The Russian pork industry is facing critical challenges due to Russia's war against Ukraine. Logistical difficulties are forcing companies to reduce production, and falling incomes of the population - to reduce product prices. Additional problems are also caused by the too strong strengthening of the ruble, which makes Russian products uncompetitive abroad, Kommersant notes .

Market participants fear that a wave of problems will lead to a drop in wholesale pork prices by 5-10% by the end of the year. The problems are caused by an imbalance in production, the Russian pork market is almost 100% divided between domestic players (imports are estimated at only 0.6% of the market). In recent years, companies have increased production volumes, including for export to China and Vietnam, but now these sales channels are not available for Russian companies - countries have restored their own production, and a too strong ruble makes them uncompetitive.

Producers seek to sell unsold capacities inside Russia, which, according to their estimates, will lead to a surplus of pork in the Russian market in the amount of 50 thousand tons by the end of the year, and, coupled with increased production, the surplus could reach 250 thousand tons. At the same time, Russian producers do not seek to reduce production to normalize the market, on the contrary, by the end of 2022, according to the National Union of Pig Breeders, production will increase by 200 thousand tons, to 5.1 million tons.

Increasing the consumption of pork within Russia is also not possible due to another drop in the real incomes of Russians. Moreover, in a year, pork producers may start having problems that will lead to the opposite situation. Excess in the market now will lead to the exit of weak players, which will reduce competition and lead to higher prices in the future. Sanctions are another negative factor: up to 80% of production technologies are Western supplies, which are no longer available due to the war in Ukraine, and a decrease in production capacity in the future may lead to a shortage of products, industry representatives say.