Chicken remains the major animal protein consumed in Ukraine.
Large industrial broiler producers dominate Ukraine’s chicken production sector, growing 1% in 2020, reaching 89% of chicken meat production. Furthermore, industrial chicken meat production in the country is concentrated with 1 large producer responsible for over 60% of the market share and 6 mid-size producers responsible for a further 30%. Less than 9% is concentrated in a large number of small farms. Most large and medium-sized producers are vertically integrated companies, and in many cases grow their own feed crops, and operate their own feed mills, hatcheries, broiler production facilities, slaughter, and distribution.
MHP SE, which remained the largest Ukrainian chicken producer in 2020, completed a major production expansion programme in 2019, which resulted in a significant increase in meat production. Production growth in 2020 was expected due to overall efficiency increase and better utilisation of existing facilities. H5N1 AI outbreak in proximity to the company’s newest production site resulted in approximately 10% production contraction in February and May due to export market closure. Despite lower than expected winter production numbers, the company was able to rebound and reported January-June production growth to almost 360,000 MT, which is 2% higher than in January-June 2019.
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In Ukraine, chicken meat producers are responsible for over 60% of feed consumption. Despite dry fall weather and lower yield, the Ukrainian poultry industry will not experience any feed shortage in the 2020/21 season. Ukraine will remain a major feed crop exporter and chicken meat producers will continue to enjoy their feed price advantage.
In 2020/21, Ukraine will remain a large exporter and a large importer of chicken meat – expensive chicken cuts and whole chickens are exported, while chicken offal is imported. Recent domestic offal production expansion is expected to result in a decrease in imports. Exports are likely to grow in 2020 and 2021 at the expense of small and medium-size producer’s growth and better facility utilisation by the largest producer. Exports will continue to exceed imports in terms of both volume and value.
Due mainly to low production costs, exports of chicken meat are expected to increase marginally in 2020 and 2021. Ukraine’s largest chicken meat producer, MHP SE, is expected to remain the largest exporter and is responsible for almost 90% of Ukraine’s total chicken meat exports. In the remaining months of 2020, Ukraine is likely to concentrate on existing markets in Asia, former Soviet Union countries, and Africa. Markets in Japan and China may become available in 2021.
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In 2020, chicken meat production is expected to grow 2.8% to 2.2 million metric tonnes and is expected to increase a further 5% in 2021.
Upon the introduction of new tariff-rate quotas (TRQ) in 2019, the EU continued to lose its role as the major chicken meat destination for Ukrainian producers. Its share declined from 35% in 2018 to 16% in 2020. Middle Eastern countries quickly gain importance as destinations for Ukrainian premium chicken meat, predominately whole chicken. The UAE became the largest consumer of Ukrainian chicken in the first half of 2020. Exports to Saudi Arabia, Oman, and the newly opened market in Qatar slowed down due to the HPAI import ban. Exports to Kuwait and Iraq remained strong.
As a result of changed market access terms, Ukraine’s supplies to the EU became more diversified in 2020. Overall chicken cuts (predominately breasts) sales to the EU are expected to be below the 2019 level due to both new properly enforced TRQs and decreased price for chicken breasts in the EU market. In early 2020, significant volumes of chicken cuts were redirected to Asian markets.
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Mexico’s chicken meat production is on track to see a marginal increase in 2020 with investments expected in genetics, breeders, incubators and farm biosecurity expected in 2021.
The significant premium parts export growth in recent years would not be possible without massive offal imports that substitute exported chicken meat in the price-sensitive domestic market. All imports are consumed by Ukrainian processors. Previously, Ukrainian chicken meat producers exhibited little interest in the domestic offal market due to low-profit margins. However, domestic production and processing growth allowed for some offal production increase. These additional production facilities, which launched in late 2019, resulted in imports drop in 2020. An additional import decrease is forecast for 2021. EU countries remained the only source of cheap chicken offal. Although Ukraine’s exports and imports are comparable in terms of volume, the value of exports to the EU exceeds EU imports significantly. The situation is expected to continue in 2021, although the long-term need for EU offal is likely to diminish.
This information was extracted from a USDA GAINS report prepared by Oleksandr Tarassevych.