High feed costs could lead to crisis in Russia’s pig production

//26 Jul 2012
The cost of pork production could increase by at least 25% by the end of the year due to rising feed prices according to Russia’s analytical centre ‘Sovekon’.
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 450 rubles per tonne (US$ 15) per week - 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 repreve.

Stabilization of prices in the southern regions is temporary, said Sizov. "The continuing 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.