“The pork market has a high potential for growth,” said Roman Raspopov, CEO of the largest pork producer in Ukraine, APK-Invest. “The market for chilled pork is not saturated. Potentially, it could grow by at least 50-70% over the next 10 years,” he said.
According to forecasts from Ukraine’s Ministry of Agriculture, the country’s pork market could grow as much as 70% by 2020 compared to 2012 levels.
“Ukraine’s pork consumption will increase; this trend has been clearly observed in the past few years. If, five to seven years ago, the average Ukrainian was consuming 14-15kg of pork per year, including processed pork products, then that level is already about 18kg per year,” added a representative from Ukraine’s state statistical service.
Pork production attractive
Experts also pointed out that good margins in pork production have boosted growth in the sector.
“This business is very profitable at the moment. Over the past year, profitability in pork production in Ukraine rose six percentage points on average – from -3.7% in 2011 to +2.3% in 2012. In large agricultural holdings with a good return, the level of profitability could be about 10%,” said Alina Zharko, an expert from agricultural market association, the Ukrainian Agribusiness Club.
This profitability goes some way to explaining the large investments planned in pork production in Ukraine over the next few years. For example, Ukrlandfarming is investing US$1bn in the construction of pig farms and a meat processing plant in the Mykolayiv and Kherson regions.
European Group Axzon, which controls agricultural company Danosha, recently secured a €54m investment from the International Finance Corporation (IFC) to build two pig farms in the Ivano-Frankivsk region.
And agricultural holding company KSG Agro is to invest US$50m in the reconstruction of a large pig farm in the Dnipropetrovsk region, where there are also a number of other pig production projects.