Harry Siemens – Jim Long, President, and CEO, Genesus Genetics reports in his weekly hog letter how the hog industry is revitalizing in Russia. He and his Genesus group participated recently in the VIV Moscow trade show.

“It’s an exciting time for the Russian Pork Industry,” says Long. “After twenty years of little or no investment in infrastructure, the levels of capital required to rejuvenate the Russian pork industry is in the billions of dollars.”
He says Russian pork production is beginning to recover in this country of 150 million people, but has to double its capacity to return to the production levels of just 10 to 12 years ago. The Russian government is stepping up with support from low interest loans and the political will for the establishment of swine production. The windfall of $60 oil and high natural gas prices is driving the Russian economy and this is creating a higher personal income. Statistics indicate Russia is one of the leading countries in the world as far as percentage of disposal income spent on meat, approximately 7.5 percent compared with the USA at about 1.5 percent. “A good market for meat expansion when you have meat lovers,” he adds.

Long writes how Russia has abundant arable land and grain available. “Some of the Russian groups we spoke to have land tracts of over 150,000 acres.”

Domestic hogs are currently taking over 200 days to get to market with backfat levels over 30 mm. The demand for new technology from the Russian producers at the show included barn design, equipment, slaughter facilities, feed mills, genetics, etc.

The battle for Russian directions is between the small-scale farm philosophy of the European industry versus the North American production model of large scale.

“We expect, in the end, the North American model will dominate, as Russia had 20,000 sow units twenty-five years ago,” says Long. “The Russians don’t fear scale, unlike the protected farm economy of Western Europe.”

From the genetics perspective, it appears that many Russians are wary of European hybrid companies. Their results in the field have been less than stellar.

“Now, producers are looking for genetic verification from registered purebreds to protect themselves. Product integrity is an issue in any marketplace and Russia is no different,” he says.

The Genesus group’s next visit was Korea, a country with approximately one million sows. Market hogs are currently $1.25 US live weight per pound.

“Producers are making money obviously and is it any wonder pork exports from the US to Korea have been terrific in the last few months,” says Long.

Like Korea, prices have increased dramatically in China in the last few weeks, gaining 40 percent. “The export opportunities are gaining,” says Long. “A weaker US dollar and possible appreciation of China’s currency would enhance the opportunity for export growth. 1.1 billion people who like pork more than any other meat sounds like a good scenario.”

He says China has expanded pork production 20 million head per year in each of the last four years. Despite this, increased disposable income has allowed domestic consumers to devour this increase and still lead to increased prices.

“Bottom-line: Russia, Korea, and China are eating more pork driven by higher disposable income. People like pork – a better world economy drives pork exports for North America and the world is not becoming vegetarian. We are fortunate that we are all in a business with enhanced demand. In the US this year alone, January to April pork demand is up 3 percent, 2 percent more pork produced with year over year prices up 10 percent,” he says.