Marginality in pig production this year may remain at the level of 2022

The head of the NSS recalled that by 2020, Russian pig breeding had reached the level of full self-sufficiency in products, pushing aside imports  - this has not happened in the country for 15 years. “The government and I have reached a consensus on the issue of waiving incentives for the construction of new projects, as there is a risk of market glut,” he stressed. At the same time, the annual increase in pork production, according to the forecasts of the Union, will continue until 2025.  

The main risk businesses face is market saturation. “For business, this is a challenge, since additional volumes of products need to be put somewhere,” Kovalev noted. In 2022, the problem was solved, despite the fact that another 5% of pig products were added to the saturated market, which were produced mainly by the top 20 companies in the sector. “Imports have practically zeroed out, and although they are open, they do not have any impact on the market. At the same time, the duty on imports of pork from 2020 is 25%, respectively, the market is protected,” the head of the NSS recalled.

Export starting from 2020 is 200 thousand tons - about 5% of the total production, this is a very serious indicator, Kovalev estimated. In the first half of 2022, the expert reminded, shipments to foreign markets decreased by 25%, however, in the second half of the year, exports were increased, and the indicator for the year amounted to 175 thousand tons, which is 9% less than the level of 2021. “The structure of shipments has changed. If until last year Vietnam and Hong Kong were the main buyers of Russian pig products, then due to logistical and currency problems we changed directions. Today, half of the exported products are shipped to Belarus,” Kovalev said.

Due to the high level of production pricesfor pork wholesale last year decreased by 6% - this, the head of the NSS noted, is a good indicator: the Union expected them to fall by at least 15%. It was possible to maintain a fairly acceptable level of prices for producers due to high consumption: in retail pork prices almost did not grow, and by the end of last year they even began to decline. “At the same time, prices for other types of food were rising,” the expert noted. Also, pork consumption was supported by social payments from the state to the poor. The third factor that has had a positive effect on pork consumption is that the price of pork has caught up with the price of broiler: for a long time they were higher. At the end of last year, pork consumption per capita amounted to 29.8 kg. “This is the highest figure in the last 30 years,” Kovalev said.

The dynamics of production costs last year, the expert called "hump-shaped". At the beginning of the year, its dynamic growth was observed due to problems with logistics, the weakening of the ruble, the rise in prices for veterinary drugs, spare parts, and feed. In the second half of the year, new logistics chains were built, in addition, there was a drop in prices for grain, meal, ruble strengthening, and as a result, the level of production costs returned to the beginning of last year.

In the first three months of this year, according to the NSS, pork production in the agricultural sector increased by 8%, a figure twice as high as in the fourth quarter of 2022. “There is an intensive recovery of exports, and if this trend continues, then by the end of the current year we can again reach plus 200 thousand tons,” predicts Kovalev.

The increase in pork consumption also continues as a result of lower wholesale prices. According to the NSS, for 3.5 months of the current year in wholesale it amounted to 9.5%. “This is a serious decline,” said Kovalev. However, he pointed out that grain prices remain low and are likely to continue at this level, respectively, if there are no significant factors affecting the market, pig farmers have every chance to maintain their margins at the level of last year.