Ukraine Agribusiness Report Q1 2013
Business Monitor International, January 2013, Pages: 77
BMI View:
In line with our view for wheat and barley exports to dry out quickly after shipments out of the country surpassed the limit set by the government in September, we do not see the recent ban on wheat 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 milk prices, and the re-opening of trade with Russia could drag production higher in the coming months. For livestock, integrated producers have increased margins in a context of high domestic meat prices and steady demand in spite of slowing economic growth.
Key Forecasts:
- Corn production growth to 2016/17: 22.0% to 23.0mn tonnes. We expect improving technology and yield gains, as well as greater demand from the poultry industry, to drive up corn production.
- Milk consumption growth to 2016/17: 9.9% to 5.7mn tonnes. We expect fluid milk consumption 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 as the most modern and dynamic sector in Ukraine’s livestock industry, leading the way with growth for the sector. Approval for exports to the EU is expected to boost opportunities for Ukrainian 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 to 2017.
- 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 to US$16.5bn in 2012/13, forecast to grow on average 2.8% annually between 2011/12 and 2016/17.
Industry Outlook:
In line with our view for wheat and barley exports to dry out quickly after shipments out of the country surpassed the limit set by the government in September, we do not see the recent ban on wheat exports as unexpected and believe the country has run out of wheat to sell on the global markets. An agreement was signed on September 4 between the government and the traders in which exporters agreed not to export major grains in quantities higher than the pre-determined limits while the state agreed not to impose any formal limit on exports. Because the export limits for wheat and barley were set at 4.0mn tonnes and 3.0mn tonnes in 2012/13, and the country has indicated it sold almost 5.0mn tonnes of wheat and 1.3mn tonnes 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 H112 thanks to the reintroduction of government subsidies to the dairy industry and a decrease in average raw milk prices linked to recent import restrictions from Russia. The company’s revenues grew by 5% in H112 while its gross margin grew by 8% over the same period. However, EBITDA and profits fell by 13% and 6% respectively, showing the impact of restrictions from the Russian Federal Service for Control 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 have been temporarily halted thanks to strict control measures according to the Food and Agriculture Organization of the United Nations (FAO), there remain some risks to pork production in the country and in the Caucasus region as a whole. In addition to Ukraine, nearby countries such as Moldova, Kazakhstan and Latvia, which have a large pig population and weak health standards and controls, are seeing potential risk of the spread of the disease in the coming months. The disease does not affect humans but the mortality among pigs can be very high. As a comparison, Russia’s pig herd decreased by 300,000 because of a similar outbreak in 2011.
Executive Summary 5
SWOT Analysis 7
Ukraine Agriculture SWOT 7
Ukraine Business Environment SWOT 8
Supply & Demand Analysis 9
Ukraine Dairy Outlook 9
Table: Ukraine Milk Production & Consumption, 2012-2017 10
Table: Ukraine Butter Production & Consumption, 2012-2017 10
Table: Ukraine Cheese Production & Consumption, 2012-2017 10
Table: Ukraine Milk Production & Consumption, 2008-2012 12
Table: Ukraine Butter Production & Consumption, 2008-2012 12
Table: Ukraine Cheese Production & Consumption, 2008-2012 13
Ukraine Grains Outlook 13
Table: Ukraine Wheat Production & Consumption, 2012-2017 14
Table: Ukraine Corn Production & Consumption, 2012-2017 14
Table: Ukraine Barley Production & Consumption, 2012-2017 14
Table: Ukraine Wheat Production & Consumption, 2008-2012 17
Table: Ukraine Corn Production & Consumption, 2008-2012 17
Table: Ukraine Barley Production & Consumption, 2008-2012 17
Ukraine Livestock Outlook 18
Table: Ukraine Poultry Production & Consumption, 2012-2017 19
Table: Ukraine Pork Production & Consumption, 2012-2017 19
Table: Ukraine Beef & Veal Production & Consumption, 2012-2017 19
Table: Ukraine Poultry Production & Consumption, 2008-2012 21
Table: Ukraine Pork Production & Consumption, 2008-2012 21
Table: Ukraine Beef & Veal Production & Consumption, 2008-2012 21
Commodity Price Analysis 23
Monthly Softs Update 23
Cocoa: Sufficient Supply 23
Coffee: Temporary Rally 25
Cotton: Against Resistance 27
Palm Oil: Outperforming The Oilseeds Complex 28
Sugar: Surging Supply 30
Table: Select Commodities: Performance & Forecasts 32
Monthly Grains Update 33
Wheat: Resilience On Borrowed Time 34
Corn: Looking The Weakest 36
Soybean: Little Relief Ahead 37
Rice: A Strong Performer 39
Table: Select Commodities – Performance & BMI Forecasts 40
Upstream Analysis 41
Europe Fertiliser Outlook 41
Europe GM Outlook 46
Europe Machinery Outlook 50
Downstream Analysis 54
Food 54
Food Consumption 54
Table: Food Consumption Indicators – Historical Data & Forecasts, 2009-2016 54
Confectionery 55
Table: Confectionery Value/Volume Sales – Historical Data & Forecasts, 2009-2016 56
Prepared Food 56
Table: Meat, 2009-2016 57
Table: Jams & Jellies, 2009-2016 58
Table: Pasta, 2009-2016 59
Table: Snack Foods, 2009-2016 61
Drink 63
Alcoholic Drinks 63
Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts, 2009-2016 64
Soft Drinks 64
Table: Soft Drinks Value/Volume Sales – Historical Data & Forecasts, 2009-2016 65
Hot Drinks 66
Table: Hot Drinks Value Sales – Historical Data & Forecasts, 2009-2016 66
Mass Grocery Retail 67
Table: Mass Grocery Retail Sales By Format – Historical Data & Forecasts, 2009-2016 68
Table: Grocery Retail Sales By Format (%) 68
Trade 69
Table: Trade Indicators – Historical Data & Forecasts, 2009-2016 69
Country Snapshot 70
Table: Ukraine’s Population By Age Group, 1990-2020 (‘000) 71
Table: Ukraine’s Population By Age Group, 1990-2020 (% of total) 72
Table: Ukraine’s Key Population Ratios, 1990-2020 73
Table: Ukraine’s Rural And Urban Population, 1990-2020 73
Our Forecast Modelling
74
How We Generate Our Industry Forecasts 74
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