pig production in · pdf filepig production in russia dr. yury kovalev, ... pigs reared per...

EPP CONGRESS 2012

Vilnius, Lithuania, M 30 J 1 2012

«Pig Production in the Baltic Region – Chances and Challenges»

May 30 – June 1, 2012

Pig Production in RussiaPig Production in Russia

Dr. Yury Kovalev,Director General of the National Union of Swine Breeders

Russia, MoscowE‐mail: nss info@mail ruE mail: [email protected]

National Union of Swine Breeders

Russia’s Pork Production Trends D i 1992 2005During 1992‐2005

Production of pork in low competitive Private back

Total pork production Industrial pork production low‐competitive Private back

yard production in carcass weight (th. tonnes)

in carcass weight (th. tonnes) in carcass weight (th. tonnes)

•For 15 years Russia’s total pork production has decreased almost 2 times

Industrial production share PSF share

For 15 years Russia s total pork production has decreased almost 2 times.•Industrial production has reduced fourfold, its share in the total output has dropped from 60% to28% .•Long degradation of the industry resulted in destruction of production assets as well as

Full‐scale modernization and recovery of the industry is impossible without 10‐15 year transition period even with all‐out support of the state.

technological, breeding , scientific potential and human resources .

National Union of Swine Breeders 2

Russia’s Basic Pork Production Indices Compared to the Countries with Developed Swine Breeding by the Beginning of 2005Developed Swine Breeding by the Beginning of 2005

RussiaIndex Unit of Measure

Europe,North America

Russia

Agricultural Enterprises Private Subsidiary Farming

Pigs reared per sow per year h d 27 18 14Pigs reared per sow per year head 27 18 14

Meat production per sow per year kg 2,190 1,400 1,082

Average daily gain of fatteners g 778 520 334

Fattening feed conversion rate kg 2 76 5 6 Up to 8Fattening feed conversion rate kg 2.76 5.6 Up to 8

Preslaughter period day 160 200 270

Slaughter meat yield % 79 69 57

Lean meat yield % 63 52 46‐48


Over $8 billion was

invested into the industry throughout 2006‐2011 within

the National Priority Project on Agricultural Sector Development (2006‐2007)

dand

the State Program of Agricultural Development (2008‐2012).

This allowed to put into operation and reconstruct more than

750 swine‐breeding facilities.

4National Union of Swine Breeders

Domestic Pork Production Under Current Conditions of State Support and Market ProtectionState Support and Market Protection

За период стабилизации (2005‐ 2011 гг.) прирост производства мяса свинины составил

58% (+886 тыс.т)


Industrial Pork Production Under Current Conditions of State Support and Market ProtectionState Support and Market Protection

h h h f d l d

Fourfold decrease in production

f

th. tonnes, carcass weight Share of industrial production

from 1992 to 2005 nearly wrecked industrial swine

breeding

assessment forecast forecast forecast forecast forecast

Industrial pork production increased more than three times In the next 7‐8 years industrial swine breeding

will grow more than twofold



(+993 th. t) from 2005 to 2011 will grow more than twofold

Production of Pork in P i t b k d d tiPrivate back yard production

Over four years the volumes d d b h d

th. tonnes, carcass weight Share of private back yard production

decreased by 126 thousand tonnesdue to the spread of ASF

During three years the volumes will decrease by 83 thousand tonnes due to uncompetitiveness of

private back yard production in comparison to modern industrial

producers and ASF controlproducers and ASF control measures

New reality – a drop in production of private subsidiary farming must be



New reality – a drop in production of private subsidiary farming must be compensated for by increase in industrial production

Technical and Technological Segmentation OfDomestic Pork Producers (share of pork production volume in agricultural enterprises).Domestic Pork Producers (share of pork production volume in agricultural enterprises).

5%9%

2005

37%

2015

44%

2010 год2010

86%57%

42%14%

44%

6%

НовыеNewСтарые

Модернизированные

OldModernized

Over 90% of industrial pork will be produced from the breeds of new genetics after 2012.


