Ukraine Agribusiness Report Q1 2013Published by: Business Monitor International Published: Nov. 21, 2012 - 77 Pages Table of Contents
AbstractBMI View: In line with our view for wheat and barley exports to dry out quickly after shipments out ofthe country surpassed the limit set by the government in September, we do not see the recent ban onwheat exports as unexpected and believe the country has run out of wheat to sell on the global markets.For dairy, producers have benefited from newly implemented subsidies in a context of higher global milkprices, and the re-opening of trade with Russia could drag production higher in the coming months. Forlivestock, integrated producers have increased margins in a context of high domestic meat prices andsteady demand in spite of slowing economic growth.Plenty Of Corn Left Ukraine – Grain July-September Exports & 2012/13 Export Limits (mn tonnes) Source: USDA, UkrAgroConsult Key Forecasts Corn production growth to 2016/17: 22.0% to 23.0mn tonnes. We expect improvingtechnology and yield gains, as well as greater demand from the poultry industry, to drive up cornproduction. Milk consumption growth to 2016/17: 9.9% to 5.7mn tonnes. We expect fluid milkconsumption to fluctuate, as consumers are still unable to afford expensive imports. Poultry production growth to 2016/17: 29.0% to 1.2mn tonnes. We see poultry production asthe most modern and dynamic sector in Ukraine’s livestock industry, leading the way withgrowth for the sector. Approval for exports to the EU is expected to boost opportunities forUkrainian producers as we move through the forecast period. 2013 real GDP growth: 1.0%, up from -0.1% in 2012. Predicted to average 1.8% from 2012 to2017. 2013 consumer price inflation: 7.5% average, up from 5.3% in 2012. BMI universe agribusiness market value: 16.4% year-on-year (y-o-y) decrease toUS$16.5bn in 2012/13, forecast to grow on average 2.8% annually between 2011/12 and2016/17. Industry Outlook In line with our view for wheat and barley exports to dry out quickly after shipments out of the countrysurpassed the limit set by the government in September, we do not see the recent ban on wheat exports asunexpected and believe the country has run out of wheat to sell on the global markets. An agreement wassigned on September 4 between the government and the traders in which exporters agreed not to exportmajor grains in quantities higher than the pre-determined limits while the state agreed not to impose anyformal limit on exports. Because the export limits for wheat and barley were set at 4.0mn tonnes and3.0mn tonnes in 2012/13, and the country has indicated it sold almost 5.0mn tonnes of wheat and 1.3mntonnes of barley between July and October, we do not expect exports to continue over the coming months(especially for wheat). Ukraine-based dairy company Milkiland announced faster growth in gross profits than sales in H112thanks to the reintroduction of government subsidies to the dairy industry and a decrease in average rawmilk prices linked to recent import restrictions from Russia. The company’s revenues grew by 5% inH112 while its gross margin grew by 8% over the same period. However, EBITDA and profits fell by13% and 6% respectively, showing the impact of restrictions from the Russian Federal Service forControl in the Sphere of Protection Consumers’ Rights (Rospotrebnadzor). African swine fever was discovered in Ukraine for the first time ever. Because the outbreak seems to havebeen temporarily halted thanks to strict control measures according to the Food and AgricultureOrganization of the United Nations (FAO), there remain some risks to pork production in the country andin the Caucasus region as a whole. In addition to Ukraine, nearby countries such as Moldova, Kazakhstanand Latvia, which have a large pig population and weak health standards and controls, are seeingpotential risk of the spread of the disease in the coming months. The disease does not affect humans butthe mortality among pigs can be very high. As a comparison, Russia’s pig herd decreased by 300,000because of a similar outbreak in 2011. Get full details about this report >> |
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