Ukrainian Broiler Production Expected to Increase

UKRAINE - Despite Ukraine's recent troubles, broiler meat production has remained stable in 2015, according to a report from the US Department of Agriculture's Foreign Agricultural Service.
calendar icon 14 September 2015
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Ukraine has experienced a sharp fall in GDP in 2015, but broiler meat production remained level and is projected to increase 2 per cent to 995,000 metric tons (MT) in 2016.

The continued expansion of production reflects, in part, the resilience of Ukraine’s large, vertically integrated producers and the support they have received from international financial institutions. These producers should continue to expand and increase market share.

The projection also reflects signs of improving economic conditions, ample availability of inexpensive feed from the 2015 crop, and expected stabilisation of other input costs.

However, lower returns from domestic sales combined with increasing costs for inputs and debt servicing pegged to foreign currencies took a toll on industry profitability in 2015.

Industry sources estimate that Ukrainian Hryvna (UAH) exchange rate depreciation since 2014 and other factors have led to a nominal increase in poultry production costs of 45 per cent. Increasing nominal costs are particularly focused in feed, hatching eggs, and energy.

Over the same period, industry sources estimate that nominal domestic broiler meat sales prices have only increased by 31 per cent. This “price squeeze” could cause some consolidation within the industry as smaller-scale producers unable to weather the storm are forced to exit.

Rise of Ukrainian broiler exports

The report projects broiler meat exports will increase to 190,000 MT in 2016; up from 180,000 MT in 2015, as poultry exporters continue to pursue higher returns by diversifying sales away from the domestic market.

Ukrainian exporters will continue to pursue expansion of exports to the EU, Middle East and Far East.

Expansion of Ukraine’s broiler meat exports from less than 25,000 MT only five years ago has
captured the attention of regional trading partners. For example, Moldova and Kazakhstan
implemented temporary trade restrictions on Ukrainian broiler meat in 2015.

Exports to the EU continue apace within allocated quotas and overtook Iraq as the largest export market by value during the first half of 2015. The EU market is considered to be lucrative but demanding as evidenced by the fact only two Ukrainian poultry production companies have been approved to export to EU markets.

The Russian market remains officially closed to Ukrainian poultry meat exports as it has been since February 2014.

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