Russian pig industry faces growth stagnation
After a decade of strong upward production dynamics, the Russian pig industry is expected to see only a marginal growth in the coming years, according to a fresh forecast from the Russian National Union of Pork Producers.
The industry association forecasted that Russian pork production will climb by only 3.3% in 2024 and slow further to 1.2% next year. In previous years, the growth pace varied between 5% and 10% per year. Pig farmers attribute the dynamics to a gradual saturation in the domestic market, where consumption seems to have hit the ceiling.
Mixed production forecast
In 2024, Russian pig farmers will manufacture 6.2 million tonnes of pork in live weight, 3.3% more than last year, the organisation calculated. Industrial farms keep ramping up their share in the total volume. This year, they will manufacture 5.8 million tonnes. This is 4.5% more than a year earlier. In the meantime, individual and backyard farms are dying out.
This year, individual farms will experience a 14% production drop to 30,000 tonnes, and backyard farms see a 10% decline to 390,000 tonnes.
Consumption, prices on the rise
The Russian annual pork consumption has reached a 30-year record of 31 kilograms per capita, which is a third higher compared with 2015. The growth in demand is accompanied by a price rise. Over the past year, the price increased by 20% to 25%.
Yuki Kovalev, chairman of the Russian Union of Pork Producers, recalled that pig farmers foresaw the saturation of the domestic pork market back in 2018. In response, he added, market players decided to constrain the further growth in production capacities.
Exports will be a game-changer
The industry association indicates that exports have yet to make a difference for the Russian industry. Kovalev estimated that during the first nine months of 2024, Russia boosted pork exports by 16% to 186,300 tonnes. However, in absolute figures, this growth is insufficient to justify the further rise in production capacities.
Margins
Over the past few years, the Russian pig industry has experienced margin changes, which could also contribute to the growth slowdown. Albina Koryagina, partner at consulting company NEO Center, calculated that the average margins in the industry nearly halved in 2022 but bounced back in 2023, reaching 25.9%.
