 4.4% on average in the market.

Imports increased - but only in the 1st half of the year

Pork imports intensified in 2022, as duty-free imports were allowed within a quota of 100,000 tons for the first six months. But already in the 3rd and 4th quarter, supplies fell sharply.

Last year, the share of pork in meat imports reached 4% (+54% by 2021). In total, 18.2 thousand tons of pork products were imported into the country, 6.3 thousand tons more than a year earlier. Suppliers are Latin American countries: Brazil (91%), Chile (7%), Argentina (1%), the Republic of Belarus and Kazakhstan accounted for about 1% (IMIT estimate).

There will be no growth in imports this year, industry experts are sure, as domestic production continues to increase, while exports do not grow, and additional volumes of pork products enter the market. This is confirmed by the latest data: in January, the share of pork in meat imports decreased and amounted to only 0.2% (-98% compared to January 2022).

Exports decreased by 10%

Last year, pork exports fell by 10%, according to IMIT, to 170,000 tons. Compared to 2021, 20 thousand tons less were exported. Among the reasons are logistical problems and a shortage of containers, the restoration of domestic production in importing countries (Vietnam), as well as the strengthening of the ruble, which negatively affected the profitability of deliveries.

Russian pork was mainly purchased by the Republic of Belarus, Vietnam and Kazakhstan, they accounted for 83% of exports.

In January 2023, there was a positive trend: 14.4 thousand tons of pork were exported (+77% per year). In the first month, deliveries increased by 102% by December 2022.

It is noteworthy that the Republic of Belarus accounted for about 60% of purchases of Russian pork, and in January last year - about 30%. Deliveries to Serbia, Vietnam, Mongolia, Hong Kong, Armenia, and Kyrgyzstan have grown significantly.

If we talk about the total volume of the pork market, then in 2022 it reached 3 million 701 thousand tons, adding 8% over the year, while the share of imported products is minimal (0.5%). Growth continues: in January of this year, IMIT estimates the market volume at 300 thousand tons, which is 7% more than last January.

The number of pigs in large agricultural holdings is steadily increasing. And since production is growing, the supply will also be higher, which means that wholesale prices will decrease this year. The decline in grain prices, which we observed in the second half of last year, had a positive impact on the profitability of pig production.

If we talk about industry risks, then the growing competition, the struggle for the consumer in the domestic market should be considered a priority: the competitive game will primarily affect the quality of the product offered and the prices for it. These are the factors that will be able to retain the consumer in 2023, and possibly attract a new one, increase demand and per capita consumption if high-quality, “non-stuffed” pork is supplied to the market at an acceptable cost for the buyer. But at the same time, a rise in prices or a decrease in the quality of meat are a risk of losing a consumer.