Russia: the Europeans are preparing expansion in the pork market

"If we do not want to lose their own pig, will have to agree on a new, — the president of the National Meat Association Sergey Yushin. — In the fight for their interests can not give up. For the EU, the issue of pork exports, including in Russia — is a matter of survival, they did talk about it. But for us a question of principle pig, so we must fight to the end "- so tough response Sergei Yushin clear. According led him to the National Meat Association (NMA), the European Union is preparing to deliver annually in Russia 7 million head of pigs. In terms of meat is about one-third of the Russian market. It turned out that in the course of negotiations, Russia missed a powerful blow to the pig — agreeing on quotas for the supply of meat, negotiators have "forgotten" to close the duty import of live pigs, "Jivka" that the industry could face a serious recession.

Over the past 6 years in the Russian pig has done tremendous work — 250 billion rubles. private investments have allowed, in fact, form a new industry. For local breeders could safely compete with international manufacturers, it is necessary for at least 6-8 years, said Yushin. The potential for development is: the next five years announced another 150 projects worth 350 billion rubles. Alas, many of them at risk of being unfulfilled. Disaster, of course, will not happen — most modern complexes built will continue to operate, however, the rate of profit will fall sharply, someone could not cope with the repayment of loans, and in the end systems will change owners. It is much more difficult to have farms that have not yet upgraded (they are still more than one-third), — they are likely to be quick bankruptcy. A full import substitution and especially on the export of meat products have to forget indefinitely. Chance to win back the situation back a bit, but they are there, you just need to start new negotiations.

 

— You took part in negotiating the terms of accession to the WTO in the area, as missed "Larkspur"?

— With us, really coordinated quota volumes, we have made concessions and left them at the level of five years ago. But no one ever told us that a fee of 40% on the import of live pigs, which we broke in 2009 and which is immediately possible to reduce the volume of imports from one half million head, back at the level of 5%. I do not know why not say — at nedoglyadu, lack of sleep, or maybe on purpose. In general, all of our obligations under the WTO on a number of agricultural commodities produced a depressing effect. When the Americans came to the talks, they were put in another room of their industry representatives, went out to him regularly for advice on conditions. We asked many times: take us with him. To no avail. And the fees for finished meat products, sausages, which was reduced to 10 funniest rub. / Kg? In the market speak and the incompetence of the negotiators, and negligence, and even sabotage. The very decision to join the WTO looks very strange. No one is calculating the benefits, losses will get the economy after accession. We can not do this analysis from the officials, it is not there. As there is no sufficient number of qualified lawyers willing to defend our interests in the court of the WTO. Speaking about the benefits of all repeat some mantra: we have clear rules, it will get rid of corruption. That, in China, India, Turkey, Brazil, there is no corruption? Everyone knows as "Siemens" and "Mercedes" excellent foreign governments are corrupt, no it does not interfere with the WTO. And our government officials make decisions for some unknown reason. Here’s the latest example: the APEC summit once again decided to make a nice gesture and introduce a regime of free — read: tax-free — trade with New Zealand. Why did you choose it? Just probably stuck your finger into the map away from the border with Russia, forgetting that this is a global provider of meat and dairy products. Such solutions business officials very scary.

— At what stage of development the industry have caught the WTO?

— Let’s back up a bit. By the beginning of the 1990s, we had a minimum import of meat and livestock own large: 58 million cattle and 38.3 million hogs. When the wild inflation, farms experienced an acute shortage of cash. The easiest way to get some money — to score cattle. Again, as imports surged finished sausages and sausage meat for businesses, with the EU is well subsidized its exporters, their products have always been more competitive on price. By 2000, the industry is completely degraded. The number of livestock has fallen to 60% of cattle left 22-23 million head of pigs — 13.7 million thus significantly worsened the structure of production — the main part of the cattle, over 60% of the population, are not made in the agricultural — collective and state farms, as in Soviet times, and in private farms. It was a disaster from the point of view of competitiveness, and in terms of recycling. Images from the animal fled, genetics stopped watching them all the systemic problems with slaughter and primary processing, logistics grew with each passing year. Processing of live pigs was on the strength of 50-60%, the rest is thrown away as waste. It is clear in this industry no investors will not go.

— The situation began to change only after the adoption in 2006 of the program of development of pig?