Russia’s Basic Pork Production Indices Compared to the Countries with Developed Swine Breeding in 2010Developed Swine Breeding in 2010

RussiaIndex Unit of Measure

Europe, North America

Russia

High‐efficiency Effective Low‐efficiency

Pi d h d 27 25 24 18Pigs reared per sow per year head 27 25 24 18

Meat production per sow per year kg 2,190 2,100 2,016 1,400

Average daily gain of fatteners g 778 760 680 520

Fattening feed conversion rate kg 2 76 3 3 6 5 6Fattening feed conversion rate kg 2.76 3 3.6 5.6

Preslaughter period day 160 168 175 200

Slaughter meat yield % 79 75 73 69

Lean meat yield % 63 60 58 52y % 63 60 58 52


Intra‐industry Structure of Swine‐breeding Sector CompetitivenessSwine breeding Sector Competitiveness

80Средняя рыночная ценаУбыточная

деятельностьЦена на

Цена на животных

Цена на животных

современнойAT

Average market price Price for animals of transitional

Price for animals of modern

iPrice for

Unprofitable ti it

50

60

70

Возможность ведения

деятельность

177‐ 3

67животных

старой генетикипереходной генетики

современной генетики

e weight, ex VA transitional

genetics geneticsanimals of old genetics

Opportunity to run

activity

30

40 Возможность ведения простого воспроизводства

ведения расширенного

воспроизводства

стои

мость

естоим

ость

стои

мость

505559

on to

1 kg of live

Opportunity to run reproduction on a simple scale

reproduction on an expanded scale

ction cost

ction cost

tion cost

0

10

20

Себе

Себ е

Себе

с

bles in

con

versio

Prod

uc

Prod

uc

Prod

uct

0Низкоэффективные хозяйства Эффективные хозяйства Высокоэффективные хозяйства

(Старые комплексы) (Модернизированные комплексы) (Новые комплексы)

Level of enterprise efficiencyAverage profitability

Interest in total number of

Rub

Low‐efficiency enterprises (old complexes)

Effective enterprises (modernized complexes)

High‐efficiency enterprises (new complexes)

Level of enterprise efficiency enterprisesWithout investment component With investment component

High‐efficiency enterprises 25% 3% 48%

Effective enterprises 10% 3% 42%


p

Ineffective enterprises ‐4% ‐4% 10%

2009‐2020 Rating of Russia’s Regions on Annual Pork Production Gain in Enterprises of All Categories In 2009 2020 th tonnes live weightEnterprises of All Categories In 2009‐2020, th. tonnes, live weight

70,1BELGOROD REGION 70,1

5,6

13,8

4 0

420

286

249

BELGOROD REGION

VORONEZH REGION

TAMBOV REGION

4,0

0,3

8,6

135

94

81

KURSK REGION

PSKOV REGION

REPUBLIC OF TATARSTAN

14,4

10,2

3,7

73

71

68

LIPETSK REGION

VOLGOGRAD REGION

CHELYABINSK REGION

0,0

3,5

‐43,4

62

53

43

ALTAI TERRITORY

ORENBURG REGION

ROSTOV REGION2010 to 2009

0,4

13,3

5,3

43

42

41

31

NOVGOROD REGION

ORLOV REGION

KEMEROVO REGION

2020 to 2010


31KEMEROVO REGION

Rating of Large Industrial Pork Producing Enterprises in 2011

AGHOLDING MIRATORG;145, 8%

OOO GK AGRO‐BELOGORYE; 106; 6%

CHERKIZOVO GROUP; 101; 5%

OOO PRODO MANAGEMENT; 72; 4%

15 largest companies made only 44% of the market in 2011 that

RUSAGRO GROUP; 63; 3%

ZAO AGRARNAYA GRUPPA 61; 3%

indicates its high fragmentation.

Market consolidation will take place by 2015 ZAO EXIMA; 36; 2%

OOO KOPITANIYA; 60; 3%

KOMOS GROUP; 39; 2%

will take place by 2015 and the share of 15

largest companies will grow to 65%.

The rest; 1,056; 56%

ZAO EXIMA; 36; 2%

BEZRK ‐ BELGRANKORM HOLDING

OOO APK DON; 34; 2%

OSTANKINO GROUP; 30; 2%BEZRK BELGRANKORM HOLDING23; 1%

ZAO TALINA; 17; 1%

OOO UK RAPT; 17; 1%


th. tonnes, live weightOOO UK BVK; 16; 1%

The State and Prospects for Slaughter and First Dressing Capacity ExpansionCapacity Expansion

25 illi l h i d i

2010 About 36.6 million pigs will be

2015 25 million slaughter pigs reared in Russia in all types of enterprises

5 million – slaughter in

About 36.6 million pigs will be sent for slaughter

( +11.6 million. to 2010)

1.3 million – slaughter in d b k dcondition back yard

production (20%)

5 million – slaughter at

condition back yard production (3.6%)

2.0 million – slaughter at outdated plants beyond

Within 5 years the outdated plants beyond modernization (20%)

