Pork consumption peaks in recent Russian history

The consumption of pork by Russians in 2020 reached 27 kg per person, which was the highest result in the history of modern Russia. This is stated in the report available to RBC, prepared by the Center for Industry Expertise of the Russian Agricultural Bank. According to estimates, last year pork consumption reached 4.08 million tons, which is 4% more than in 2019 when consumption per person averaged 26.6 kg, in 2018 it totaled 25.5 kg.

The increased consumption of pork is also confirmed by the data of the Rusagro group, the third largest producer of this type of meat. The company's annual report gives an even slightly higher figure - an average of 28 kg per person. Yuri Kovalev, general director of the National Union of Pig Breeders, agrees with the assessment of Rosselkhozbank analysts. According to him, pork has become the only meat category where consumption has increased in 2020. In 2020, a record figure for pork consumption was reached, says a spokesman for the Ministry of Agriculture.


How popular is pork?

Pork is in the second place among the meat consumed by Russians. Its share in total consumption is 36%, notes the Center for Industry Expertise of the Russian Agricultural Bank. Poultry traditionally leads in the category. A Russian eats in average 34 kg per year, accounting for 44% of all consumption. Meat is one of the most important food categories, accounting for about 14% of all food expenses, says the research company GfK, which tracks the daily purchases of more than 20 thousand families throughout Russia.

Why is pork consumption on the rise?

The increase in consumption was helped by the expansion of production. In 2020, the production of pork for slaughter in live weight increased by almost 9%, to 5.5 million tons, according to the Center for Industry Expertise of the Russian Agricultural Bank. Analysts draw attention to the fact that supply exceeds demand: the target set by the Food Security Doctrine for self-sufficiency in meat as 85% for pork is not just achieved, but overfulfilled and reached 110%.

Pork production was increased mainly by large industrial players: they provided 3.8 million tons in 2020, which is 11% more than a year earlier. In particular, the leaders including Miratorg, Rusagro, Agropromkomplektatsiya and the Velikie Luki pig-breeding complex  together produced 200 thousand tons more than in 2019.


Pork demand is 'covid-surprise'

Peasant farms and personal subsidiary plots, on the contrary, are reducing pork production: in 2020, they produced products by 5% less than in 2019. As a result of the increased domestic supply of pork, the average market price for live pigs in 2020 decreased by 3% and amounted to 87.9 rubles per 1 kg, excluding VAT. Pork demand skyrocketed in May 2020, said Kovalev of the National Union of Pig Producers. The expert calls this a "covid surprise" and connects, in particular, with the lack of travel abroad and the restriction of domestic tourism: part of the population did not spend money on vacations, cut spending on clothes and some other expenses. In addition, the weather was good from May to October 2020, which traditionally leads to an increase in the demand for pork. Meat was one of the categories of food that was consumed consistently during the period of restrictions related to the pandemic, the GfK notes. In the first half of the year, consumers were actively switching to more affordable types of proteins like chicken, pork, turkey and processed meat from products such as beef, lamb, fish and seafood. According to the results of the whole year, the greatest interest among buyers was in processed meat products, pork and turkey. Chicken did not make it to the list of preferences at the end of the year which is due to an increase in the selling prices for this product caused by the bird flu epidemic at the end of 2020 and, as a result, a decrease in livestock.

Retail prices

In the first half of the year, pork prices were 10% lower than in the same period of 2019. In the second half of the year they increased slightly against the background of high demand, but remained at the level of previous year and pork was generally more affordable than other types of meat. Against the background of an increase in production volumes in January-June 2020, the selling and retail prices for pork then fell by more than 10%, the Ministry of Agriculture also notes.

Average retail price change for meat products in 2020, per 1 kg
Type of product Price change Changed price, Rub
Pork boneless -1,5% 358,3
Pork on bone -1,2% 267
Chicken -1,5% 143
Turkey -0,3% 373,7
Beef on bones +2% 345,9
Beef boneless +1,6% 490

However in 2021 pork becomes more expensive, although not as significantly as chicken: pork on bone has risen in price in March this year compared to the same month of 2020 by 6.4%, boneless - by 4%, while chicken - immediately by 17.3%.

In retail, pork prices have been practically stable for five years, the growth this year is within inflation. The chains are reluctant to increase prices, and the purchasing power of the population also restrains them. Wholesale prices this year are holding at the level of the fourth quarter of 2020, although they usually fall in the spring. Now, according to the expert, they are affected by the continuing restriction of tourism, as well as the growth in demand for pork from meat processors due to the increase in the cost of chicken.

At the same time, the cost of production for pig breeders increased over the past year by at least 15–20%, while prices did not rise, as a result of which the producers' margins dropped by a factor.

Geslachte varkens

Will consumption continue to grow?

In 2021, pork consumption will grow by another 3% relative to 2020, the Center for Industry Expertise of the Russian Agricultural Bank predicts. Production, according to Kovalev, will definitely grow: if in 2020 it was 4.3 million tons (in carcass weight), then this year it is higher by 4-5%. According to the press service of the chain, Magnit expects that the demand for pork will continue to grow.

Against the background of satisfied demand and the implementation of import substitution tasks, domestic consumption will cease to be such an effective driver of the pig industry as it was five to ten years ago, says Andrey Dalnov, head of the Center for Industry Expertise of the Russian Agricultural Bank. The response to the oversaturation of the pork market and increased competition has already become a decrease in imports and an increase in exports, and further growth in production will force producers to seek profitability in foreign markets.

In 2020, pork imports decreased tenfold, to 8.3 thousand tons, against 91 thousand tons a year earlier, the share of imported pork in Russia fell to almost zero. The Center for Industry Expertise of the Russian Agricultural Bank expects that, given a favorable epizootic situation, the export of pork by the end of 2021 will reach a record 250 thousand tons.

Source: RBC