Wednesday, August 5, 2009

Livestock Production in Ukraine

I promised Rob-Bear some data on when the last cow in Ukraine would turn out the light or why we eat chicken all the time.
Under the old Soviet production system cattle (dual purpose dairy/beef) production had to be heavily subsidized as it was horribly inefficient. Just one example was the number of people "employed" - 10 times or more per unit of inventory that one would expect. This production methodology carried over on the restructured state and collective farms creating huge losses so the cattle are dumped in favour of grain and oilseed production which is profitable. Only the new larger commercial dairy farms which import their management from Europe and America are profitable.

Pig production was much the same picture in Soviet times. The restructured farms stopped raising pigs because they lost too much money. A few years ago investors began building large commercial pig farms using western technology and management. Backyard pigs and big barns now account for the bulk of production. You can see the hog cycle beginning to appear about 10 years ago. The cure for low prices is low prices. The cure for high prices is high prices.

Poultry production has taken off and is extremely profitable and chicken meat is extremely cheap, about 1/3 to 1/4 the price of pork and beef. Virtually all broiler meat now comes from modern commercial companies, using western technology.

8 comments:

  1. Data is from USDA Foreign Agricultural Service. http://www.fas.usda.gov/psdonline

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  2. Ugh. Graphs AND agriculture.

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  3. Am I missing something here. If prices for beef and pork are up why wouldn't farmers switch to cattle or pigs? Or is there a problem with feed costs?

    Just saw a clip about Ukraine on the BBC. Inflation looks nasty there.

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  4. With cattle, no one in Ukraine knows how to raise them. Period. Except Americans or Canadians who are invested in feedlots here. Ther eis essentially no cow-calf industry. Beef is a by product of dairy.

    Pork prices were up and so we got "over supply". Wages have dropped by half so people are not buying pork. The prices are falling. When the economy picks up pork prices will again pick up and so will production.

    Feed prices are a problem. Government keeps interfering in the export market. Export licences are a good source of bribe money. Corn and barley were high in 2007-8 but have plummeted.

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  5. So, it's cheaper to raise chickens, right? That, I can understand. But what happens to all the pigs that didn't go to market? Maybe I don't want to know.....No. I DO want to know. Are cows now mostly a milk market? Honey, why don't you just COME HOME.

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  6. Good data, good analysis. Thanks BF.

    BTW, when are you going to start up a Canadian-styled cow-calf operation near Dnipropetrovs'k Oblast, Ukraine? (I'm guessing you'll need calves to start a feedlot.)

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  7. Dana, I AM home. You mean back to Canada? In a well functioning pig industry, slaughter:inventory ratio should be close to 2:1 ie inventory is turned twice a year. If pigs do not get to market before their first birthday, then slaughter:inventory is less than 1:1.
    Rob-Bear - I am working on one for Ivankiv Raion, Kyiv Oblast. We'll see how it goes. I am not an investor, though, don't worry.

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