In what the Russian media describes as a ‘Ukrainian breakthrough,’ Ukrainian beef is stampeding into Russia, capturing a large hunk of the meat market there. Analysts in Ukraine are now hoping meat products will become a major Ukrainian export commodity – if the government can resist the temptation to help itself to a slice of exporters’ profits.
In recent months, Ukraine has become Russia’s leading beef supplier, forcing traditional suppliers Germany and Ireland to cut back exports to the country, according to reports in Russian media.
Svetlana Lopatina, a manager of the Moscow-based Campomos meat-processing plant, told the Post her factory has switched to Ukrainian instead of Irish beef this year. Campomos is one of the largest meat processors in the Russian capital.
Explaining the switch, Lopatina said prices for Ukrainian beef had fallen below those for Western European producers, thanks to a CIS trading agreement which allows Ukrainian exporters to send their beef to Russia duty free.
Analysts also said the recent sharp devaluation of Ukraine’s national currency, the hryvna, has played its part too.
‘Ukrainian beef is of good quality and we’ll continue to buy it,’ said Lopatina.
Yelena Tyurina, general director of Russian Agrarian Market Research Institute, predicts that Ukrainian meat and meat products will satisfy around 66 percent of Russian demand this year – an impressive increase from just 23 percent last year.
In Russia’s biggest cities, the bulk of the meat on sale in the markets – some 85 percent – was raised in Ukraine, Tyurina told Russian Novecon news agency. She said improved quality of Ukrainian meat and meat products was pushing up sales figures.
Ukrainian beef exporters have benefited from worries over the safety of beef from western Europe in the wake of the Mad Cow Disease debacle, which ruined Britain’s beef export market. But analysts here warn that Ukraine’s rising exports could indicate that the domestic meat market is unhealthy.
‘It’s good that [the meat producers] are earning hard currency,’ said Serhy Feofilov, director of agricultural commodity analyst UkrAgroConsult. ‘But it shows that purchasing power on the domestic market is falling.’
Feofilov said Ukraine’s export figures are on the up because more cattle are being slaughtered, not because production is rising. He said that the high cost of cattle feed and small size of the domestic market is forcing producers to slaughter cattle and export their meat abroad.
‘Exports are rising while the cattle population is diminishing,’ he said.
He said Ukraine had 11.26 million head of cattle as of Nov.1 this year, 8.3 percent down from the same date last year.
Other analysts said meat could turn into a major Ukrainian ‘export bright spot,’ but only if the government allows the sector to develop on its own.
‘This will be an interesting case to watch and see if the Ukrainian government can overcome its long history of meddling in a negative way in anything in the agricultural sector that appears to be successful,’ said Jim Davis, an independent agricultural analyst.
This year the government dented the sunflower seed trade by imposing a 23 percent export tax on what had been the country’s most successful export commodity. The government argued the decision would provide domestic oil manufacturers with enough raw materials to process the seeds into sunflower oil – an even more lucrative export commodity. But the government’s plan has already backfired – the big foreign agricultural companies have since announced they are cutting back investment in sunflower seed production in Ukraine, because the tax no longer makes it profitable to export seeds.
‘We know what happened in sugar and what is in the process of happening in sunflower,’ said Davis. ‘Will meat exports be next?’