— The first step was the introduction of quotas on imports of meat in 2003 with the establishment of a relatively high above-quota tariffs. After the decision to subsidize part of the interest rates on investments in pig production and reduce the cost of banking resources in the industry profitability was good — 25-35%. Banks were willing to lend. For 6 years, private investors have invested 250 billion rubles., And the government has allocated 50 billion to subsidize interest rates. The industry has changed a lot. The number of pigs increased by almost 30%, while the production and consumption of meat — by 50%. But the most important change in the structure of production — the share of private households declined from 70% to 37-38%. There was quite a distinct unit of primary processing — slaughter, cutting, mainly among large manufacturers — for their own needs, but also for the foreign market too. Company "Agribusiness", one of the leaders in the industry, has built-art robotic factory for slaughtering and butchering, giving it $ 250 million — of such units in the world. Automated cutting, first carcass is subjected to a three-dimensional scanning, the computer then calculates the best option of dressing, and the robots cut it down to the millimeter. This is important — the blade and neck have a price difference of up to 30%, the wrong cut — suffered losses. Processing at the plant — a 100% worthless waste of offal made mass products for the food and pharmaceutical industries. Video of the plant — a fantastic spectacle. These companies, however, less productivity, plan to build other large investors.

— Why do we still can not fully compete with European producers, whose meat is cheaper by 25-30%? Our producers are less effective?

— There are a couple of things. First of all, there is still more than a third of livestock is grown on private farms and small farms and private traders are unlikely to compete with professional western farmers. Secondly, 65% of agricultural enterprises, industrial pork producers are quite effective, they have all the indicators at the global level. But more than a third are still lagging behind. This outdated pig, but there are also new, allowing a lot of errors, down to the banal theft. And most importantly, the cost and the price — it is still different. We can not afford to reduce prices for several reasons. Industry is now in the investment phase, there comes a time to return most of the credit. They did not give us 20-30 years, as in Europe, and a maximum of 8 years. Deadlines of repayment also
dictate the need for a high margin. Industry to develop further, it should be attractive to investors. It also means stable prices in the market allowing to operate with high margins. In addition, in Europe, with which we basically have to compete and, pig beginning to develop rapidly after the Second World War. First, they have invested a lot directly into production — for many years, farmers received direct payments cover the difference between high at that time taking into account the cost of bank margins and the world market price. When the industry matured, the need for additional payments no longer remained public investment in genetics, the scientific work, the environment, rural infrastructure. Inside the market they had a lot of competition, survived the most effective and advanced, all investments have paid off for a long time, the infrastructure is built, "and from" — roads, housing, staff, and more. We are now in the beginning. Investors need a good margin — they often have to build in an open field, the entire infrastructure to them. Yes, to help the village, the region — because without the people who live here can not do. One day even the state of the investor had to attend to the airport — no one else. It turns out that the current price of meat includes a social tax to restore the ruined Russian village. If the momentum of the development and expansion of production in the industry continues, the greater competition will drive the price decline — as in the poultry industry, where until recently the prices are not rising nearly three years. For all this pig — the future. Under present conditions for the implementation of all the announced projects to 6-8 years. The share of private farms would have decreased to 20%, the natural way, because of the competition and the change of generations — young people do not want to raise cattle in private households, prefers to work at work and at home resting.

The largest pork producers in Russia

Company Pork production for slaughter in 2011, the live-weight tonnes
"Agribusiness" 144.8
"Agro-Belogorie" 106
"Cherkizovo" 101.2
"PRODO Management" 72.2
"RusAgro" 63
"Agrarian Party" 61.1
"KoPitaniya" 60.2
"Space-group" 39
"EXIM" 36.2
"APK-Don" 33.9

To be afraid of high food prices is not worth it — they stimulate an increase in production, the creation of new jobs. Low-income people to give money to the products in the same America, nothing wrong with that. Our officials scares them incomprehensible card system, they say strange things about the price of bread as a social product. Bread no longer a social product in the diet it is not the main part. And when we demand that the bread, meat and milk were equally cheap for everyone — it is a real social injustice. We do not need the lowest price, we need a high income salary. The Japanese and Norwegians, for example, thrive at high prices, and we have an average salary in the countryside — 8-10 thousand rubles. In this case, the state program on selhozrazvitiyu laid that in 2020 wages in rural areas will be 55% of the national average. It’s the same with what reason? There’s that life easier? Job easier?

— The air is cleaner.

— Somewhere, maybe cleaner. But as it stimulates the development of agriculture? Prescribe such figures in the state — a disgrace. When in private farms grow to 2 million heads of pigs — two times more than the average U.S. farm, by the way, is also a disgrace. At the same time they do not have checks, supervision, accounting, virtually no veterinary control, no one knows how the recycling. In the south, the Kuban is all pretty common. Since these farmers is difficult to talk, to explain something, they are the legal nihilists. In addition, they are used for their own purposes, some political parties. The Communist Party, for example, supports such farmers in the Volgograd region. The biological food security for all care, arrange our little war of the African swine fever.

