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RusAgro resumes talks on building pig farms in China

Russian agricultural holding RusAgro has revived a $ 5-billion worth project of building several big pig farms in China’s Qingdao province, put on halt last year due to the Covid-19 pandemic.

The negotiations on the project are expected to be resumed with Chinese partners as soon as some improvements with the coronavirus pandemic are seen, Maxim Basov, general director of RusAgro, outlined, speaking during an online conference in May.

Currently, the RusAgro’s emergency on the Chinese market entirely depends on local authorities. RusAgro’s products enjoy strong popularity among foreign customers, but not all key markets import products from Russia, Basov said.

RusAgro is very interested in building swine farms in China. - Photo: Vincent ter Beek
RusAgro is very interested in building swine farms in China. - Photo: Vincent ter Beek

Russia is not allowed to export pork to China, despite all efforts the Russian authorities put into solving this issue during the past few years. Local experts believe that chances China would open its market for Russian pork turned to be extremely low after African Swine Fever (ASF) was registered in the Russian Far East in 2019.

Aiming at new pig production targets in China

Last year Basov said that the long-term goal was to make China the primary sales market for RusAgro. The company expected to sell 2 times more pork in China than it would be selling in Russia.

Rusagro has production capacities for 308,000 tonnes of pork in live weight. The company earlier unveiled plans to boost this figure to 1 million tonnes, taking advantage of sales at foreign markets.

Becoming a global pork player

Yuri Kovalev, general director of the Russian Union of Pork Producers (RUPP), told the local magazine Agroinvestor that RusAgro had everything it takes to turn this project around.

Pig farming in China is developing fast after the ASF epidemic, changing its shape as big farms replace small-scale family businesses. This is the main reason China has become an attractive market for RusAgro, Kovalev said.

The Chinese market is giant, and the potential for investments in the pig industry there is vast, Kovalev said, adding that so far, RusAgro has been primarily investing in Russia. Still, the company is so successful, it could afford to become a global player.

RusAgro: Solid performance in early 2021

RusAgro indeed reported on solid financial performance in the 1st quarter of 2021, with all key indicators have been seen improving. In the 1st quarter of 2021, RusAgro’s net profit reached 6.5 billion roubles (US$ 900 million), compared to 3.5 billion rubles (US$ 400 million) during the same period last year.

The group’s revenue reached 49.9 billion roubles ($ 650 million), 52% up on year-to-year comparison. Positive dynamics of financial performance were seen not only in the meat sector but also in the grain and sugar production niches.