Quite rarely we hear about achievements of Ukrainian livestock industry: farmers can only rely on their own efforts in coping with the loss of main markets as well as consequences of infectious livestock disease. Nevertheless, there are some achievements: Ukraine gains weight as global poultry producer.
Agriculture is the most powerful sector of the Ukrainian economy. It produces over 10% of Ukrainian GDP, while the export of agricultural products constitutes 40,7% of the total Ukrainian export. Though, these results were achieved due to extensive methods of land cultivation – soil exhaustion, absence of crops rotation, etc. Such cultivation methods lead to erosion of soil and decrease of arable areas. While crops production increases the meat and dairy farming remain to decline. Let’s take c closer look on what preventsthe development of the national livestock farming industry.
Milk: the livestock number decreases while resellers increase profit
Milk-processing factories decreased the purchase prices for milk by 1 UAH per 1 kg on average since the end of January. The retail market is dominated by an opposite trend – the price of 1 kg of milk increased by 0.7 UAH, of butter – by 10 UAH, of cheese – by 7 UAH. Such trends may lead to the decrease of dairy products sales and further degradation of the industry. Processing enterprises, which won’t receive any state subsidies at least until May, will have to bear additional production expenses. At the same time, an increase of retail prices will result in a decrease of orders. GDP payments, as well as the absence of state subsidies, mean that expenditures of milk factories will be higher than revenues.
Last year industrial milk production increased by 1,2%, while individual farmers decreased its production by 4.2%. Taking into account that 74% of Ukrainian milk is produced by private households, the milk industry faced production decline last year. Large milk processing enterprises blame small retailers, while milk producers think that factories agreed on prices among themselves. In such circumstances, multilateral dialogue between the government, farmers, milk factories and retailers is required. The absence of communication among all stakeholders leads to the situation when everyone tries to solve their own problems by themselves. The cooperative movement which has recently become quite popular among Ukrainian farmers may be a solution of this challenge.
At the same time, there are some positive trends in milk processing industry, such as improvement of products quality for example. The production volume of first-grade milk increased up to 36,4%, while of extra quality milk – up to 13,8% (267 thousand tons) out of the total amount of milk produced.
«AltaGenetics» company appearance on the Ukrainian market, which is involved in livestock genetics research, is another good news for national dairy farmers.
Meat: poultry replaces pork and beef on our tables
The amount of livestock in Ukraine gradually decreases – during last 12 years we’ve lost 47% of cattle. Livestock farming, especially related to meat breeds, is unprofitable. At the same time, livestock farmers not only lack support from the government but even face additional challenges created by the state. Subsidies provided for the industry in 2017 won’t compensate losses emerging from the cancellation of special taxation treatment regime. Furthermore, national livestock farmers find it difficult to compete with relatively cheap Polish and Danish beef.
The situation with pig farming is catastrophic because of the African Swine Fever (ASF) which led to the slaughtering of a large number of pigs. Since 2007 the number of pigs in Ukraine decreased by 17%. The negative trend of pig stock decrease is reinforced by the ban on import of Ukrainian pork, which was recently introduced by several large importers including Belarus, Moldova, Romania, Russia, and Armenia. Last year the export volume of pork dropped 8.5 times. Ukrainian farmers received USD 5,1 million of export revenues, which is 10 times less than in 2015 when Ukraine exported USD 54,6 million worth of pork.
Conspiracy theories emerge even faster than ASF spreads: rumors vary from secret oligopoly deals and increased competitiveness on the internal market to the usage of the biological weapon. Pigs breeding became very risky for small-scale farmers. For example in Vinnitsa region 30 pigs were slaughtered due to the mistake of veterinary service, resulting in UAH 60 000 loss for the owners of the farm. AFS also impacted pork retailers: in Zaporozhe retailers of pork went on 40-days strike in winter protesting against the introduced quarantine as well as restrictions on selling pork. These measures were introduced after the contaminated animal was identified in the city. Protesters insisted on the equal opportunities for all participants of the local market and finally managed to protect their rights.
Chicken meat production is the only sector of livestock and poultry farming where positive trends are observed. Last year national livestock and poultry farmers sold 295 thousand tons of beef, 621 thousand tons of pork and 1,2 million tons of chicken meat. In 2016 the export of this product increased by 33%, regardless the epidemic of bird influenza which erupted in Chernigov, Kherson, and Odessa regions. Because of this situation, EU countries temporarily suspended import of Ukrainian chicken meat. Nevertheless, the State Service of Ukraine for Food Safety and Consumer Protection managed to agree with European counterparts on partial lifting of the import ban. Furthermore, due to recent events in Brazil– one of the largest meat exporters in the world, Ukrainian chicken meat producers have good chances to strengthen their presence on external markets and increase the export of their products.
Chicken meat production is the single developing industry out of 3 major livestock sectors. During last 10 years, beef, milk, and pork production sectors were dominated only by negative trends. Furthermore, farmers constantly face various unpredictable challenges such as cancellation of special taxation treatment regime, competition with market monopolies and animal diseases. In order to advocate for their interests and start gaining profit Ukrainian livestock farmers must organize themselves into associations and cooperatives. ASF is also one of the challenges to be addressed comprehensively. First steps in this direction were already made – Research and Practice Program on ASF treatment in 2017 was already launched.