May 25, 2009

Pork Commentary

By Jim Long President - CEO Genesus Inc.

On the Road in Russia

   This past week we have been travelling in Russia.  Currently we 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 1200 miles (1500 kilometers) 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 U.S. kilo or roughly $1.10 U.S. live weight a pound.  Feed is $120 U.S. 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 lbs per year or about 500,000 sows worth of production.

Word Pork Expo

The Annual World Pork Expo will be held June 3 - 5, 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 our visit in this area we were surprised that despite the excellent hog prices that the global and Russian credit crunch had forced liquidation with hog numbers in this region down 10% in the last year.  We visited one of our customers who we 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 $25 - $30 per head range.  In perspective, Domestic Russian swine genetics have just under 2 inches of back fat (50mm).  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.  Our 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 don't 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

   We attended the Agrofarm conference in Moscow where we 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 program.  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 we have ever been to.  Canals like Venice, wide boulevards like Paris.  A hustle like New York.  Grand castles and buildings like no other. 

  Our host in St. Petersburg went to great lengths to show us all the visual highlights.  He said he realized 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 can't 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 we are with the Russians, the more we see 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 we will return to Moscow.  The international Livestock show VIV is underway.  We will report our observations.

Genesus Dominates Swine Management Services

2008 - 52 weeks Summary

Swine Management Services (SMS) of Fremont, Nebraska is the world's swine benchmarking service. SMS 2008 data was benchmarked on 585 farms with 1,175,053 females.

Genesus once again dominated results, 8 of top 10 farms were Genesus, 12 of the top 15 Genesus. 

2008 - 52 weeks

1,175,053 females

	SMS	GENESUS
No. of Farms	585	49
Top 10% Avg.	27.66	29.71
Average All	21.41	25.78

 

SMS Total 585 Farms  -  Genesus 8 of Top 10

SMS 52 weeks

RANKING		FARM	P/S/Y
GENESUS	SMS
1	1	Camrose	30.80
2	3	Riverview	29.82
3	4	Evergreen	29.54
4	5	Grand Colony	29.52
5	6	Woodland	29.49
6	7	Milltown	29.01
7	8	Fairhaven	28.95
8	9	New Haven South	28.95

 

All genetic companies are represented in this database of 1,175,053 females. The facts are indisputable; Genesus is the number one female. If you are not satisfied with your results, you should consider Genesus.