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Russia first reported ASF in 2007 and has registered more than 1,300
cases since then as the highly contagious hemorrhagic disease of
pigs has spread from the southern Caucasus region to the country's
northwest region and Siberia in the east.
The spread has coincided with Russian efforts to boost local
production in a bid to substitute imports of European Union pork
that have been banned since 2014, despite a World Trade Organization
(WTO) ruling demanding the ban be lifted.
Helped by state subsidies, Russian producers now meet 95 percent of
local demand. But as the amount of locally produced pork has
climbed, domestic prices have slipped.
"We have come to the point where developing the sector further
without significant exports becomes difficult and strategically
short-sighted," said Yuri Kovalev, head of Russia's National Union
of Swine Breeders.
One of Russia's top three producers, Cherkizovo, said the average
selling price for its products was 5.3 percent lower in the first
half of 2018 than a year earlier.
The value of pork sales at Rusagro, another big producer, fell 6
percent in the first half of 2018 compared to 2017 as prices slid.
Cherkizovo and Rusagro, along with the other big producer Miratorg,
together control 20 percent of Russia's market, according to the
National Union of Swine Breeders.
The three firms, which have all been affected by the virus in
previous years, want to keep expanding but say ASF outbreaks are
undermining their prospects abroad.
Miratorg, whose pork production growth slowed to 1.5 percent in 2017
from 6 percent in 2016, said ASF was "certainly one of the main
obstacles to expanding exports and opening up new markets."
At least 105 outbreaks have been reported in Russia in 2018, of
which 55 were in farmed pigs, Russian agriculture watchdog
Rosselkhoznadzor said. Wild boars can also contract the virus.
EXPORT MARKETS
Russia already sells some pork abroad, with exports climbing more
than 20 percent in 2017 to more than 70,000 tonnes. But that remains
a fraction of the annual global pork trade of 8 million tonnes.
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"Export volumes are very small compared to the potential Miratorg
and Russia have," said Miratorg, which produced 415,000 tonnes in
2017 and has plans to double capacity by 2023.
Russia's main export markets are former Soviet countries, with some
supplies going to Africa and southeast Asia, Kovalev said.
Asia is the most attractive market, as prices there are 20-30
percent higher than in Russia, said Sergey Beiden, an analyst at
Renaissance Capital.
But China, the world's biggest consumer and producer of pork, is
struggling with its own outbreak of ASF and offers limited prospects
for Russian pork products for now.
Cherkizovo said it was "highly unlikely that in this environment any
Russian region will obtain permission to export to China soon."
Sergei Yushin, President of the Russian Meat Association, also said
he expected China to tighten its import regulations. But he added:
"We still have potential to increase (export) volumes to existing
markets."
For now, Rusagro, which has invested heavily in a pork production
complex in Russia's Far East, has said it would not expand capacity
further until more export markets opened up.
Russia and China are not alone in battling the disease. Belgium
reported in September its first ASF outbreak since 1985, while
hundreds of thousands of pigs have already been slaughtered in
Eastern Europe because of the virus.
But Kovalev said Russia's efforts to tackle ASF could build
confidence among foreign buyers of Russian pork.
Cherkizovo said it had invested more than 2 billion roubles ($30
million) to protect its pork facilities from diseases over the past
two years, while Miratorg said it spends tens of millions of roubles
each year on sanitary treatments.
(Editing by Edmund Blair)
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