July 27, 2012


Russia's pig production facing crisis due to high feed costs


Russia's pork production cost may rise by about 25% by the end of 2012, due to increasing feed prices.


Last week, Russian feed grain prices continued to rise, although the growth rates were lower than in the previous week, the executive director of 'Sovekon' Andrei Sizov, Jr said. If the growth trend continues in August with the same speed, it could spell disaster for the Russian pork market.

During the summer the average cost of feed grain in Russia increased by US$15 per tonne weekly - a record growth rate for the Russian market. As a result, since May of this year, according to various estimates, the cost of feed for pigs has increased by 15.7%, resulting in a significant reduction in profitability of producers nationwide.


The current situation in the feed grain market in Russia is considered critical - over the last week in the southern regions of the country, there was rain, this slowed down the rise in feed prices, but experts say that it will be only temporary reprieve.


Stabilisation of prices in the southern regions is temporary, said Sizov. "The worsening of the US's corn harvest prospects plus record stock prices for wheat and corn in Chicago can be considered an indication that the upward trend for global and Russian prices will continue," - he said. The ceiling value of domestic prices has not yet been reached, and this is obvious.


A further increase of 15% for pig feed by the end of the year could lead to disaster for the pig industry in Russia, resulting in a third of businesses finding themselves below the threshold of profitability which will led to bankruptcy, experts added.

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