Livestock production in Ukraine is expected to be extremely unprofitable in the foreseeable future due to skyrocketing feed prices, Ivan Chaikovsky, agricultural secretary of the country’s Parliament Verkhovna Rada, told local press.
The price for sunflower and soybean meal has doubled during the past several months, and there are no signs that a price relief might be in the pipeline, Chaikovsky said. In this situation, the government should step in to protect farmers, who are suffering significant losses, he added.
Photo: Hans Prinsen
Pig farms going bankrupt
Up to 1,500 pig farms may be shut in early 2021 due to skyrocketing feed prices, the Ukraine pig farmers association said in a statement. In Ukraine’s pig farming, feed accounts for 65% to 70% of production costs, and these costs have been seen soaring amid the record-breaking grain export.
Not having enough funds to form substantial feed reserves during harvesting campaign several pig farmers decided to shut their business,” the pig farmers association said.
Fattening farms could resume operation in the future if market conditions are improved. However, it is way more difficult for closed-cycled pig farms and sow farms to get back in business, the farmers’ association claimed.
The Ukraine poultry farmers association has also complained about the skyrocketing grain prices. The prices have been steadily rising during the past few months, the poultry farmers estimated.
Mix of factors
According to Elena Neroba, business development manager of the Ukraine trading company Maxigrain, there are several factors behind such a sharp rise in prices. Firstly, domestic oilseeds and corn harvests are weaker than expected. Secondly, China is making a significant effort to purchase grain on the global market, rushing to restore pork production after a devastating epidemic of African swine fever (ASF). For instance, in October of 2020, China purchased 721,000 tonnes of corn from Ukraine, which was by a factor of 4 times more compared to the same period of the previous year. China is expected to import 26 million tonnes of grain this season – the highest figure ever, the USDA forecasted.
The high feed prices are also likely to take a toll on the retail food prices, which could jeopardise the less wealthy part of the country’s population, farmers warned.
Overview of futures prices for: corn, wheat and soybean
In this background, Ukraine poultry and pig farmers have repeatedly been calling the Ukraine government to limit grain export. However, traders believe this is not the best idea. “In the past, when soybean and rapeseed export was artificially limited, grain producers were first to react by cutting sowing areas,” Neroba said.
The government could consider supporting domestic business. This approach would be better than introducing export quotas, forcing exporters to break their obligations, she added.