12 million – slaughter at

outdated plants beyond modernization (5.5%)

10 million – slaughter at plants requiring deep

amount of animals

d t dplants requiring deep modernization both in the

sphere of veterinary sanitary regulations and deep

dressing (48%)

plants requiring deep modernization (27.3%) processed at modern

plants will grow from 2.9 million – slaughter at completely modernized dressing (48%)

3 million – slaughter at modern plants (12%)

12% to 63 – 65%.20.4 million – slaughter at newly‐built slaughter and d d i l t

p yplants (7.9%)


modern plants (12%) advanced processing plants 55.7%)

FORECAST OF RUSSIA’S MEAT MARKET DEVELOPMENT up to 2020 (thousand tonnes)up to 2020 (thousand tonnes)

The share of lamb in total meat consumptionThe share of pork in total meat consumption

The share of beef in total meat consumptionThe share of poultry in total meat consumption

Forecast


The share of pork in total meat consumptionTotal Russia’s meat consumption

p y pPer capita meat consumption, kg per year

FORECAST OF RUSSIA’S MEAT MARKET DEVELOPMENT 2020 ( h d i h )up to 2020 (thosand tonnes, carcass weight)

+1 million

+ 1 млн. тонн+1 million tonnes

+1 million tonnes

+ 1 млн. тоннtonnes

Poultry consumption

Pork consumption

Beef consumption


Forecast

Distribution Channels of Additional Gain In Pork Productionin Industrial Swine Breeding During 2012‐2020g g

th. tonnes , carcass weight

Consumption growth1 million tonnes

I t d ti

Gain in production in

l

Gain in industrial pork production

Import reduction0,4 million tonnes

Drop in private back yard production

new complexes 1.8 million tonnesp

0,3 million tonnes

Export launch0.1 ÷ 0.2 million tonnes

1.95 million tonnes

Compensation fordrop in production in

ld lold complexes

0.15 million tonnes


Национальный Союз свиноводов 17

Национальный Союз свиноводов 18

Import Structure of Pork, Back Fat and Byproductsp , ypBack fat and byproducts are dropped out of pork products import volume control. Their amount is comparable with annual pork quota and this sharply decreases the q p y

efficiency of this control.


CONSEQUENCES OF RUSSIA’S WTO JOININGCONSEQUENCES OF RUSSIA S WTO JOININGON DECLARED CONDITIONS AND

MEASURES TO BE TAKEN TO MINIMIZE NEGATIVEMEASURES TO BE TAKEN TO MINIMIZE NEGATIVE EFFECTS ON SWINE‐BREEDING DEVELOPMENT


Basic Russia’s Concessions Concerning Meat Industry When Joining WTOWhen Joining WTO

Up to date After WTO joining

Total quota for 2012, thousand tonnes 430 430

I d15%

b l h 0%Intra‐quota customs duty but not less than0.25 €/kg

0%

Over‐quota customs duty75%

but not less than1 5 €/кг

65% 1,5 €/кг

Duty on live pigs for slaughter (out of quota basis)40%

but not less than0.5 €/kg

5%

Duty on pork byproducts 25%

but not less than0.25 €/kg

15%

Lowest price for ‘high quality’ BEEF (out of quota basis liable to Increased from с 3 to 8 €/kg The price criteria is not applied to Lowest price for high‐quality BEEF (out of quota basis, liable to reduced 15% rate)

Increased from с 3 to 8 €/kg USA, Canada and Argentine and to the rest of the countries in future.

Over 500,000 tonnes of pork products and their derivatives (fat b k b d t li i d t ) i t i l d d i t b i

Protected by increased t d ti f 2010

Duties are drawn back to 2006 l lback, byproducts, live pigs and etc.) is not included in quota basis. customs duties from 2010 2006 level


Reduction of Import Customs After Russia’s WTO JoiningWTO Joining

015Свинина внутри квотIntra‐quota pork

0

5

0

5,4

40

Информационные технологии

Живые свиньи

Свинина внутри квотIntra quota pork

Live pigs

Information technology

6 2

8

0

8,4

13,4

Электротехническое оборудование

Лес и бумага

Информационные технологииInformation technology

Wood and paper

Electrical facilities

5 2

12

6,2

6

15,5

Химические вещества

Автомобили

Электротехническое оборудованиеElectrical facilities

Vehicles

Chemicals

10

7,1

5,2

15

9

Зерновые

Растительные масла, семена …

Химические веществаChemicals

Vegetable oils, seeds...

