Simon Grey, General Manager Russia, CIS and Europe, Genesus Inc.
Pig price is Russia is 103 Roubles per live kg ($1.58). Half carcass price is 151 Roubles per kg ($2.32). In Russia carcass is head off, so killing out % in the 74% region. This means slaughter plants selling ½ carcass have a 1092 margin ($16.78) over live pig purchase price. Russian pig industry continues to be very profitable.
ASF and Russia
At this point there is no sign of increased price due to situation in China. As Russia is a country with ASF, China will not buy pigmeat from Russia. Not all of Russia has had ASF. Russia as a country nearly 4 times larger in land area than the entire EU. In Europe it is only countries that have ASF that can’t export. There are counties in the EU with less land area than some Russian Oblasts (States). Seems logical regionalise ASF in Russia and allow regions free of ASF to export. For sure China and South East Asia is going to need pork over the coming years. Seems market forces will overcome the political and veterinary issues.
Our information is China is already considering importing breeding stock from Russia. Genesus has 6,000 High Health sows in Nucleus in Russia today that are part of Genesus Global Nucleus. Genesus for the past few years has been the number one exporter of breeding stock to China. The Chinese like the productivity, robustness and ease of management of Genesus pigs. If an agreement is made with Russia Genesus is well placed. The volume of breeding stock that will be required to restock farms in China is unbelievable.
Genesus Seminar in Russia
Back to the Russian market. Two weeks ago Genesus held its annual seminar jointly with AgroEco. The focus of this seminar was maximising profitability from farm to plate. Russia has in place GOST standards. These are standards for carcass classification and standards on how to cut up carcass into saleable parts. These standards are very old and have their roots from Soviet times.
For carcass classification category 1 pigs are up to 2cm backfat, measured between 6th and 7th rib mid back. Category 3 is up to 3 cm and category 3 is over 3cm. One of the themes was achieving heaver slaughter weights of 130kg and over to minimise cost of production and increase income.
The negative comments from this was that the pigs will be fatter and we will get penalised for category 3 pigs. Interestingly the GOST standards are just that, standards. There are no penalties in law for not following them. Also more interestingly was the variation in discount for category 3 pigs which ranged from 0 Roubles to 8 Roubles per kg!
The discount is more to do with the ability of the people marketing the pigs than any real lower value in the carcass. Whenever I calculate the value of heavier pigs, there would need to be a discount of 14 Roubles/kg between 115kg and 135kg for there to be no benefit in producing heavier pigs.
As part of the seminar we organised a live demonstration by Master Butcher Mike Owen, who showed the delegates how good butchery techniques can add considerable value at retail. Here again in Russia there is GOST standards for butchery. Many companies also still follow this. The photo below shows a typical meat display counter with the pig butchered following GOST
Mike showed how to add value by increasing the proportion of highest value cuts, neck in Russia with good butchery. He also showed some new techniques that got good quality port steaks from the leg and even cuts from the leg that look the same as neck.
He showed also how to take a cut from the shoulder that looked exactly like ham (back leg). Lastly he showed the value of a good retail display to encourage people to buy more pigmeat and even pay more for it.
Last piece of the supply chain
As pig farmers, to be profitable and grow our business we need people to eat more pig meat and to pay more for it. We often do not realise how important the last piece of the supply chain is in realising our goals. We can have the best genetics, best health, best nutrition and best management. If people do not want to buy the end product it makes no difference
This post was written by Genesus