November 12, 2019
Cherkizovo in talks with Chinese companies to jointly supply pork to China
Cherkizovo Group PJSC is in talks with several Chinese companies to jointly supply pork to China, as the Russian producer looks to expand in Asia and help alleviate a shortage in the world's biggest market, Bloomberg reported on November 11.
"Rebuilding pork production isn't easy," Cherkizovo CEO Sergey Mikhailov said in an interview this month. "Large companies in Russia, including ours, have dealt with outbreaks of the fever and understand how to fight it."
African swine fever has halved China's once 400 million-strong hog herd since 2018, and the country's imports of pork, beef and chicken have soared as domestic prices jumped. Talks to set up a joint venture pork producer and exporter either in Russia or China, which could hold five million to 10 million hogs, are at an early stage, Mikhailov said. He didn't disclose who potential partners may be.
Cheap farmland, animal feed and electricity in Russia means pork production costs are either lower than or comparable to the US and Brazil, Mikhailov said. Russia hasn't exported pork to China as it deals with its own outbreaks of the hog virus, though there have been talks about starting trade and China started imports of Russian poultry this year.
China's pig herd will probably take more than half a decade to recover from the disease, and meat imports can't make up the shortfall, Rabobank said in a report. The bank expects the virus to kill a quarter of the word's pigs.
Cherkizovo, Russia's second-biggest pork producer, is looking to expand internationally to boost sales of pork as well as chicken. The company's poultry sales to China will likely beat expectations and top US$100 million this year, Mikhailov said.
Russia was a big importer of food in previous decades, but has now become self-sufficient in poultry and pork and is looking for export markets.
"Russia is a new player in the meat market," Mikhailov said. "It's unusual for many people and different from what happened in past years. Before, everybody got used to us being one of the largest importers of meat."