• Meat, Meat

Gira shares insights on the latest developments in the Ukrainian poultry markets from its recent Gira Meat Club annual meeting in Geneva.

After nearly two years of war, the country’s economy is recovering. Still, the domestic demand remains depressed by demographics as it is estimated that 6.2 million people left the country and a further 5.1 million are internally displaced. Purchasing power continues to be low and domestic demand is expected to remain challenging in the short and medium term.

While poultry production declined by 9% in 2022, it bounced back by 5% in 2023 and is expected to continue its recovery in 2024. Indeed, most of the large production facilities are in Central/Western Ukraine and thus less directly disrupted by military operations (but not spared with consequences on power supplies, logistic disruptions, and labour availability challenges).

Depressed domestic demand and resilient production capacities led to an increasing poultry surplus available to export. However, military operations in and around the Black Sea complicated export logistics to key Middle Eastern and other remote markets. Coupled with the European Commission’s decision to suspend import tariffs, and high prices in Europe, due to some avian influenza-induced supply tensions, this led to a massive increase in Ukrainian poultry meat exports to the EU from 90,000 tons in 2021 to 200,000 tons in 2023.

While being about the size of the Italian poultry industry, the structure of the Ukrainian sector differs significantly from those of Western European countries:

• The sector is significantly concentrated. The leader, MHP, represents about 70% of the production and 85-90% of exports to the EU. It also has poultry operations in the Netherlands, Slovakia and the Balkans.
• The whole value chain is fully integrated from the field to the distribution centre at every stage, including growing farms.
• The production facilities are organised into clusters of significant size. A single broiler farm can house up to 2 million broilers at the same time, while most significant operations in the EU house around 150,000 broilers.

In the end, Ukrainian operators are extremely competitive. They can export chilled broiler breast filet 20% to 25% cheaper than the competitive Polish origin. This is adding pressure to both European producers and even to other external suppliers such as Thailand or Brazil.

Therefore, given the current market conditions, operators on the European poultry market may expect Ukrainian exports to continue to exert pressure on the market in 2024 … even considering the Commission’s plans to set back TRQs at 2022-2023 levels.

Reach out to Véronique Aguera, François Cadudal or Rupert Claxton with your questions.

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