ASF and Russian Pork Market
According to Russia's Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor), as of April 6, 2021, 21 outbreaks of African swine fever (ASF) are active in Russia. The disease is most common in the Tver region (at six enterprises) and in Kursk (at five enterprises). There are also outbreaks in Kaluga, Vladimir, Magadan, Tambov and Yaroslavl regions, in Primorsky and Trans-Baikal Territories and in the Komi Republic.
In Russia, according to the Rosselkhoznadzor, the outbreaks of ASF have been recorded since 2007. In total, from 2007 to 2021, 1128 outbreaks of African swine fever among domestic pigs and 710 among wild boars were registered in Russia. Most of the cases where foundm took place in 2016 which totaled 222 (domestic) and 76 (wild boar) respectively.
For humans, this disease is not of any problemsafe, but the destruction of the pig population entails economic damage. In 2017, the Rosselkhoznadzor calculated that over the recent 9 years, Russian agricultural producers have lost about 75 billion rubles from ASF.
Farmers who suffered losses in 2020 due to African swine fever will be able to extend the maturity of loans with state support. The decree on this was signed by Prime Minister Mikhail Mishustin on April 3, according to the government's website. The extension of the loan maturity applies to concessional investment loans at a rate of up to 5%, previously issued to cover costs associated with construction, reconstruction of production facilities or their modernization[SH1] [LO2] , as well as loans for the purchase of machinery and equipment. Earlier, a similar decision was made in terms of loans issued for the development of the livestock subsector. The government believes that in this way agricultural companies that have faced difficulties due to the spread of the disease will be able to complete investment projects and ensure uninterrupted food supplies to the market.
Biosecurity and backyard farms
The number of outbreaks in personal subsidiaries and peasant farms in 2020 increased by more than one and a half times compared to 2019, as reported by the Federal Center for Animal Health, subordinated to Rosselkhoznadzor. Such farms have a low level of biosecurity. At the same time, in large agricultural enterprises that have an animal-health status of at least 3 compartments, which is a satisfactory level of biosecurity, the number of registered cases of ASF is decreasing. In 2020, eight agricultural enterprises reported unfavorable conditions for this disease. For comparison: in 2012 there were 21 such enterprises.
Significant role in the spread of African swine fever in Russia is played by small pig farms (private household plots, peasant farms, individual entrepreneurs) engaged in keeping and trading animals, pig products, and feed. The main threat of the introduction of infection into safe areas remains the illegal transport of feed, infected animals and contaminated livestock products with a weak biosecurity system for pig farms.
No effective measures
According to the experts, effective measures have not yet been implemented in the country to encourage small owners to establish a reliable biosafety system for their farms. Animal owners are pragmatic in their assessment of the risk of introducing ASF into their farms. They know that the infection is not dangerous for themselves and the other species they keep, and they will be compensated for pigs alienated during an ASF outbreak. Therefore, under the current circumstances, the significant costs required to create and comply with biosafety measures are not economically profitable for them.
The main party interested in eradicating ASF in Russia remains large pork producers, whose production development is hindered by existing cross-border barriers due to the country's unfortunate ASF situation. However, it is impossible to solve the problem only by their forces, without involving all small producers in the process.
Production forecast downgraded
According to the forecast of the National Union of Pig Breeders, outbreaks of African swine fever in Russia will lead to a noticeable reduction in supply in this market. In 2021, the production of pork may grow by 175-180 thousand tons instead of the previously expected 250-260 thousand tons. However, the market[SH1] [LO2] participants are not yet planning to increase production this year due to the change in the forecast.
The head of the National Meat Association warns that the threat of a further decrease in the forecast for pork production remains in case of new outbreaks of ASF. According to him, the situation with this virus in Russia is still "extremely unstable." The pig-breeding companies themselves practically cannot influence the spread of ASF.
The situation looks especially alarming due to the fall in poultry meat production and rising prices in this market. According to Russian Statistics Committee, in January-February, the production of poultry meat decreased by 6.2% year-on-year, including due to the spread of avian influenza. The estimates of the Center for Industry Expertise of the Russian Agricultural Bank showed, that, as of March 21, a broiler carcass was 30% more expensive than a year earlier. Based on the situation of of rising prices, large poultry meat producers agreed to temporarily not increase the cost of products.
Impact on prices
Against this background, the National Union of Pig Breeders also changed the price forecast. Earlier, due to over-saturation of supply in the pork market, the average annual wholesale prices were expected to decrease by 4-5%. Now the Union predicts that the cost will remain at the level of 2020, i.e. about 100 rubles per 1 kg in live weight. Last year, due to the rise in prices for compound feed, the cost of pork production increased by 15–20%, which, with a decrease in wholesale prices by 4–5%, would threaten enterprises with zero profitability. Experts also believe that pork may rise in price if it is not possible to stabilize production and prices in poultry market. But the experts note that the fall in the cost of wheat and positive forecasts for the yield allow poultry farmers to count on a reduction in the cost of feed, which will lead to a decrease in prices for their products.
The National Union of Pig Breeders keeps the forecast for pork exports in 2021 at the level of the last year - about 200 thousand tons. The experts point out that the increase in supplies is hampered by the lack of access to China, as well as high competition in the markets of Hong Kong and Vietnam. Exports may even drop slightly. It may be necessary to compete with Germany, where outbreaks of ASF (only wild boar) have also been recorded, which means that German pig producers may try to squeeze Russia out of the markets of Vietnam and Hong Kong.