New ecological requirements with regard to chemical content of wastewater could negatively impact the meat industry in Russia, including pig farms.
That message was shared in an open letter, written by a group of agricultural associations and addressed to the Russian deputy prime minister Alexey Gordeev.
The petition was signed by e.g. the Russian National Meat Association, the National Union of Dairy Producers, the Union of Soft Drinks and Mineral Water Producers and various other organisations.
Wastewater in Russia may have to comply with much stricter standards soon. Photo: Henk Riswick
Reducing the presence of chemicals in wastewater
The Russian government seeks to tighten ecological standards to reduce the presence of various chemicals in wastewater as from 1 January 2019. This includes phosphorus, nitrogen and various other substances that are often used in pig feeding and can become a part of waste.
The new requirements are much stricter compared to the 2018 standards. If adopted, they would compel most farms in the country to install advanced filtration systems, which are rather expensive, according to the open letter.
The need of additional investments could undermine the companies’ profitability, according to the letter. Additional negative impact on the business may come from fines for violation of the new standards, which are rather huge.
Record-breaking situation for pig farmers
In 2018, Russian pig farmers generated a record-breaking revenue, research by financial advisory agency Deloitte showed. In total, the industry generated 121 billion roubles (about US$ 2 billion) this year, 80% up as compared to 2017.
The average profitability in the industry also grew, from 18% in 2017 to 29% in 2018 due to a strong harvest and price rises on the domestic market, after the Russian veterinary watchdog Rosselkhoznadzor banned pork imports from Brazil.
At an industry meeting in Moscow, Yuri Kovalev, chairman of the Russian Union of Pork Producers, said that in 2019, the market conditions may not be as favourable for Russia’s pig farmers as in 2018.
Factors affecting profitability
It is very likely that the 2019 arable harvest will not be as high as 2018. In addition, he said, Brazil has been authorised to resume exporting pork to Russia, Mr Kovalev said. The new ecological requirements may also become one of the factors affecting profitability.
The industry operates in market conditions, which means that nobody can guarantee high profitability to the pig farmers, Mr Kovalev emphasised.