Feed costs hurting Ukraine’s pig industry

The average production costs of pig feed in Ukraine increased from 4.90 hryvnia (US$ 0.17) per kg as of the beginning of 2020 to 7.00 hryvnia (US$ 0.25) per kg as of early October, the Association of Ukrainian Pig Breeders (AUPB) said in an open letter filed to the government. Given the low market price for live pigs, the expensive feed incurs huge losses to pig farmers, pushing them out of operation. Against that this background, Ukrainian pig farmers have asked the government to limit corn exports in order to contain the growth of prices on the domestic grain market.

Situation in the pig industry is critical

The association wrote, “The situation in the pig industry is taking on a critical shape. Due to the current environment on the grain market, pessimistic and even panic moods among market operators are intensifying.”

According to the pig farmers, the expensive feed jeopardises the anticipated recovery of the Ukrainian pig industry. Since the beginning of 2020, the pig population in Ukraine has been growing. The farmers warned, however, that the progress can be lost as easily.

Pig industry is not attractive to invest in

In the middle of autumn, the industry’s investment attractiveness ratio entered “the red zone”, the farmers said, referring to some companies struggling with high production costs. Oleksandra Bondarska, head of the analytical department of the AUPB, said: “Of course, as in any economy, pig production is cyclical, with ups and downs in profitability. However, now the situation is somewhat different.”

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Toll on retail prices for pork

The new problems of the pig farmers could also take a toll on the retail prices for pork in Ukraine. In this background, the Ukrainian government must brace for rising pork imports, which could negatively affect the country’s self-sufficiency status in pork.

Bondarskaya added, “Considering the significant weakening of pork prices globally this year, there are plenty of willing foreign pork suppliers from European countries and the US ready [to export pork to Ukraine].”

Annual domestic pork consumption

The AUPB estimated that annual domestic pork consumption could double in the coming years from the current 15 kg per capita. According to the Ukrainian Meat Industry Association, the country could boost the pig population to 20 million tonnes from the current 3.3 million tonnes. That would help in ramping up domestic consumption.