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Pork Commentary: On The Road in Russia

by 5m Editor
28 May 2009, at 9:33am

RUSSIA - This week, Jim Long (CEO of Genesus Inc.) presents his Pork Commentary from Russia.

This past week, a group from Genesus has been travelling in Russia. Currently, they are in St. Petersburg after stops in Moscow and the Russian Kuban region. Kuban is in the south of Russia, situated between the Black and Caspian Seas. St Petersburg is about 1,200 miles (1,500 kilometres) north-east of Kuban. Moscow is just about half way in between.

Russian Swine Market

Swine producers in Russia are in a good place. Market hog prices are $2.50 US kilo or roughly $1.10 live weight a pound. Feed is $120 per ton. Good producers are making $100 per head. It's what happens if for almost twenty years, next to no buildings are built. Russia's current pork production falls significantly short of self sufficiency. Most estimates put the Russian pork deficit at 2.5 billion pounds per year or about 500,000 sows worth of production.

Word Pork Expo

The Annual World Pork Expo will be held 3 to 5 June 2009 at the Iowa State Fairgrounds in Des Moines. Thousands of producers and industry professionals from all over the world are expected to be in attendance. Visit the Genesus tent at booth #5109 East of Varied Industry Building.

Kuban

Kuban in many respects is Russia's breadbasket, large tracts of good land with moderate climate similar to southern Illinois or Missouri. On the visit, the Genesus group was surprised that despite the excellent hog prices, the global and Russian credit crunch had forced liquidation with hog numbers in this region down 10 per cent in the last year. They visited one of their customers whom they had stocked last year. They had just finished their first six months in production. They have averaged 10.7 weaned and clipping along at 25 pigs weaned per sow per year. The premiums for carcass they are receiving are in the range of $25 to 30 per head. In perspective, domestic Russian swine genetics have just under two inches of back fat (50 mm). The Russian National pigs weaned per sow per year is about 14. Consequently, even at $2.50 a kilo ($1.10 pound live weight), some producers are not making money. The customer with 25 pigs weaned is thinking the world is about perfect with profit of $125 per market hog. They wondered how this compares to America.

Probably the best deal in Russia is importing pork meat. One importer told us that they were buying pork in Brazil for $1.50 a kilo and selling in Russia for $3.00. Nice spread, isn't it? You do not need an MBA to figure that this works. Recently, Russian Agriculture Minister speculated that official legal pork imports were probably half of what is actually coming in. Nothing like big profits to stimulate creative business practices.

Moscow

The Genesus group attended the Agrofarm conference in Moscow where they had an opportunity to be involved in a swine genetic seminar. It was a who's who of global swine genetic companies all on the same programme. Of course, you can suspect what happened. Much controversy with one Russian speaker emotionally attacking the European hybrid companies for their reluctance to sell purebred breeding stock in Russia. As in most things, there are lots of different perspectives but the challenge can be best summed up by one of our Russian customers: “We are fifty years behind”. This in itself leads to a huge learning curve in all aspects of swine production in Russia. With it come mistakes by both suppliers and producers. Education and training is paramount to prevent train wrecks.

St Petersburg

The former city of Leningrad in Soviet times now renamed to its previous name, St Petersburg. Situated on the Gulf of Finland, St Petersburg was a city built and designed by the Czar Peter the Great over 300 years ago. Built in a European design in many respects, the most spectacular city the Genesus group has ever been to. Canals like Venice, wide boulevards like Paris. A hustle like New York. Grand castles and buildings like no other.

The host in St Petersburg went to great lengths to show all the visual highlights. He said he realised that there is disdain for Russian expertise in much of the West. He expressed his frustration that he has had western suppliers talk to him about swine production facilities in Russia as if it was a third world country. He said look around St Petersburg – see what the Russians built. To believe we cannot build pig barns is maddening. Point taken. Take it a step farther. Two countries have put people in space. Russia is one of them.

The more they were with the Russians, the more they saw in common with America. Pride of country. The ability to build and think scale. Primarily Christian countries with strong belief in the nuclear family. More in common than not.

This coming week, the group will return to Moscow. The international livestock show, VIV Russia, is underway. The group will report its observations.