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USDA International Egg and Poultry


28 October 2014

USDA International Egg and Poultry 21 October USDA International Egg and Poultry 21 October


USDA International Egg and Poultry

 

Ukraine’s Poultry Situation

Production

In 2014 poultry production in Ukraine is expected to increase by 8 percent due to new production facilities that came on line in 2013 and in the first half of 2014. The bulk of this additional growth in production will be exported, although domestic demand is expected to grow marginally as well. The 2014 production level will fall below the forecast figure due to the ongoing political turmoil in Ukraine as well as production and distribution problems in the eastern regions. The production estimate for 2015 also decreased as major producers are expected to moderately expand production by raising production efficiencies.

Consumption

Substantial currency devaluations in early 2014 will have a limited impact on poultry consumption. Poultry meat remains the most affordable animal protein and consequently is also the most favored by local consumers. Overall meat consumption is expected to decline due to comparatively higher beef and pork prices. Major poultry producers anticipate strong consumer demand in the domestic market and are preparing accordingly.

Imports

 Poultry imports in 2014 will likely be at an all-time low by the end of the calendar year and are expected to further decrease in 2015. Export complications that could arise due to the ongoing conflict could foreseeably drive down import estimates lower. Imported frozen poultry will remain price-sensitive for the “further processing” market niche while domestically produced chilled product will be positioned in higher market segments. New export markets in the EU led to an innovative production model whereby premium parts and whole birds were exported, while inexpensive cuts and offal were imported. U.S. market share grew from 10 to 19 percent primarily for chicken leg quarters (HS 02071420) imports.

Ukraine did not fully implement the DCFTA with the EU despite the political crisis and formation of a new government that welcomed such an Agreement. A possible trade ban by the Russian Federation imposed on both Ukrainian and EU exports will further delay the ratification of the FTA agreement in the Ukrainian Parliament. In order to support the Ukrainian economy and to avoid Russia’s sanctions, the EU provided Ukrainian producers a six-month unilateral market access grace period on the terms agreed upon in the FTA agreement. Given the political situation in the country, it is difficult to speculate as to whether or not EU exporters will be offering further market access in late 2014 and beyond. If opened, the impact importers will have under the TRQ for European poultry products will not be as significant given the Ukrainian industry remains highly competitive. Currency devaluation so far has had limited to negative influence on Ukraine’s poultry imports. An increase in poultry production is expected to continue in the near future leaving little space for imports irrespective of whether or not EU producers receive TRQ in November.

Exports 

Poultry meat exports are expected to grow significantly in 2014 and 2015. Ukrainian’s producers will remain bullish on foreign markets which will continue to be their main source of growth. The Russian market remains closed to Ukrainian poultry meat exports since February 2014. Iraq became a major export destination for Ukraine’s poultry meat, with Former Soviet Union (FSU) countries responsible for the remaining 1/3 of the market. In 2014, the European Union granted market access to two major Ukrainian exporters. Shipments from both eligible exporters are expected to continue until the fulfilment of the Tariff Rate Quota (TRQ) in November 2014. In order to continue exports beyond 2014, the Deep and Comprehensive Free Trade Agreement (DCFTA) needs to be fully implemented by Ukraine and EU Member States. This year, the domestic industry will concentrate on developing new export markets and have set their sights on ambitiously expanding these from 40 to 50 by 2017. Source: USDA FAS Gain Report UP1426. 

 

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