Genesus Global Market Report Russia, May 2020
Simon Grey, General Manager Russia, CIS, and Europe
Pig price in Russia is currently 100 Roubles ($1.33) per live kg. This is up just a little from the past few weeks due to holidays in Russia in early May. Coronavirus is affecting Russians regions differently, from total lockdown in some regions, like Moscow, to almost normal levels of free movement of people in others.
The Russian government is using words like ‘holiday’ and ‘non-working’ days rather than quarantine. The first ‘holiday’ announcement in April led to a run on holiday bookings to Russia’s Sochi resort. Hotels were quickly closed and some flights turned around.
One thing the Coronavirus outbreak has done on a personal level – has been now seven weeks with no international travel, as opposed to a normal eight to ten flights a month. Genesus has continued to function, with the majority of sales and support staff working from home and holding web-based meetings with clients around the world. The time saved has enabled a little spare time to think about our business.
One thing I have been thinking about for some time now is that in live pig production we actually are not managing pigs, we are really managing space (our farms) and time. Pigs are processed through our farms, just the same as they are processed through slaughter plants.
This realization brings in to question the value of traditional measures of ‘efficiency’ like born alive, pigs weaned per sow per year, growth rate, FCR, etc. None of these are actually related directly to what we are doing – processing pigs through our farm’s day by day, month by month, and year by year.
The one thing that is 100% related to what we do is kg sold/m2 of space in Nursery and Finisher. The following table is data from farms/business’s in Russia. This ranks from best to worst. I have calculated the extra margin over feed per 1000 sows assuming the farm could achieve the same level of performance as the highest-ranked farm. The extra margins from best to worst are very significant.
Another tool Genesus has updated is the “Genetic Value Calculator”. This enables us to compare to scenarios for a pig farm, scenario A vs scenario B. This is a very powerful tool that we can use online with clients.
Using this tool it becomes very clear that kg sold is the major driver of profitability for a pig farm. In fact, a difference of a very significant 2 piglets born alive per sow can be canceled out by just 27g/day extra growth rate.
Remember these numbers are for live production only. For a fully integrated business that slaughters and processes the pigs it grows, and often as is the case in Russia retails the meat, more kg means even greater profitability!
Remember well, our final consumer has no interest in buying live pigs. The sales product in our business is kg of pork.