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Ukraine: Meat Sector Review Ukraine – Meat sector review – Meat sector Ukraine Ukraine Meat sector review FAO INVESTMENT CENTRE COUNTRY HIGHLIGHTS Please address questions and comments to: Investment Centre Division Food and Agriculture Organization of the United Nations (FAO) Viale delle Terme di Caracalla – 00153 Rome, Italy Report No. 14 Report [email protected] http://www.fao.org/investment/en Ukraine: Meat sector review Report No. 14 - February 2014 I3532E/1/11.13 FAO INVESTMENT CENTRE Ukraine Meat sector review Andriy Yarmak Economist, Investment Centre Division, FAO Elizaveta Svyatkivska Meat Market Analyst Dmitry Prikhodko Economist, Investment Centre Division, FAO COUNTRY HIGHLIGHTS prepared under the FAO/EBRD Cooperation FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS Rome, 2014 The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) or the European Bank for Reconstruction and Development (EBRD) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO or the EBRD in preference to others of a similar nature that are not mentioned. The views expressed in this information product are those of the author(s) and do not necessarily reflect the views or policies of FAO or the EBRD. © FAO 2014 FAO encourages the use, reproduction and dissemination of material in this information product. Except where otherwise indicated, material may be copied, downloaded and printed for private study, research and teaching purposes, or for use in non-commercial products or services, provided that appropriate acknowledgement of FAO as the source and copyright holder is given and that FAO’s endorsement of users’ views, products or services is not implied in any way. All requests for translation and adaptation rights, and for resale and other commercial use rights should be made via www.fao.org/contact-us/licencerequest or addressed to [email protected]. FAO information products are available on the FAO website (www.fao.org/ publications) and can be purchased through [email protected]. For further information on this publication, please contact: Director Investment Centre Division Food and Agriculture Organization of the United Nations (FAO) Viale delle Terme di Caracalla, 00153 Rome, Italy Cover photo: © Dreamstime TABLE OF CONTENTS Foreword iv Acknowledgements v Acronyms and abbreviations vi Executive summary vii 1 Global overview of the meat sector 1 2 Meat market in Ukraine 8 3 Beef, pork and poultry primary production efficiency 59 4 Meat market players and processing efficiency 103 Annex 1 Foreign trade statistics 132 Annex 2 World per capita meat consumption and population income 144 FOREWORD This joint publication of the Food and Agriculture Organization (FAO) and the European Bank for Reconstruction and Development (EBRD) reviews Ukraine’s meat sector over the 2005–2010 period. It aims to encourage policy-makers and investors to make the sector more efficient and inclusive. The report provides information on meat production and consumption as well as trade and policy measures for Ukraine’s three main meat subsectors: beef, pork and poultry. It provides comparisons of meat consumption and market protection measures with other countries. The review also contains information on Ukraine’s main meat market players and identifies key constraints and opportunities for the development of the sector. Between 2005 and 2010, the Ukrainian meat sector grew in absolute terms to reach 14.4 percent of agricultural value added in 2010. However, compared to the overall Ukrainian gross domestic product (GDP), the importance of the meat sector constantly decreased. The most important factors explaining this evolution include Ukraine’s accession to the World Trade Organization (WTO), the overall market liberalization, the financial crisis, urbanization and shifts in food consumption patterns. Despite recent improvements, the Ukraine meat sector still faces important challenges related to food safety and access to markets, in particular in the context of the future Ukraine-European Union (EU) free trade agreement (FTA). Readers of this report who are interested in Ukraine’s meat market mid-term prospects are encouraged to read the Agricultural Outlook 2013–2022 jointly produced by FAO1 and the Organisation for Economic Co-operation and Development (OECD). 