National production of meat between January and May 2016 was 1.4% higher than in the same period last year.
However, the situation remains complicated as earlier reports from the statistics agency claimed the cost of production for meat and milk increased by a quarter in 2016, versus 2015. Coupled with unstable prices, this could lead to a fall of livestock population and may make further problems for the meat industry in the future.
According to reports, the cattle population as of June 2016 had reached 4 million (m) heads, decreasing by 2.8% compared to the same period last year. Ukraine’s poultry population reduced by 3.6% to 217.1m heads, while its pig population fell by 3.5% to 7.4m heads.
Armed conflict impacts spend
According to the recent estimations of Ukraine’s Club of Agricultural Business (UCAB), in the past three years the number of cattle in the country decreased by 10%, pigs by 2%, sheep and goats by 20% and poultry by 12%. The situation continues to deteriorate, as farmers have lost important tax breaks this year.
There are several reasons for the crisis, including armed conflict in the east and falling consumer purchasing power, which is forcing Ukrainians to cut their spend on meat.
“The government should be interested in saving the domestic livestock industry, since it plays an important role in employment in rural areas,” said Taras Vysotsky UCAB’s CEO. “Justified state support for the sector will not only halt the decline of livestock population and jobs, but also provide a basis for the development of companies, increasing the volume of livestock production and exports.”
Job losses happiness
A forecast from UCAB claims that, without proper government policy, up to 40,600 employees in Ukraine’s livestock sector could be dismissed within five years. In addition, falling tax income and the impact of unemployment benefit payments mean overall state budget losses during this period could reach UAH 2.7 billion (US$ 110m).
At the same time, numerous experts indicate a rise in cattle production, claiming that that may be associated with the acute problems of the dairy sector, which remains unprofitable.
“Our country has not previously experienced such a large-scale slaughtering of cows [as it is observed now],” said Alina Zharko, agricultural market expert at UCAB. “If the reduction of livestock would continue with the same pace, there will be irreversible consequences. We need to slow down the process, otherwise Ukraine will be left without milk.”
Ukraine’s meat industry is largely dependent on exports, while in 2016 they are becoming unstable. For instance, beef exports have dropped by 40%, while pork exports are substantially down, mostly due to the Russian embargo. Exports have also been hit by delivery restrictions imposed by Moldova and the United Arab Emirates.
Ukraine’s Ministry of Agriculture and Food has declared intentions to open new sales markets, including South Korea, Angola, SAR and Ghana. However, so far these efforts have not succeeded.