April 4, 2013

Ukraine's restriction on pork imports from Brazil since the end of March, due to "health concerns" may lead to a shortage of meat on the domestic market, as well as a jump in prices.

Ukraine's veterinary watchdog, Gosvetfitosluzhboy, implemented the ban at the end of March, claiming that Brazilian imports were not meeting the required veterinary standards. However, analysts claimed the government took the step in order to support the domestic pig industry, which was coming under pressure from the cheaper imports.

"In the last few months on the Ukraine chilled pork market, Brazilian products - thawed products that were sold as chilled - already accounted for about 30% of the total market, and were considered by domestic producers as the number one competitor," said Elizabeth Svetvyatskaya, an expert at the Ukrainian Agrarian Club.

"At retail, Brazilian pork was selling at the price of UAH35-40 (US$4.24-4.84) per kilogramme, while Ukrainian pork was selling above UAH40 (US$4.84) per kilogramme. And since the consumer cannot determine the difference between products just visually, they simply chose the cheaper pork."

According to official statistics, imports of fresh, chilled and frozen pork rose by 2.4 times in 2012, from 86,000 tonnes (US$160 million) to 207,000 tonnes (US$446 million). Domestic production, on the other hand, only grew 7% from 670,000 tonnes (in carcase weight) in 2011 to 720,000 tonnes in 2012.

The volume of imports of Brazilian pork rose almost fourfold during the same period from 33,000 tonnes in 2011 to 123,000 tonnes in 2012. As a result of the ban, the Ukrainian market lost more than 10,000 tonnes of pork per month, so domestic pork prices are expected to grow by as much as 20%, which should make pig farming a profitable business again.

"If the ban on Brazilian pork imports carries on for a long time, then, due to the shortage of raw material, the price increase in this segment of the ready meal market could amount to 20%. Unfortunately, it involves a significant part of the market, as most manufacturers use low-quality imported raw materials for the production of these products, the quality of which was placed in doubt by Gosvetfitosluzhboy," said Roman Raspopov, CEO of the largest Ukraine pork producer APK-Invest.