Grain crops

11 2

14,9

10

15,6

19,8

Среднее по сельхоз продукции

Молочные продукты

Зерновые

before after

Grain crops

Dairy products

Average over agricultural products

22

11,2Среднее по сельхоз продукцииAverage over agricultural products

2007‐2011 Live Pigs Import and 2012‐2015 Forecast(Customs commodity codes 0103 91, 0103 92), in terms of carcass weight, thousand tonnes

Forecast, all countriesGermanyGermanyEastland (Latvia, Lithuania, Estonia)Others

Live pig production in prospective exporting countriesprospective exporting countries

Germany – 47 million headsPoland – 20 million headsEU in whole – 260 million heads

Source: Federal Customs Service of Russia and National Union of Swine Breeders


assessment forecast forecast forecast forecast

Combined Influence of Such Factors as:1. Reduction of customs duties on live pigs from 40% to 5%

2. Lack of quota and country restrictions on live pigs import

3. Reduction of customs duties on pork import within quotas from 15% to 0%, over quotas from 75% to 65% (from 56,25% to 48,75% including preferences)

4. Lack of quota and country restrictions on back fat and byproducts import (total annual volume is about 500,000 tonnes), as well as reduction of duties on byproducts from 25% to 15 %.

will lead to reduction of prices for live pigs at least by 10 RUB/kg.Minimum annual losses of industrial pig production will make up RUB20Minimum annual losses of industrial pig production will make up RUB20

billion (about $700 million).(2000 thousand tonnes of live weight (forecast from 2012) х 10 RUB/kg = RUB20 billion)(2000 thousand tonnes of live weight (forecast from 2012) х 10 RUB/kg RUB20 billion)


• Under current economic conditions after Russia’s WTO joining on declared terms the enterprises of all categories with investment component taken into account (the necessity to return the principal)find themselves in a loss‐making zone.

• It will increase payback period of investment projects on construction of new and complete modernization of operating facilities from 8 to more than 12 years (by 1 5‐2 times depending on

• Due to increased payback periods banks and companies will be forced to revise current business plans

modernization of operating facilities from 8 to more than 12 years (by 1.5 2 times depending on the enterprise category).

plans.• The probability to start new investment projects after 2013 (when the launched projects will be completed) is dramatically decreasing.

• Starting from 2014 under such development scenario the Russia’s pig industry will suffer cutback or stagnation of pork production caused by insufficient introduction of new projects with simultaneous production loss in old enterprises as well as in private back yard production because f l i iof low competitiveness.

As a consequence, there is new risk of high import dependence as the share of import may again approach 35‐45% of total consumption volume.


Russia’s Pork Production Forecast up to 2020 Under Declared Conditions of Russia’s WTO Joining (thousand tonnes)g ( )

Without Adoption of Countervailing measures.

Russia’s pork consumption, thousand tonnes

Total pork production in carcass weight FORMER NSS FORECAST thousand tonnes*

Доля импорта в объеме потребления

Total pork production in carcass weight, FORMER NSS FORECAST, thousand tonnes*

Total pork production in carcass weight, AFTER RUSSIA’S WTO JOINING , thousand tonnes*

Import share

•Investment attractiveness of the industry will drastically go down after Russia’s WTO joining on declared terms! • The share of import in pork consumption after Russia’s WTO joining will be increased from 20% in 2011 to 32% in 2015 and 45% in 2020.•Cutback or stagnation of pork production in Russia starting from 2014 will be caused by insufficient introduction of new projects with


simultaneous production loss in old agricultural enterprises as well as in private back yard production because of low competitiveness.

I. The adoption of countervailing measures by the Government of the Russian Federation to mitigate risks when joining WTO.

II. The use of legitimate methods under WTO gto protect domestic market:a) Special safeguard measures

(countervailing duties)) Measures as part of the agreement on sanitary

The whole set and synergy of all these factors provide a reasonable expectation of saving the investment

a) Measures as part of the agreement on sanitary and phytosanitary measures, SPS

b) Measures as part of the agreement on technical barriers, TB (Technical regulations)

saving the investment attractiveness of the industry after Russia’s WTO joining.III. Activation of swine‐breeding business

community towards cost reduction and ydeeper pork processing.

VI. Production loss in private back yard p yproduction together with simultaneous increase of pork consumption – new opportunities for growth of modern i d t i l d ti


industrial production.

Thanks For Your Time!


pig production in · pdf filepig production in russia dr. yury kovalev, ... pigs reared per...

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