Russia’s accession into the World Trade Organization (WTO) and its impact on the pork market will not stop the country’s major agricultural holdings from investing in huge pig production projects, according to experts.
Forecasts from analysts that Russia’s WTO accession would have an extremely negative impact on the pork industry led Rusagro to freeze the construction of a huge pig farm, the cost of which was estimated at RUB20bn (US$700m), as well as some other projects in the Tambov region.
Another large player in the Russian market, Cherkizovo, took an “investment vacation” after representatives predicted that WTO entry would lead to a decline in the profitability of pork producers.
However, although the price of pork fell by by 12% to RUB72 (US$2.30) per kilogram over the last month, reducing profitability for producers, analysts say the future looks positive enough for the companies to continue with their investment projects.
“Both Rusagro and Cherkizovo can successfully finish the construction of the pig farms in the Black Earth [central regions of Russia], without fear of a sharp decline in profitability,” said Maria Bovykin, an analyst at Russia’s largest commercial bank Alfa-Bank.
Alexander Kostikov, head of communications and investor relations at Cherkizovo told Globalmeatnews.com that the company recently completed a large investment project. “This year, the Cherkizovo Group completed the construction of a modern pig farm with capacity of 12,500 tonnes of meat in live weight annually. The new complex is an integrated module for 4,800 sows, consisting of several stand-alone sites for breeding, rearing and fattening, equipped with the most modern equipment,” he said.
He added that Russia’s entry into the WTO would not prevent the company from moving forward with its plans. “In terms of Russia’s accession to the WTO, Cherkizovo plans to maintain its leading position in the Russian market. The group no longer has any “frozen” projects in pig farming,” he told Globalmeatnews.com