December 24, 2012

Russia may face unprofitability for pork output in 2013

Russia's pork output may become unprofitable in the first half of 2013, according to a joint marketing study conducted by the National Meat Association (NMA) and the Union of Pig Farmers (UPF).

According to a forecast the most important factors that will influence this trend, would be too expensive feed (growth of 50% during the last 4 months) and the rising import volume (by 6% in the second half of 2012), which leads to lower pork prices.

In the most optimistic scenario - there will be high prices for pork in the market and a moderate grain price growth with the net margin of pig farmers estimated to be about 2 - 10% in the first half of 2013.

The CEO of Russian pork producer, Rusagro, Maxim Basov, agreed with analysts' estimates, adding that it is also important to consider the interest payments on loans and depreciation, as they can also affect the margin levels. Previously, industrial pig farmers were the most profitable in Russia, with the EBITDA margin of public companies in the sector exceeding 40% in 2011.