Pork consumption will continue to grow

The continued growth of pork production and market saturation will lead to increased competition between producers of this product, analysts of the industry association believe. At the end of last year, pork production in live weight in Russia amounted to 5.76 million tons, which is 275.5 thousand tons more than in 2021, Rosstat calculated. Domestic consumption of this meat increased by 242.2 thousand tons in carcass weight and reached 4.36 million tons. At the same time, the consumption of other types of red meat decreased: Russians bought beef by 54.7 thousand tons less than a year earlier, and mutton - 5.7 thousand tons less.

The average cost of live pigs of the 1st and 2nd categories in the Central Federal District at the end of 2022 was 117.5 rubles / kg - 5.8% lower than in 2021. Earlier, the NSS warned of a possible price drop of at least 10%. The actual decline in prices was better than forecast due to the increase in domestic consumption, which supported falling prices. Consumption was also boosted by government assistance to the poor and a reduction in the price gap between pork and poultry. 

The NSS expects that due to the systemic reduction in the cost of pork and the oversupply in the market, pork consumption will grow by 1-2% per year until at least 2025 and will amount to 32 kg per person per year against 30 kg now. 

Due to the growth in production, leading to the saturation of the domestic market, the country will continue to move away from the model of import substitution of pig products to an export strategy, follows from the presentation of the Union. This means that domestic producers will face tough competition with the world's leading suppliers for the markets of Southeast Asia. 

“According to the results of sales in 2020-2022, Russia has already entered the top 10 world exporters. Entering the top 5 global pork exporters is the main strategic challenge for the pig industry in the next 10 years,” NSS believes.

At the same time, following the results of last year, Russia increased pork imports by 53% to 17.98 thousand tons. Pork exports (including live pigs, pork fat, offal and other products) decreased by 10% to 173 thousand tons. Such a situation was largely the result of reduced supplies to Vietnam and Hong Kong due to higher logistics costs and lower domestic prices for pork in Southeast Asia. At the same time, pork exports from Russia to Kazakhstan and Belarus increased.

The development of the pork export sales channel will be the main trend of the industry for the next few years. This implies that producers will have to study target markets, train personnel and invest in freezing and storage capacities, the Union emphasizes.

M&A transactions in the market of pork producers are necessary for scaling large players and a soft exit from the business of “weak” participants. The NSS assesses as a high probability that the industry will experience bankruptcies and a reduction in production in old pig farms. If at the end of 2022 the share of the 20 leading pork producers in the total output of these products was 76%, then by 2025 it will reach 83%.