The average profitability of Ukraine’s pig industry increased during 2017, reaching 3.5%, according to the Association of Pig Breeders of Ukraine (APBU). This is a relief after bad results in 2016.
The association revealed the figure in a statement on its website. The figures are a lot better than the years prior, when an average pig farm in the country was losing money, APBU said. In 2016, the profitability rate in the industry was -4.5%.
Pig price increase on the domestic market
The main factor improving the 2017 profitability was the price increase on the domestic market, according to research conducted by the National Institute of Agricultural Economy. In 2017, Ukrainian pork prices increased between 38.1% and 46.1% in 2017, depending on the region and the types of cut. For example, the price for 1 kg of boneless pork increased from 77.64 hryvnia (US$ 2.93) in December 2016 to 113.46 hryvnia (US$ 4.28) exactly 1 year later.
Snapshot of a pig farm in the Ukraine. The country’s farms on average reported profits again in 2017. Photo: Robert Bodde
A 2nd development is that the country’s pig population has shrunk – both last year and still continuing today, due to rising costs of production. That development now has become visible in purchasing prices, as the price rises to some extent are due to a shortage at the domestic market.
On top of that, the exchange rate of Ukraine’s hryvnia has slightly increased against other currencies in 2017, e.g. the euro. This factor positively affected the costs in the pig industry as feed additives are mostly imported from the EU.
Volatile pig price development in recent years
In 2016, the average profitability of swine production had been under pressure for a variety of reasons. That included the African Swine Fever (ASF) epidemic, the fall of purchasing power of Ukraine’s population and a reduction of state support from the national government, Alexey Doroshenko, chairman of the Ukraine Retail Suppliers Association, told the local news outlet Agroportal.
Compared to years ago (2014 and 2015), the 2017 figures have not been that profitable yet. In those years the average profitability of the swine business was 5.6% and 12.7%, respectively. In general, over the past 10 years the margins of pig business have been rather volatile. APBU commented, “Pig farmers have not always been able to keep profitability above zero.”
Pig prices even higher than China
In 2013, the profitability of pig farms in Ukraine was roughly 36%. This was prior to the registration of the 1st ASF outbreaks and the before Russia annexed the Crimea, according to Irina Palamar, chairman of the Ukraine Stock Breeders Association. In a statement on the association’s website, Ms Palamar said that profitability at that time was very high in comparison to global standards, and in particular it was nearly twice as high when compared to China.