1 http://www.oecd.org/site/oecd-faoagriculturaloutlook/. iv ACKNOWLEDGEMENTS This review was conducted under the cooperation between FAO and the EBRD. It was funded by the EBRD Shareholder Special Fund and FAO. The main author of the study was Andriy Yarmak, Economist, Investment Centre, FAO, assisted by Elizaveta Svyatkivska, Meat Market Analyst. Dmitry Prikhodko, Economist, Investment Centre, FAO, supervised the analysis and contributed to the sections on global food markets and policies. Arianna Carita and Vasyl Hovhera, both Economists at the FAO Investment Centre, carried out background research that was used to draft the report. They were assisted by Ivan Vinkovic, Intern, Investment Centre, FAO. Marta Bruska, Agribusiness, EBRD, provided leadership and coordination on behalf of the EBRD. The authors express their deep gratitude to Lesya Kuzmenko, Senior Banker, Agribusiness Team, EBRD, for her very useful insights on meat sector issues and trends. This report benefited from comments by Pedro Marcelo Arias, Economist, Trade and Markets Division, FAO. Special thanks are extended to Hsin Huang, Secretary General of the International Meat Secretariat (IMS), who also provided valuable suggestions. The authors would finally like to thank Emmanuel Hidier, Senior Economist, Investment Centre, FAO, and Claudio Gregorio, Chief, Europe, Central Asia, Near East, North Africa, Latin America and Caribbean Service, FAO, for their overall support and guidance. Genevieve Joy, Project Support/Communications, Investment Centre, FAO, took very good care of the publication process, together with Linda Mitchell and Adriana Brunetti, who edited and formatted the report. Thanks are also extended to the entire TCIC Administrative team for their assistance during the implementation of the study. v ACRONYMS AND ABBREVIatIONS CIS Commonwealth of Independent States CWE carcass weight equivalent EBRD European Bank for Reconstruction and Development EFTA European Free Trade Association FAO Food and Agriculture Organization FAT fixed agricultural tax FTA free trade agreement GDP gross domestic product GNI gross national income GUS Central Statistical Office (Poland) Ha hectare HACCP Hazard Analysis and Critical Control Points Ho/Re/Ca Hotel/Restaurant/Cafe IFC International Finance Corporation IMS International Meat Secretariat ISO International Organization for Standardization Kg kilogram MAPFU Ministry of Agrarian Policy and Food of Ukraine MPS market price support NPC nominal protection coefficient OECD Organisation for Economic Co-operation and Development PPP purchasing power parity PSE producer support estimate ROI return on investment RTC ready to cook SCT single commodity transfers SPS sanitary and phytosanitary (measures) UAH Ukrainian hryvnya UCAB Ukrainian Agribusiness Club USD United States dollar VAT value added tax WTO World Trade Organization vi Ukraine - Meat sector review EXECUTIVE SUMMARY Global meat production A buoyant world meat market Worldwide productivity growth throughout the meat production chain has been significant in recent years. Meat production has grown about 300 percent in the last 50 years. Meat is anticipated to be one of the fastest growing commodities due to increasing incomes, changing consumer preferences in many emerging economies, economies of scale and structural changes which are lowering costs of meat production and meat prices (poultry and pig meat in particular). Global meat consumption continues to grow at one of the highest rates of any major agricultural commodity. Growth in developing countries is projected to capture 82 percent of the additional global consumption by 2021. Surging meat consumption, in particular of poultry, in developing countries According to the OECD-FAO Agricultural Outlook 2012-2021, growth in meat demand will be driven mostly by the large Asian economies, oil exporting countries and Latin America, where income gains are expected to be significant, and by emerging economies where income growth and urbanization will strengthen the consumption of animal proteins at the expense of foods of vegetal origin. Poultry meat as the cheapest and most accessible source of meat protein will lead this anticipated growth, globally overtaking pig meat as the largest source of meat by 2021. Ukrainian meat production Sharp increase of domestic production in volume, relative decline in value The six year period under review in this study is 2005 to 2010. Based on the review, forecasts are made on the mid-term prospects of the meat sector. Despite the fact that meat production in Ukraine grew in absolute terms during 2005–2010, its contribution to the Ukrainian GDP decreased from 4.4 percent to 3.2 percent. During those six years, Ukraine increased meat production in terms of volume by 39 percent. All of the increase occurred on
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