Despite favorable weather conditions, which allowed for a good grain harvest, Ukrainian farmers are not optimistic about its sale and export. The situation with grains, compared to last year, has become more complicated, because the blockade on the Ukrainian-Polish border was added to the closure of sea routes. Low grain prices motivate farmers to explore other areas of activity, in particular to move into the livestock sector.
Although corn threshing continues in Ukraine, we can already say with confidence: the 2023 harvest will please Ukrainian farmers. According to the forecast of the Ministry of Agriculture, the gross production of grain crops will reach 59.7 million tons (last year the figure was 53.864 million tons). Agricultural producers owe a good harvest to weather conditions, which made it possible to achieve record yields for some cereals in the entire history of Ukraine. Focus found out what prospects the Ukrainian agricultural sector has for 2024 and why there is a risk of a significant reduction in acreage.
Big harvest – low price. What happened to grain prices and exports in 2023
Unfortunately, farmers will not be able to convert the harvest into good earnings due to problems with exporting products abroad. “Export in 2023 was carried out in all possible ways, but at the same time On each of these paths there were obstacles: blocking the work of a temporary grain corridor, a ban on supplies and even transit through neighboring EU countries, physical blocking of crossing points, air attacks by Russian troops on the seaports of the Odessa region and the Danube river ports, destruction of port infrastructure,” says Focus Analyst of the Ukrainian Club of Agricultural Business (UCAB) Svetlana Litvin.
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“On the one side, the year was successful because we were able to grow a good harvest, but from the point of view of the ability to sell this product it is difficult– comments Focus Denis Marchuk, Deputy Chairman of the All-Ukrainian Agrarian Council, – after all, the grain initiative stopped working, mass blockades began on the Polish-Ukrainian border, a ban on the import of Ukrainian products actually from May to September, battles over transit. The sea is just opening and is not working as we would like.”
According to preliminary estimates, in 2023, the export revenue of farmers will be $21.7 billion, which is 8% less than a year ago, noted in UCAB. The main reason is the global trend of decreasing prices for crop productsprimarily grains and oilseeds, which are the basis of our exports.
According to analysts, in 2023 the export revenue of farmers will be $21.7 billion, which is 8% less than a year ago
“As Ukraine began to restore exports and other global players adjusted their planting areas in accordance with global needs, the price of major grains and oilseeds began to decline. In December 2023, world prices for grain crops decreased by 43% compared to March 2022 and by 29% compared to December 2022; oilseeds by 29% and 23%, respectively,” said Svetlana Litvin.
According to her, in addition to global trends in price reduction, the formation of Ukrainian prices is also influenced by expensive logistics and the presence of carry-over balances, which further put pressure on the price. “At the end of last year, Ukrainian farmers sold their products at a loss, and now they are selling at an even lower price. In December 2023, grain prices on the Ukrainian market decreased by an average of 23% compared to December of the previous year. But among oilseeds, we are seeing a drop in prices for sunflower and rapeseed (-10% and -12%, respectively), and for soybeans an increase of 16%,” added Lytvyn.
Due to the export blockade, grain prices on the domestic market are falling. Thus, in December 2023 they decreased by 23% on average compared to December of the previous year
In such conditions, farmers are faced with a dilemma: how to plan their activities further. “The issue of loans and on-lending will be key,” Marchuk predicts. “At the same time, the launch of the second stage of land reform, where (legal entities) will be allowed to buy 10 thousand hectares of land, is a very big problem for medium and small businesses. Commodity producers are raising 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 prospects: will farmers switch to meat production
As grain growing and marketing becomes more risky and complex, livestock farming is gaining popularity in the country.
“Pork production this year demonstrated enormous profitability among all types of meat. Small import supplies and relatively low costs generated stable demand from the population, which maintained purchase prices for live bait at a high level. Poultry meat is also a serious area of work for farmers. Feeding and costs are different compared to pig farming, but production remains profitable. Beef production will continue to attract less attention from producers, because the animal rearing cycle is the largest among the areas already listed. Moreover, there is very little specialized beef cattle breeding in Ukraine; the cost of production of this type of meat is high, which affects the final high cost, which does not satisfy the demand of the population of Ukraine in such difficult economic times,” states Focus UCAB analyst Maxim Gopka.
He added that This year’s significant achievement in livestock farming is the rethinking of animal protein farming and its export potential.
However, for this, farmers need to learn to cope with the challenges facing livestock exporters, namely the implementation and compliance with phytosanitary standards and EU regulations, which correlate with the future European green policy.
Lard has risen in price by 30%: how meat prices have changed in Ukraine over the year
“Since the beginning of the year, prices for main types of meat in grocery supermarkets have shown an increase of 5.7–31.8%, depending on the type of meat. Beef has increased in price the least in a year – goulash and ribs. They added 7.4–9.3% in price and cost 254.82 UAH/kg and 157.95 UAH/kg, respectively. This is due to the fact that beef prices are highest when the purchasing power of consumers is low. Chicken meat became more expensive by 5.7–15.2%. Among poultry meat, chicken carcass and chicken drumsticks increased in price over the year by 5.7–8.3% and cost 85.90 UAH/kg and 77.45 UAH/kg, respectively. Retail prices for chicken thighs and chicken fillet increased by 13.5–15.2% – to 105.95 UAH/kg and 153.96 UAH/kg. The rise in prices for poultry meat is due to an increase in demand for this cheapest type of meat“, noted Focus Leading researcher at the Department of Pricing and the Agricultural Market of the National Scientific Center “Institute of Agrarian Economics” Natalya Kopytets.
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According to her, retail prices for pork increased by 4.7–27.9% over the year. Moreover, pork belly increased in price the least – only 4.7%, and rose in price to 177.02 UAH/kg. The price of collars increased the most – by 27.9%. Now for 1 kg of this meat you should pay 246.23 UAH. In grocery supermarkets, prices for homemade lard over the year increased by 31.8% – to 249.00 UAH/kg, while salted lard fell in price by 7.5% – to 242.80 UAH/kg. One of the reasons for the rise in price of pork is a decrease in supply due to a reduction in the number of livestock.
According to the forecasts of IAE scientists, increased demand for meat on the eve of and during the Christmas and New Year holidays will further push retail prices up to 3%.
Milk has risen in price by 7%: experts have found an unusual explanation
Milk has not become cheaper this year either. According to the State Statistics Service, milk in November relative to December 2022 increased in price by 7.3%. Now a liter of milk in supermarkets costs on average 41–42.3 UAH. Hard cheese and cottage cheese went up in price by 6%, butter by 7%. For example, 1 kg of Dutch hard cheese Zveni Gora, according to the Ministry of Finance portal, increased in price over the year from 392.5 UAH to 466.2 UAH as of December 1. At the same time, if at the beginning of the year Ukrainians paid an average of 66.6 UAH for 200 g of butter, then as of November the price increased to 71.8 UAH.
Dairy producers are also talking about rising prices for raw materials on the domestic market. For example, the purchase price of premium milk on December 10 averaged 14.61 UAH/kg excluding VAT, while in January it was about 12 UAH/kg, and first grade milk was 13.5 UAH/kg and 11.7 UAH/kg. kg respectively. The Association of Milk Producers suggests that milk prices in Ukraine are rising due to the return of about a million citizens from abroad, which led to an increase in demand due to the increase in the number of milk consumers. In addition, 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 rising.
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The Association also recalled that in Ukraine, since independence, unfortunately, no effective state program has been introduced to support and promote the development of dairy farming.