August 17, 2004
Ukraine's 2004/05 Beef Production Seen At 2.955 Million Head
Ukraine's 2004/05 domestic beef production will decrease to 2.955 million head from 3.05 the previous year, according to information from the U.S. Department of Agriculture's Foreign Agricultural Service web site, dated Aug. 11 and released Monday.
Production of beef in 2005 will continue to decline due to low beef enterprise efficiency and the negative effects associated with severe weather during the 2003/2004 crop season, the report said. Conversely, pork production is expected to increase slightly. Production growth is being generated by an influx of investment into efficient hog operations and as a response to increasing domestic pork prices. Ukraine's exports of beef to Russia will decline significantly, though Ukraine will continue to benefit as a transshipment point for Polish and U.S. pork to Russia. Imports of pork are expected to remain at relatively high levels, while imports of beef will continue to be insignificant due to technical barriers to trade in red meats and a recent shift in consumer preference towards poultry.
Imports of live cattle and beef to Ukraine in 2004 are significantly lower than anticipated. Despite falling domestic production and increased prices, the Ukrainian market for cattle remains closed for potential U.S. exporters. Even before the BSE case was confirmed in the United States, the Ukrainian State Veterinary Service refused imports of U.S. beef due to hormone usage. Exports of Ukrainian live cattle to markets in the Middle East remain insignificant and are restricted by export duties.
Imports of pork are expected to triple in 2004, but will probably level off in 2005 due to stabilization of domestic production. For the first time in many years, U.S. pork penetrated the Ukrainian market and captured a significant 30% market share. This trend occurred despite resistance from the Ukrainian Veterinary Authority and the lack of a negotiated bilateral health certificate. It is likely that smuggled shipments of pork recently spotted in the Ukrainian market are of U.S. or Polish origin.
Almost one third of all pork imported into Ukraine ended up in Russia. Ukrainian companies have become involved in the pork re-export market after Russia introduced country specific quotas for meat. In some cases, imported U.S. or Polish pork is substituted for Ukrainian pork in the domestic market, while Ukrainian pork is exported.
In many other instances, Polish and U.S. pork are repackaged and relabeled in Ukraine for sale to Russia. Russian competent authorities have complained about these developments, but no action has been taken by the GOU thus far. Trade flows of pork and products in 2005 are likely to mirror the trends of 2004.
The structure of trade in red meats is not expected to change much in 2005. Russia will continue to be the major export market, but Ukraine's share will most definitely decline quickly. Prior to 2004, Ukraine was supplying increasing amounts of beef to the Russian market due to the high level of animal slaughter. These exports were a result of the low profitability of the domestic livestock enterprises and an insufficient increase in domestic production. A consistent decrease in cattle inventories eventually resulted in the Ukraine not being able to meet Russian demand. 2005 will be the second year Ukrainian exports of red meat will decline (excluding re-export).
