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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
National Union of Swine Breeders 3
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)
National Union of Swine Breeders 5
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
assessment forecast forecast forecast forecast forecast
National Union of Swine Breeders 6
(+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
assessment forecast forecast forecast forecast forecast
National Union of Swine Breeders 7
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.
National Union of Swine Breeders 8
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
National Union of Swine Breeders 9
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%
National Union of Swine Breeders 10
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
National Union of Swine Breeders 11
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%
National Union of Swine Breeders 12
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%)
National Union of Swine Breeders 13
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
National Union of Swine Breeders 14
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
National Union of Swine Breeders 15
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
16National Union of Swine Breeders
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.
National Union of Swine Breeders 19
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
National Union of Swine Breeders 20
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
21National Union of Swine Breeders
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
23National 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)
24National Union of Swine Breeders
• 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.
National Union of Swine Breeders 25
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
National Union of Swine Breeders 26
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
National Union of Swine Breeders 27
industrial production.
Thanks For Your Time!
National Union of Swine Breeders 28