Covid-19: RusAgro suspends Chinese pig investments

Maxim Basov (left) at the signing of an investment agreement with a regional government in Eastern Russia. Photo: Russian Far East Development Ministry

Russian pork producer RusAgro had to postpone negotiations about a pig project in China due to the recent coronavirus. That was shared by the company’s general director Maxim Basov at a press conference.

Basov said that RusAgro evacuated its team from China due to Coronavirus disease 2019 (Covid-19), and as a result there is a lot of delay and uncertainty. He added that the company is following the Chinese situation with both African Swine Fever (ASF) and Covid-19 and is waiting to see what the Chinese authorities’ policy will look like with regard to new construction projects.

No progress in the negotiations

Over the past 3 months there has been no progress in the negotiations as business activities in China have been at low levels, Basov said. RusAgro already established 2 companies in China, called Ros Agro Trading (managing all trade operations in China) and Ros Agro China (building pig farms).

Negotiations with local banks are ongoing and the final decision on their participation is yet to be taken, Basov said, adding that the long-term goal is to make China the main sales market for RusAgro. The company expects to sell 2 times more pork in China than it would be selling in Russia.

RusAgro is Russia’s 4^th largest pork producer. In 2019, the company sold 202,000 tonnes in Russia, a growth of 41% compared to the same period in the previous year. RusAgro is selling both live pigs as well as pork.

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1 million tonnes of pork in foreseeable future

Building pig farms in China is only one element of the company’s plans to expand its presence on the Chinese market.

The company is already exporting sunflower and soybean oil, as well as corn and soybeans to China. In addition, it aims to establish a major pork cluster with an annual designed production capacity of 1 million tonnes of pork per year, partly located in China, Basov explained earlier in 2019.

According to the Global Times, a publication published in China and overseen by China, RusAgro achieved a preliminary agreement with the Chinese authorities to invest around US$ 5 billion into establishing pork production capacities.

In the meantime, China’s approval for Russia to export pork is still pending. In 2019, the Russian Union of Pork Producers stated that the Chinese agreed to allow pork import from the Russian regions which are free from ASF. However, so far Russian pork remains prohibited at Chinese markets.