Ukraine: High feed grain prices creates losses for livestock sector

Since October of 2020, poultry production in Ukraine is loss-making

While grain producers obtain record-breaking profits, selling grain on export contracts at unprecedentedly high prices, dozens of livestock companies struggle to live long enough to see the new harvest, the Ukraine magazine Ukrinform reported, citing local market participants.

“Since October of 2020, poultry production in Ukraine is loss-making. The average profitability ratio is minus 12% to 15%,” estimated Sergey Karpenko, executive director of the Ukraine Association of Poultry Producers. “This has already caused an unplanned 10% drop in the country’s poultry population in the 4th quarter of 2020, and its further decrease at the beginning of this year.”

Feed grain price jumps 90%

Ukraine’s poultry population has been seen shrinking for the first time in 2 decades, stressed Karpenko. The country is a large grain exporter, but despite that, since the beginning of the coronavirus pandemic, the price for feed grain on the domestic market jumped by 90%, he added.

Poultry and pork producers who have no their feed production, fields and feed mills, are in the worst position

Corn price doubles

“The average price of corn amounted to $ 150 per metric tonne a year ago, but now it reached $ 260. Wheat or barley could become an alternative to the expensive corn, but their prices are also on the rise,” commented Alexander Shegaev, expert of the Ukraine livestock association.

The continuing tension on the feed market means that Ukraine poultry and livestock producers would have to struggle for survival for at least the next 6 months until the grain from the new harvest hits the market, forecasted Roman Slasten, general director of the Ukraine Club of Agricultural Business. “Poultry and pork producers who have no their feed production, fields and feed mills, are in the worst position,” said Shegaev. Huge producers managed to purchase stocks at relatively low prices, while their smaller competitors have no opportunity to accumulate reserves for a year ahead. In this background, big companies appeared to be more competitive and began pushing their rivals out from the market, Shegaev said.

Livestock producers have limited power to raise prices

All livestock producers are currently limited in their ability to raise prices. On the one hand, meat consumption in Ukraine slightly decrease in 2020, and any increase in prices is likely to further push on the demand. On the other hand, the Ukraine market is dealing with the rising import from the European Union.

Growth in imports

As explained by Shegaev, import supplies have been growing on the pork market. For this reason, the domestic price has not been growing, but instead even decreased at the end of 2020. However, most market participants believe that given the further increase in price for feedstuff, livestock producers will have no choice but to changes price tags in the coming months.