— On the problem of ASF has been spoken for years. The main difficulty in dealing with it — the lack of a central veterinary services. In the new law on animal health, which once again sent back for revision, amendment on this issue and did not have?

— Unfortunately, the option being considered now, only reinforces the status quo, where the main powers given to the regions. They do not execute them or perform poorly — it is visible on the epizootic situation, except ASF, and even anthrax regularly erupts everywhere brucellosis, bovine tuberculosis, widespread violations of the rules of carriage of livestock and so on. Industry associations related to controlled products, insist on a return to common veterinary services. Business itself requires a clean, tough on crime, to protect your investment and to create equal conditions of competition. We are fighting this bill for three years, constantly pulled away to send it to the Duma, but no one will lack the will to change it on the merits.

— Why, who can be against?

— The reasons are many. The Ministry of Finance does not realize that the veterinary service plays a key role in ensuring biological security, protection of investments, including government. I had to hear this too: why spend tens of billions of rubles on the creation of a federal structure, if it does not make money in the budget? Regions mind, it is unprofitable to change the system — they sell blanks veterinary accompanying documents and leave the money at home, and the difference in price — several times, as you wish. I call it a "regional economic self-interest." The current system again allows for different veterinary problems as a reason for limiting the import and export of products exclusively from the economic interests of the regions or friendly companies, and not for objective reasons. Manufacturers regularly judged against such regional initiatives and win.

As for the separation of veterinary services at the regional control — it’s the same thing if the FSB was divided into 83 parts and transferred to the self-financing. We are talking about the biological food security of the country. If the situation with the ASF and other diseases out of control — and it is close to it — investors will suffer huge losses. In the pig and poultry farming invested 250 billion rubles. After such a default investment is unlikely to return to the industry. The importance of a strong veterinary services in Russia understood even under the tsars. A veterinary Soviet system was the most advanced in general, it has been studied by many countries. Recently, at a diplomatic reception selhozattashe one of the countries asked me about the new law on animal health, the text is laid out on the site, everyone can read. I replied evasively that the work in progress, and I hear: "When you finally fall apart veterinary service and the system will be lost, do not say that this is also to blame the CIA." It was not funny.

— And with the external risks Rosselhoznadzor say copes well.

— It is. Now, in contrast to the 1990s, the country has not driven everything with false documents, substandard come true — because it kept the federal control over the safety of imported products. A powerful, effective audit system of veterinary services and businesses in exporting countries, are continuously monitored as the epizootic situation in the world and the capacity of national veterinary services from producers to seek strict compliance with safety requirements of products. When importing products could eliminate corruption component: the human factor is reduc
ed to zero — the documentation submitted electronically via the Internet and the computer, and not giving official permission to import. Businessmen say that vets for this system should put a monument. And inside the country is still absurd. Vetkontrolya questions are very important for the export of food products. Trouble in this area can close the markets for our products in other countries.

— For us, this is true?

— First, the opening of any market — it’s a long process of coordination requirements for products, veterinary certificates and other things. It takes years, so now is the time. Second, do not make key mistakes — to believe that we will be ready for export only after saturation of its own market. Each carcass is made up of different parts — the more expensive ones: brisket, pork loin, other cheaper: the neck, scapular cut and so on. Our meat consumption is different from the natural proportions of the parts of the carcass, after some time we will have a surplus of pork loin, then it is better to export, so as not to impair the economics of production, and cheaper neck for sausage production — purchase, once we have the structure of consumption of such we are cooked sausages eat. For the EU, the same America it is important to remove excess meat — they have a price below cost. For the EU meat exports — a matter of survival, I extract from the report is. That is why they were dragging Russia into the WTO. On the channels we have received information that they were planning a great breakthrough in our market through the supply of live pigs — along the Lithuanian border Danes are already building pigsties. Why is this information available to us do not reach our diplomatic channels, the trade mission? We seem to have a special structure, which need to think about the interests of the state, to collect information, what do they do? With such volumes of supply "Jivka" tariff quotas is ridiculous. Development of the industry will slow down, if not stop altogether.

— But we have already agreed on everything, as much as possible to return to negotiations?

— Now, the introduction of a 40% duty on "Larkspur" with the European Union to negotiate directly, as it was with the 2009 Neither the Americans nor the Canadians nor the Brazilians will not mind — they come to us live pigs are not lucky. But Europe needs to be more flexible. While Rosselhoznadzor constrained supply "Jivka" under the pretext of bovine tuberculosis, which is found in Europe — though they are already preparing lawsuits us about it. It is necessary to explain to them that their interests are more consistent with a stable supply of specified volumes of products, rather than war, we declare each other. (Expert /Food industry and food products in Ukraine, CIS and the world)

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