Russia’s ministry of agriculture has approved a $4 billion credit line destined for new projects in the domestic pig industry, Pig Progress reports.
The money will become available in the form of soft loans with subsidized interest rates. The policy was made public by Yuri Kovalev, chairman of the Russian Union of Pork Producers (RUPP) when recently speaking to local news outlet Kontinent Sibir.
Мajor state-owned banks such as Sberbank, VTB and Rosselhozbank are expected to issue the loans, just as in previous years. The funds must be invested between 2018 and 2022. RUPP estimate that the loans will facilitate the increase in domestic pork production capacity in Russia by 1.5 million tons in that period.
The announcement appears to be a major change in the government’s policy on the domestic pork market and is sure to have opponents among industry players. Russia’s pig producers earlier noticed that the federal government had stopped providing state aid for new projects in the industry since early 2017.
New subsidies will mean that ‘enormous volumes’ of pork will hit the market, driving the domestic pig industry into ‘a new pricing realm’, Kovalev said. The average profitability in the industry will drop further, whilst those pig farmers unable to keep up with the tightening competition will go bankrupt, he warned.
Even some bigger farms, but with older production technologies or poor financial management may soon be forced to give up, Kovalev said. In the new pricing realm they virtually have no chance to survive, he emphasized. Some modern farms with the high debt burden are also at risk, he said.
