Demand for pork and beef in Ukraine’s domestic market has decreased as consumers’ incomes have fallen, while prices for all categories of meat products have risen, according to a recent report by the Ukraine Agribusiness Club (UAC).
In the first two months of 2015, the supply of meat to Ukraine’s domestic market fell 3% year-on-year to 379,400 tonnes (t). Due to a rapid reduction in imports, supplies of pork to the market dropped 7%. Meanwhile, the supply of beef and veal decreased 4%, while consumption fell by 6% year-on-year to 37,400t, said the UAC.
The report also noted that poultry meat production in the first two months of 2015 also fell, but the volume of export supplies plummeted by 31% year-on-year so supplies to the domestic market rose. The main factors contributing to this trend, said experts, were an increase in demand in the domestic market and partial blocking of export supplies to third countries by Russian Customs.
The UAC added that poultry consumption in January-February increased by 2% to almost 181,600t, so it now accounted for more than 50% of total meat consumption in the market.
"Changes in the structure of meat consumption towards cheaper species are a logical consequence of the fall in [the population’s] real income. In future, a further increase in demand for cheaper types of meat and sausages is expected. However, it should be noted that the production costs of these will also rise, due to a increase in the cost of resources and the introduction of import duties," said UAC expert Alina Zharko.
"In this complex situation, it is important to maintain the capacity of the whole livestock industry in Ukraine, providing a comfortable working environment for producers, because at the end of the crisis, the demand for meat will recover and it would be difficult to restore the livestock population after that," she added.
However, over the next few months, the impact of rising prices is still expected to be felt. "Wholesale poultry prices have increased recently from UAH28-UAH28.50 (US$1.18-$1.20) per kg to UAH30-UAH30.50 (US$1.26–$1.28). That is not yet reflected in retail, so the prices in stores should go up in the near future," said a UAC spokesperson.
Yuri Lupenko, a member of the Ukraine Academy of Agricultural Science, noted that the prices for pork and beef would continue to rise, due to a decrease in supplies to the domestic market. According to Lupenko, prices will also be pushed up by an increase in taxation on farmers, and a rise in the cost of energy and feed. Meanwhile, a devaluation in Ukraine’s currency, the hryvnia, could stimulate exports of beef and pork.
"Now exporters from Azerbaijan and other countries are coming to Ukraine to buy live weight beef. Due to the fall in the hryvnia, they are willing to pay more. In fact, without that, the prices [for beef] on the domestic market could go up substantially. But thanks to a reduction in consumption, prices in April will only rise by 2-3%," added Zharko.