Ukraine meat industry airs concerns on gas supply
According to Alexander Bakumenko, chairman of the UPBU supervisory board, a large number of producers could face problems as a result of this situation.
"Any disruption of the thermal regime will have a negative impact on production processes - in particular when it comes to incubators on poultry farms. The difference in one-tenth of a degree is critical," he stressed.
"One alternative to natural gas is liquefied gas. But that is not as easy as it seems. It can take about two months to change nozzles and other equipment. A more serious issue, however, is where are we going to buy enough resources in Ukraine?" added Bakumenko.
Even if the supply issue can be resolved, another obstacle will be the numerous regulatory agencies, which could ensure the paperwork drags on for months.
According to Bakumenko, it is time to look to chicken manure, for example, as a source of energy. But before investing in fuel production from such sources, changes to existing regulations are needed.
The largest Ukrainian agricultural holdings claimed to have anticipated this situation and, as part of a risk management programme, have already secured alternative sources of energy. So they did not forecast major problems related to this. However, medium and small producers could run into trouble if the gas supply problem is not resolved.
"We traditionally run our farm on natural gas, and there has been no deficit so far. However, in the winter time, we will have to use alternative energy sources. And to be honest, we have not yet come up with an optimal solution to this problem, since any replacement gas is extremely expensive and we simply cannot afford these costs," said Alexei Orosipenko, director of the Rassvet poultry farm in Poltava Oblast, central Ukraine.
He added that given the forecast deficit in energy resources, it is difficult to predict the future cost of heating and energy and thus project what the losses might be. "We and our colleagues are looking at this situation pessimistically, as most of the small and medium-sized poultry producers in the country already have a debt burden and are trading with relatively small margins, so even a small increase in spend will bring us many problems," he added.
Ukraine has been importing almost all its natural gas from Russia. However, following the February events in Kiev, as well as the Crimea crisis, Russia immediately cancelled several discounts on gas supplies to Ukraine and, as a result, the end-price jumped from US$268.50 per 1,000 cubic metres to US$485 per 1,000 cubic metres. Ukraine has refused to buy at the new price and has also refused to pay the debts already owed at that time. As a result, the gas supply has stopped, and industry analysts reckon Ukraine now has insufficient funds to eradicate the debt and begin to buy gas once more.
