"The pace of import substitution is faster than expected": the US Department of Agriculture predicted an increase in pork production in Russia

The Foreign Agriculture Service of the US Department of Agriculture predicts an increase in the production of pork meat in Russia.

“According to forecasts, pork production in 2020 will increase to 3.52 million tons in carcass weight, which indicates a faster-than-expected pace of import substitution and the opening of new export markets.

Against the backdrop of expectations of growth in domestic demand and a moderate increase in exports, production is projected to grow to 3.6 million tonnes in carcass weight in 2021, ”the service said in a report read by RT.

For comparison, the US department cites data for 2019.

Then, 3.3 million tons of pork meat were produced in the Russian Federation.

At the same time, it is emphasized that the document does not take into account information on Crimea.  

Meanwhile, according to Rosstat, in 2019, livestock breeders across the country produced 3.9 million tons of pork in carcass weight.

According to the US Department of Agriculture, one of the factors of production growth is the domestic consumption of pork.

Competition between manufacturers leads to more affordable retail prices.

This will stimulate buyers. 

According to the estimates of the American department, in 2020 Russians will consume 1.7% more pork, and in 2021 the figure will grow by another 1.75% and will amount to 3.48 million tons.

As indicated in the document, the development of pig breeding in Russia is also facilitated by the availability of feed due to the rich harvest of grain crops.

This resource partially compensates for the negative impact of the weakening ruble on the cost of production, according to the report.

US Department of Agriculture also noted that the Russian pork market remains closed to the United States due to the embargo.  

Recall that in 2014, a number of Western countries introduced sanctions against Russia in connection with the events in Ukraine.

After that, Moscow was forced to retaliate.

By the decision of Russian President Vladimir Putin, a ban was introduced for the United States, the European Union, Canada, Australia and Norway on the import of certain types of agricultural products into Russia, including pork, cattle meat, dairy products, live fish, vegetables, fruits, etc.

Over the six years of the pro-embargo, Russia has reduced its dependence on imports of raw materials and has significantly improved its own agricultural production.

The indicators of food security of the domestic market have increased for a number of products.

National production has particularly shown its relevance during the coronavirus pandemic, Putin said.

"The experience of recent months, when international trade has stalled due to the closure of borders, has shown, nevertheless, that this task (import substitution. -

) has not lost its relevance, and perhaps becomes even more urgent," the head of the Russian Federation said.

As the expert of agricultural projects Elena Tyurina told RT, the state began to develop the pig-breeding industry even before the start of the import substitution program.

As a result, this support of manufacturers against the background of the embargo has led to today's high rates.

“Pig breeding is the first industry that has begun to receive serious state support and subsidized loans.

The beginning of active financing, attracting investments in pork production, we had in 2006-2007, when the national project was announced, ”she said.

Tyurina also noted that in 2020 there was a turning point in the ratio of imports and exports of pork meat - the country moved from a negative balance to a positive one.

In the first six months of 2019, Russia had a negative trade balance for these products.

The volume of imports exceeded the volume of exports by $ 135 million. However, in the same period of 2020, supplies abroad exceeded purchases by $ 106 million, the expert explained.

• Pigs

• RIA News

• © Alexander Kondratyuk

Domestic production records

The US Department of Agriculture is also paying attention to changes in the indicators of imports and exports of Russian pork.

As indicated in the document, the volume of supplies to Russia has decreased due to the abolition of the import quota.

The zero rate within the quota since January 2020 has been replaced by a 25 percent tariff on all imported pork meat.

However, shipments fell more than expected, the report said.

Experts explain this by the weakening of the ruble and distribution problems caused by the COVID-19 pandemic.

When catering establishments closed at the end of April 2020, there was a shift in consumer demand from the hotel and restaurant sector to retail stores, the American department emphasizes.

As a result, consumption of local chilled pork increased, hitting demand for imported frozen meat.

Due to these factors, the volume of imports will decrease to 10 thousand tons in 2020 and will remain approximately at the same level in 2021, American experts suggest.

The US Department of Agriculture considers the restoration of favorable trading conditions for foreign companies in Russia questionable, as local suppliers have successfully replaced the missing foreign products.

According to the rating of the National Union of Pig Breeders, the three largest pork producers in the Russian Federation included APH Miratorg - 9.7% of the total industrial production in the Russian Federation, GK Cherkizovo - 6.5% and LLC Velikoluksky Pig Breeding Complex - 6%.

Russia is also increasing its exports.

The US ministry expects that in 2020 supplies will reach record values ​​of 110 thousand tons, and in 2021 will increase to 130 thousand tons.

However, the National Union of Pig Breeders said that the export of pig products in the first half of 2020 has already reached 88 thousand tons, which is 96% more than in the previous year.

According to the organization's estimates, Russia will be able to export about 200 thousand tons of goods for the whole year, if force majeure does not arise.

According to the expert Elena Tyurina, the active growth of production and the implementation of new projects have led to the saturation of the domestic market, so now manufacturers focus primarily on world customers.

Vietnamese jump

Meanwhile, American experts associate the export success with stable demand from traditional buyers - eastern Ukraine, Belarus, other CIS countries and the EAEU.

In addition, in their opinion, the opening of new markets plays an important role.

Russia has established pork supplies to Hong Kong and Vietnam.

At the same time, the latter accounted for 35% of all exports in the first half of 2020.

“The supply of Russian pork to Vietnam was the main positive achievement of 2020, and also supported domestic prices at a level that served as an incentive for increasing production,” the report says.

The Vietnamese market opened to Russian companies at the end of November 2019.

According to Yuri Kovalev, Director General of the National Union of Pig Breeders, this is a colossal achievement

“Vietnam opened first for two Russian enterprises.

According to the latest data, now 12 companies have the right to supply to Vietnam and the work on opening the Vietnamese market continues.

Another six to eight enterprises are at different stages of certification, ”he said in an interview with Agroexport.

Kovalev also noted that 60% of world imports come from the countries of Southeast Asia, which is why it is important to enter this market.  

Sovekon's managing director Andrei Sizov, in a conversation with RT, stressed that Vietnam is just one of the possible directions for Russian exports.

The main platform, in his opinion, should be China.

“China has already allowed Russian poultry to enter its market.

Now pork products are being discussed.

It can be expected that China will be more favorable to Russian proposals due to the fact that it is the largest importer in the world - more than 4 million tons per year.

At the same time, the pig industry in China has not yet recovered at all after a sharp drop in production due to ASF (African swine fever.

), "Sizov said.

• Meat market in Vietnam

• Reuters

• © Kham

Southeast perspectives

As the US Department of Agriculture stressed, the Russian authorities are working to obtain permission to export to key Asian markets, but the endemic foci of the spread of ASF in the country make it difficult to implement these initiatives.

"According to industry sources, if the epizootic situation improves, the export potential of Russian pork producers could grow by 100-200 thousand tons of carcass weight in a year," the department said.  

According to Sizov, Russia's success in the fight against ASF will help to enter the Chinese market.

He also noted that Beijing may recognize the regionalization of the Russian Federation, because the disease has not been registered in some pork producing regions.

“The PRC, for example, recognizes European regionalization, so supplies are going on, although the EU also has ASF.

Recently, the disease appeared in Germany, and this is the main producer and exporter of the European Union, ”he added.

According to Elena Tyurina, in the future Russia will expand the geography of pork exports.

Small volumes of goods are already starting to arrive in the UAE, Indonesia and India.

In 2020, domestic suppliers also sold products in Malaysia, Singapore and the Philippines.

The list of countries that buy trial lots is constantly growing, she said.