Russia to provide pork hub for the Chinese

Two Russian firms, Rusagro and Mercy Trade, are planning to create a pig breeding hub in Russia within five years to hold a capacity of 1.2 million head of pigs, with an investment of $954m, with most of the export heading for China, says Russia's Agriculture Minister Alexandr Tkachev; this pig production will be the largest in Russia. This move comes as the World Trade Organisation (WTO) says a ruling on Russia's embargo of EU pork will be addressed in April this year. Russia closed off it market to live pigs from the EU in January 2014 citing detections of African swine fever in some wild boar, thereby cutting off almost 25% of all EU imports in the sector, however, the EU claim the ban is not based on scientific evidence. Russia continues to stonewall attempts to engage in dialogue with Europe on resuming pork trade.

Most of the production will be aimed for export to the neighbouring Chinese market, according to statements from the Russian Agriculture Minister Alexandr Tkachev and the governor of Primorsky Krai Vladimir Miklushevsky.

“Primorsky Krai has a 1,100 km border with China. More than 400 million people live just a two-hour flight away from our country, which is a huge market. So we have created a ‘priority territory for development’ and now Rusagro and Mercy Trade are planning pork production plants in the area,​” said Miklushevsky.

A ‘territory for priority development’ in Russia indicates a special industrial area created for specific investment projects or several similar projects. It enjoys a beneficial tax regime and simplified administrative procedures.

“The far east​ [of the country] is a promising area for investment​. There are many special economic zones and territories for priority development with privileges and preferences for investors concentrated in this area. As a result, Primorsky Krai has attracted a number of powerful players in the agro-industrial business,​” added Tkachev.

Huge projects​

The pig production cluster now planned in the Mikhailovskaya territory of priority development will be the largest in Russia outside the main producing regions in the south west of the country.

“Each investor will create a large group of pig farms and the necessary associated businesses. Over the next three years, Rusagro and Mercy Trade will saturate the market of Primorsky Krai [with pork] and will also achieve the volumes needed to allow them to launch exports to neighbouring states​,” commented first deputy governor of Primorsky Krai Sergey Sidorenko.

According to official information, Mercy Trade plans to invest RUB20bn (US$258m) in the construction of seven pig farms, handling 540,000 head of pork, as well as a processing facility, feed mill and the cultivation of soybean and corn in the region. The project should be commissioned by 2018.

Rusagro will invest RUB52bn (US$696m) in the construction of 10 pig farms, handling 700,000 head of pigs by 2017, along with a feed mill for 240,000 tonnes (t) of compound feed, a slaughterhouse with a capacity for 120 head of pigs per hour and processing facilities. The joint capacity of the two complexes would be close to 120,000t of pork per year.

Opening of exports to China​

Rusagro is already planning to launch exports of pork to China from its production sites in Tambov this year, according to a statement from the company’s CEO Maxim Basov. He added that export supplies from farms in the far east of the country should be launched in 2018.

“The Russian government, along with the Chinese government, has already come a long way towards opening the Chinese market for Russia’s pork manufacturers. It is about to happen; we could even consider that it is already happening​,” he said.

“Russian companies are now going through certification procedures. This is already happening for production sites in Tambov, which will begin their first deliveries this year,​” he added.

Rusagro’s CEO also revealed that the company plans to supply finished pork products to China, Vietnam and a number of other Asian markets by 2019. He added that, in terms of chilled pork, Russian has no serious international competitors in the Chinese market.

Earlier, Russia’s largest pork producer, Miratorg, announced plans to start exporting pork to China. However, so far neither Miratorg or Rusagro have given any forecast on the export volumes planned for the Chinese market.