A culmination of factors including available markets and domestic production standards mean that a sharp reduction of pork exports is expected this year in Ukraine.
Speaking at the ІІІ Agri Invest Forum, the Ukraine pig association chairman Artur Loza, suggested that there might be an almost 70% drop in exports compared to 2015, with only 15,000 tonnes of pork going to external markets.
This figure is approximate, however as so-called gray exports still exist in the country, which is when pork is exported without appropriate custom clearance. Traditionally, this pork goes to Russia and rebel republics of Donetsk and Luhansk Oblast of Ukraine.
Impact of Russian embargo
2015 was a record in terms of pork exports with more than 50,000 tonnes of this type of meat supplied to customers abroad, according to estimations of the Association of Pig Producers. One of the main reasons for the decline this year is the Russian embargo, introduced since 1 January 2016.
In his speech Loza explained that a large part of pork last year has been supplied to Russia, including annexed Crimea. This year pork exporters are struggling to compensate for the loss of this market with increasing deliveries to Armenia, Georgia and Moldova, but still the volume of actual supplies in these directions remains negligible. Pork exports to Moldova however, have been recently affected with trade restrictions of this country.
Asia offering pork export potential
Several companies this year also started exporting pork to Hong Kong and Vietnam, delivering mostly offal, including legs and ears, which in fact is not considered as a marketable product in Ukraine, but which are in great demand in Asian markets.
In particular, Loza cited the experience of Ukraine's largest pork producer Donetsk-based APK-Invest, which established the first supplies of pork production to Hong Kong this year and have in general made efforts to develop exports in this direction. He added, that his organisation considers China, Japan and South Korea as the most promising markets for Ukraine pork, since they consume a large amount of this type of meat.
Free falling domestic industry
Loza also pointed out that the Ukraine pig production industry is currently in a free-falling state, which is partly connected to the problems of the market. Since 2013 the overall consumption of pork in the country has dropped by 22% from 990,000 tonnes to 775,000 tonnes, according to estimations of the Association of Pig Producers.
He indicated that the structure of pig industry in this context remains rather uneven with 50% of the pigs contained on household farms. Out of 3,000 pig farms there are only 100 which have easily invested in modernisation of their production capacities, while the others are retain archaic extensive pig farming.