Growth of the Russian pig industry, which has been booming since 2006, is forecast to slow down this year.
Feed prices are the main factor driving out smaller producers from the business. In mid-2007, they rose nearly twice the level a year previously.
It is feared that many small farmers, who account for half of the production output, may not be able to manage with this increase and will be unable to transfer the extra costs on to the consumers and will thus abandon their businesses.
According to German consumer agency, ZMP, after a 10% production increase in 2007, growth in 2008 is estimated to fall to roughly 5 – 6%. To some extent the lost output will be made up by bigger producers and the increased use of modern, western technology.
The Russian meat market is unusual in comparison to the rest of Europe, as the price of pigmeat is higher than that of beef.
The Russian state is very active in supporting the meat production industry. There is a drive to improve the quality of slaughter pigs, so that meat-rich animals low in fat, better able to convert feed, are produced.
In addition, Russia needs to catch up with its western European counterparts with regards to the ratio of feed to growth. At present, 4kg of feed are required to generate 1kg growth whereas in the rest of Europe, the ratio is a modest 3kg to 1kg.
Grains also account for 90%of feed input. In the EU, they make up 50%, which puts Russia at a disadvantage.
Investment yielding returns
Under the national agricultural promotion programme, 114 new meat and slaughter concerns have been established some involving foreign investors.
Current pigmeat production of 1.9 million tonnes could grow to 2.4 million tonnes by 2009, according to Russian experts and even 3.5 million tonnes by 2012.
However, imports are still needed, even as consumption of pigmeat products is growing at a fast rate.
Russia is annually importing 350,000 to 400.000 pigs mainly from Poland, Lithuania, Estonia, Germany Ireland and Denmark.
Brazil is a leading exporter, its prices competitive, especially due to exchange rates. In 2007 alone, 280,000 tonnes of meat were exported from Brazil to Russia.