Higher feed costs are eroding profits for the Russian pig industry
Higher feed prices have reduced profitability for Russian pig breeders and prices per kilo in liveweight, currently at 103 Roubles ($1.40), have been in the range of 100 to 110 Roubles for months now. With no increase in prices and new farms being built rapidly in the last 12 months the Russian pig industry is heading for a darker area, according to the latest report from Simon Grey, General Manager Russia, CIS and Europe, Genesus Inc. "A large proportion of production is in the hands of fully integrated companies. These produce a lot, if not all of their own major feed raw materials. This is in grain stores and in principle there at cost of production for the holding company. From a cash point of view, these companies can operate with lower pig price. Farms that buy their feed do not have this advantage. At the same time, new farms continue to be built and stocked. Russia continues its march to be a next exporter of pig meat. This will inevitably mean lower pig prices," he commented.
Ironically as it sounds, the only relief seen in this market was a number of ASF outbreaks that reduced the stocks in several large farms. In November and December, nearly 500,000 pigs were destroyed in Russia, due to ASF and that maintained the prices steady. The number accounts for 3% of the swine population in the country, according to official data.
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