Less bread in 2024. Why are agricultural companies turning to meat production and how will this affect prices?

Although corn threshing continues in Ukraine, we can already say with confidence that the 2023 harvest will please Ukrainian farmers. According to the forecast of the Ministry of Agriculture, gross grain production will reach 59.7 million tons (last year this figure was 53.864 million tons). Agricultural producers owe a good harvest to weather conditions that made it possible to achieve record yields of some grains throughout the history of Ukraine. Focus It revealed what expectations the Ukrainian agricultural sector has for 2024 and why there is a risk of a significant decrease in the planted area.

Big harvest – low price. What happened to grain prices and exports in 2023?

Unfortunately, farmers will not be able to turn the harvest into good income due to problems in exporting products abroad. “In 2023, exports are carried out in every possible way, but at the same time There were obstacles on each of these paths: “Blocking the work of the temporary grain corridor, ban on supplies and even transit through neighboring EU countries, physical blocking of crossing points, air strikes by Russian troops on ports in the Odessa region and ports on the Danube, destruction of port infrastructure,” he says Focus Svetlana Litvin, Analyst of the Ukrainian Club of Agricultural Enterprises (UCAB).

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“On one side, The year was successful because we were able to grow a good harvest, but it was difficult to sell the product– comments Focus Denis Marchuk, Deputy Chairman of the All-Ukrainian Agricultural Council, – as a result, the grain enterprise stopped working, mass blockades began on the Polish-Ukrainian border, in fact from May to September a ban was imposed on the import of Ukrainian products, transit fights began. “The sea is just opening up and it is not working as we would like.”

According to preliminary estimates, In 2023, farmers’ export income will be 21.7 billion dollars, which is 8% less than a year ago. It was stated in UCAB. The main reason for this is the global downward trend in prices of herbal products.Especially grains and oilseeds, which form the basis of our exports;

“As Ukraine began to revive exports and other global players adjusted their plantings to global needs, prices of key grains and oilseeds began to fall. World grain prices decreased by 43% in December 2023 compared to March 2022 By 29% compared to December 2022; oilseeds increased by 29% and 23% respectively,” said Svetlana Litvin.

According to him, in addition to global trends in price declines, the formation of Ukrainian prices is also influenced by expensive logistics and the presence of outstanding balances, which puts further pressure on the price. “At the end of last year, Ukrainian farmers were selling their products at a loss, now they are selling them at even lower prices. In December 2023, grain prices on the Ukrainian market fell by an average of 23% compared to December of the previous year. However, among oilseeds, we are seeing a decline in sunflower and rapeseed prices (-10% and -12% respectively) and a 16% increase in soybean prices,” Lytvyn added.

In such cases, farmers face a dilemma: how to further plan their activities. “The issue of loans and lending will be key,” predicts Marchuk. “At the same time, the launch of the second phase of land reform, [юридическим лицам] The purchase of 10 thousand hectares of land will be allowed for medium and small businesses; This is a huge problem. Commodity producers raise the question: How can we survive when we have actually been working in the red for two years and everything we earn goes to support the Armed Forces of Ukraine?“.

Meat expectations: Will farmers switch to meat production?

As grain growing and marketing becomes more risky and complex, animal husbandry is gaining popularity in the country.

“Pork production this year has shown tremendous profitability across all meat types. Small import supplies and relatively low costs created a stable demand in the population, which kept live bait purchase prices at a high level. Poultry meat is also a serious field of work for farmers. Feeding and costs differ from pig farming, but production remains profitable. Beef production will continue to attract less attention from producers, as the animal breeding cycle is currently the largest among the areas listed. Moreover, there is very little private breeding of beef cattle in Ukraine; The cost of production of this type of meat is high, which affects the final high cost, which does not meet the demand of the Ukrainian population in such difficult economic times.” states Focus UCAB analyst Maxim Gopka.

added this This year’s major achievement in animal husbandry is the rethinking of animal protein farming and its export potential..

But for this, farmers need to learn to cope with the challenges faced by live animal exporters, namely the implementation and compliance with phytosanitary standards and EU regulations linked to the future European green policy.

The price of lard increased by 30%: How have meat prices changed in Ukraine during the year?

“Since the beginning of the year, prices of main meat types in markets have increased by 5.7-31.8 percent, depending on the type of meat. The price of beef increased by the least in a year – goulash and ribs. They added 7.4-9.3% to the price and the cost was 254.82 UAH/kg and 157.95 UAH/kg respectively. This is because meat prices are highest in periods when consumers’ purchasing power is low. Chicken meat has become more expensive by 5.7-15.2%. Among poultry meat, the price of chicken carcasses and chicken drumsticks increased by 5.7-8.3% during the year, costing UAH 85.90/kg and UAH 77.45/kg respectively. Retail prices of chicken legs and chicken fillets increased by 13.5-15.2% to 105.95 UAH/kg and 153.96 UAH/kg. The increase in poultry prices is due to the increasing demand for this cheapest type of meat“, recorded Focus Natalya Kopytets, leading researcher at the Pricing and Agricultural Market Department of the National Science Center “Institute of Agricultural Economics”.

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According to that, Pork retail prices increased by 4.7-27.9% during the year. Moreover, pork belly showed the least increase in price – only 4.7%, and the price rose to 177.02 UAH/kg. The collar price increased by 27.9% at most. Now for 1 kg of this meat you have to pay 246.23 UAH. Prices of homemade lard in markets increased by 31.8% during the year to 249.00 UAH/kg, while the price of salted lard decreased by 7.5% to 242.80 UAH/kg. One of the reasons for the increase in pork prices is the decrease in supply due to the decrease in the number of live animals.

According to IAE scientists’ estimates, Increased demand for meat on the eve of and during the Christmas and New Year holidays will further increase retail prices by up to 3%.

The price of milk increased by 7 percent: Experts found an unusual explanation

Milk did not get cheaper this year either. According to the State Statistics Service, the price of milk in November increased by 7.3% compared to December 2022. Now the cost of a liter of milk in supermarkets is on average 41-42.3 UAH. The price of hard cheese and cottage cheese increased by 6 percent, and butter by 7 percent. For example, the price of 1 kg of Dutch hard cheese Zveni Gora rose from 392.5 UAH during the year to 466.2 UAH as of December 1, according to the Ministry of Finance portal. At the same time, while Ukrainians paid an average of 66.6 UAH for 200 g of butter at the beginning of the year, by November the price increased to 71.8 UAH.

Dairy product producers also mention that raw material prices have increased in the domestic market. For example, on December 10, the purchase price of premium milk was on average 14.61 UAH/kg excluding VAT, while in January it was about 12 UAH/kg and 13.5 UAH/kg and 11.7 UAH/kg for premium milk, respectively. The Milk Producers Association claims that milk prices have increased in Ukraine Due to the increase in the number of milk consumers, the return of approximately one million citizens from abroad caused an increase in demand.. Additionally, the number of cows continues to decline, the cost of feed production is increasing, premixes and other purchased ingredients are becoming more expensive, and logistics costs are increasing.

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The Union also reminded that, unfortunately, no effective state program to support and encourage the development of dairy farming has been implemented in Ukraine since independence.