Blackouts hurt Ukrainian pig industry

Russia’s continuing assault on Ukraine’s energy infrastructure with missile and drone strikes has seen the country’s power cut by nearly a third, triggering widespread outages across the country. Energy operator Ukrenegro warned some parts of the country might be left without electricity for days or even weeks.

Supply disruptions

The emergency and scheduled power outages wreak havoc on the supply chain in the pig industry. This increases retail prices, the Ukrainian pig industry warned. For instance, some farmers have been failing to deliver shipments of chilled pork to meat processors in time during the past month. As a result of the blackouts, the average capacity utilisation factor of the Ukrainian slaughterhouses dropped to 20% or 30%, the association estimated.

Falling farmgate prices

As slaughterhouses and meat-processing plants have to stand idle, wholesale pork prices have started falling, in contrast to the rise in retail prices. In the second half of October, the power outages strengthened the seasonal decline in the farmgate pig prices. During the second week of October, the average price of pigs in live weight was UAH 73.9 ($ 1.99) per kg, in the fourth week, this figure dropped by nearly 16% to UAH 61.7 ($ 1.66) per kg.

Production costs Ukrainian pig industry surge

On the other hand, production costs keep rising across the board. In the wake of blackouts, several farmers switched to diesel generators to secure backup power generating capacities. However, the average cost of a kilowatt of electricity from a diesel generator is by a factor of 2 or 3 times higher compared to that from the common energy grid.

“Still, both farmers and processors have to bear such costs since long-term power outages would lead to greater production losses and higher production costs,” the Ukrainian pig farmers association said, adding that not all companies managed to secure backup power generation capacities in time. Some farmers are waiting for diesel generators. The Ukrainian government helps purchase diesel generators, but it takes 3 to 5 weeks for a farmer to get one since it must be imported into Ukraine.

Feed mills also impacted

The problem is that power outages impact all segments of the production chain. While meat-processing plants and slaughterhouses can plan their work according to the outages schedule, for feed mills, it is essential to maintain uninterrupted work, the association added.