Ukraine outlines livestock growth plans amid uncertainty
The Ukrainian government has hammered out a new livestock industry development programme, hoping to ramp up meat and milk production following a decade of steady decline. The goals are ambitious, but it remains to be seen whether they are achievable.
The war with Russia has largely fuelled this downward trend. Since 24 February 2022, Ukraine has lost 238,000 head of cattle, 544,000 head of pigs, 131,000 head of sheep and goats and almost 13 million poultry.
Long-term industry development programme
Under the long-term industry development programme, Ukraine is set to increase meat and milk production dramatically by 2033. For instance, meat production per capita in the country is projected to reach 70 kg, against just 57 kilograms in 2024. Milk production per capita is due to rise to 270 kg, up by nearly 60 kilograms compared with the current level.
Strategic decision for industry recovery
“This is not just a reform – it is a strategic decision that will restore the livestock industry, strengthen the economy, ensure food security and create new opportunities for farmers and agricultural businesses,” Vitaly Koval, the Ukrainian Agricultural Minister, said. The Agricultural Ministry promised to come up with a detailed industry development roadmap.
State support for livestock growth
“It [the roadmap] will become the basis for directing state support to the industry. The synergy effect of efforts and expenditures of budgets at different levels will give an additional impetus to the growth of livestock farming,” the Ministry said.
Political will alone won’t revive feed industry
However, political willpower alone will clearly be not sufficient to move the needle too much for the Ukrainian feed industry, where the mood seems to be close to the lowest ebb following 3 years of brutal war. “The Ukrainian feed industry has experienced war-related challenges just like any other economy segment,” commented Maxym Gopka, an analyst with Ukrainian Agribusiness Club, a Kyiv-based lobby group. These challenges include the destruction and seizure of production facilities, supply disturbing and persistent labour shortage, to name a few. As the war is about to grind into a fourth year, the Ukrainian infrastructure is on its last legs. “Because of active fighting, feed mills in some regions were forced to suspend production. Logistical problems became a critical factor, blocking ports, destruction of railroad and automobile infrastructure complicated the delivery of raw materials and shipment of finished products,” Gopka explained.
Labour shortage due to mobilisation
The ongoing mobilisation has become another critical problem. The Ukrainian agricultural sector is desperately struggling to reserve personnel, but as the country constantly needs new soldiers on the frontline, there are fewer men of conscription age available. “Many workers at feed mills have been mobilised or have gone abroad. The shortage of personnel has become especially noticeable for the companies operating in the regions that experienced heavy destruction or are located near the front line,” Gopka said.
Some firms estimated they fail to fill up to 30% of vacancies. To deal with the crisis, farmers are attracting retired workers to go back to their former positions. Some companies with enough working capital are investing in automation, according to Gopka.
Naturally, one of the key threats to the Ukrainian feed industry is the advance of the Russian troops in the east, commented Igor Silchenko, director of Agrofeed Ukraine, a feed additive distributor. Due to a physical threat to its existence, livestock farms face a dilemma: to operate under constant shelling or move to a safe location, Silchenko said, admitting that both scenarios look almost equally unlikely.
Power outages complicate the production process
Ukrainian feed mills will have to deal with persistent power outages, as Russia has been relentlessly pondering the energy infrastructure with barrages of kamikaze drones and missiles. For the Ukrainian economy, this strategy brought about a constant battle between the darkness and the light, and with every new attack, the scenarios in which darkness triumphs become more likely. As revealed by local government officials, almost all thermal power plants and most hydropower plants were destroyed or damaged during these bombardments. “Power outages complicated production processes and forced companies to switch to alternative power sources or change their work schedules,” Gopka said.
Ukrainian feed mills purchased diesel generators on a massive scale to keep operations humming during the blackouts. However, market players consider this just a band-aid since the cost of electricity from diesel generators is at least 30% higher than from the energy grid.
Labour shortage challenges Ukraine’s recovery plans
The new development programme is clearly built on the assumption that the war will end in the foreseeable future. However, even in this scenario, the production targets set in the programme look optimistic. In particular, there is no silver bullet for the labour shortage. As estimated by Andrey Dligach, a local analyst, the country currently lacks around 3 million workers. The M. V. Ptukha Institute of Demography and Social Research calculated that the Ukrainian population living in the country ranged between 25 and 28 million. The country has lost at least 8 million people since the onset of the conflict.
To fill the gap, Ukraine will need to attract workers from Bangladesh, India, Africa and the Middle East, Dligach admitted. As Silchenko estimated, in the short term, he expected Ukrainian farmers to minimise risks and only keep as much livestock as the company could easily handle.
The energy bill will likely also be biting for Ukrainian feed mills, as the reconstruction of the damaged grid will require massive investments.
Security concerns hinder Ukraine’s feed recovery
What’s more, Gopka pointed out that without sufficient security guarantees for Ukraine, the post-war recovery of the Ukrainian feed industry may take a long time. A threat that fighting could break out again would discourage investors from pumping money into building new or restoring damaged capacity. “Rebuilding the feed industry is feasible but will require a comprehensive approach: modernising production capacities, developing logistics, bringing back human resources, restoring energy and attracting foreign investment,” Gopka said.
Ukraine’s feed industry: A bright future post-war
However, if the cards are played right, the Ukrainian feed industry could emerge from the war stronger than it was before. According to Gopka, the country still has plenty of fertile land where feed crop production remains relatively cheap. Before the war, a significant share of the Ukrainian feed industry comprised old infrastructure running on outdated equipment. The post-war recovery would allow Ukraine to get a modern high-tech feed industry instead.
“If Ukraine manages to use international support effectively, the industry will not only recover but also significantly increase its competitiveness in the global market,” Gopka claimed.
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