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Pork Imports Expected to Grow to Historic High Levels

12 September 2012

USDA Foreign Agricultural Service

UKRAINE - After a pork production slowdown in 2011, production in 2012 is expected to stabilise at 2011 levels driven by production increases in the industrial sector.

The growth is boosted by the stable high domestic pork price and high price for poultry which is often viewed as a substitute product by Ukrainian consumers and processors.

If price remains high, production in 2013 will grow despite feed cost increases. Feed supply in 2013 is expected to remain stable despite rather unfavorable weather conditions. Most Ukrainian pork producers are vertically integrated holdings and have some resistance to sharp price shocks. The trend for increased investments into the pork sector is expected to continue in 2013.

Imports of pork products in 2011/12 grew as forecasted. Import volume exceeded our previously forecasted level due to the same high domestic price factor. Similar to previous years, imported products were used by Ukrainian meat processors.

This increase allowed the Brazilian producers to occupy over half of Ukrainian’s import market. Imports in 2013 will remain significant, but forecasted to be less than 2012 level even if prices remain high.

Cattle/beef production in Ukraine remains a derivative of the dairy industry and is highly dependent on the milk price and the availability of export markets for Ukrainians dairy products.

Ukraine's production of beef is expected to stabilize in 2013, although little sign of recovery is expected in 2013 despite some investments into dairy sector.

Upon introduction of export restrictions on Ukrainian cheese by Russian Federation, many small private milk producers reviewed their plans and slaughtered animals. The trade conflict over Ukrainian cheese was partially resolved, but many producers were delisted and could not continue exporting. Exports of cheese from approved facilities are complicated by the new rules. According to some experts total cheese export decrease may reach 30 per cent by the end of 2012.

In an attempt to fix the situation, the GOU tried to introduce a minimum milk price in the fall of 2012. This soviet type administrative restriction had proven to be counterproductive during multiple previous GOU attempts to control retail process or to control grain prices.

Similar to pork, the cattle price remained high providing additional support to beef production in the country. Direct access to Russian market facilitated to high price spillover into Ukraine. No significant trade restrictions were introduced by Russian Federation on beef products.

Further Reading

You can view the full report by clicking here.

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