Pork production could grow by 12% in 2022

In 2022, pork production in agricultural enterprises may increase by 12%, this year the output will be about 1% more than in 2020 and will amount to 4.9 million tons (hereinafter - in live weight). Yury Kovalev, head of the industry association, said this during the XIII International Scientific and Industrial Conference of the National Union of Pig Breeders (NSS). According to him, growth will continue in 2023-2025, and production will reach 6.5 million tons, while the top 10 companies will increase their production by 58% compared to 2021, to almost 5.5 million tons. The share of the 20 largest players market will increase from 71% this year to 85% in 2025.

According to the NSS forecast, additional volumes - 1.45 million tons in carcass weight - will most likely be used to increase consumption from 28 kg to 30 kg per person per year. Also, due to this increase, there will be a replacement for falling volumes in old and bankrupt complexes, in household plots, and reductions due to epizootic problems. At the same time, breakthrough solutions are needed to increase exports to 400 thousand tons, otherwise these volumes will remain on the domestic market, Kovalev emphasized.

Pork consumption rose by 4.4% last year to 27.9 kg per person, the biggest increase in 30 years. In general, meat consumption amounted to 76.5 kg. The increase is due to the pandemic (limited opportunities for outbound tourism, payments from the state) and the rise in the cost of poultry meat.

Starting in 2020, the annual increase in pork production was supposed to be from 5% to 10%, and the main challenge was the glut of the market, Kovalev said. In 2020, production increased by just under 9% or 350,000 tonnes, resulting in a 10% drop in the average pork price in the first half of the year. This year, due to epizootic problems, an increase of 1% is expected, while wholesale prices increased by 20% (September 2021 to 2020). The trend of the first nine months of this year towards a decrease in production led to the decision of the government to zero import duties on 100 thousand tons of pork for processing, although already in October the industry recorded an increase in output, and now there is a significant drop in prices.

According to Kovalev, if the industry shows growth for a long period, then there is hope that there will be no duty-free import of pork next year. But if this import still enters the market, then, taking into account the increase in production, an increase in supply by 13-18% is possible. Without increasing exports, this can lead to a decrease in wholesale prices by 10-15%. Higher production costs, duty-free imports and flat sales prices could collectively lead to financial problems for more than 50% of pig companies, the NSS predicts.

The increase in the cost of grain and imported feed components last year led to an increase in the average annual cost by 25-30% compared to 2019, which greatly complicates the fulfillment of obligations on previously taken loans, Kovalev noted. Over the two years of the pandemic, the cost increased by 35-40%. “Price costs could rise another 10%,” he admits.