The Ministry of Agriculture and Food (Minahroprod) encourages the production of meat - introduces surcharge on heifers, and increases payments total herd size and young livestock in live weight. It is expected that the state aid is to stop cutting up the cattle and pigs, as it was a kind of a tendency at the end of last year.
In crisis, the government essentially decreased subsidizing the meat industry, and now intends to resume monetary support. Thus, in the 2011 state budget the Minahroprod proposes to increase previously existing benefits per head of a cow - from 600-1,500 UAH to 600-1,900 UAH. An innovation of this year will be the compensation for livestock heifers up to 7 UAH per1 kgof live weight.
The changes will affect payments for slaughter meat as well. Thus, for the last two years the state subsidized only beef production - 1 UAH per1 kg. Now pig producers will get the support of 1 UAH per kg of pork, which was not introduced before, and beef producers will be paid 50 copecks more for meat – 1.5 UAH per kg. The Cabinet also decided that to cover costs of breeders for the purchase of milking equipment. With the purchase by individuals (population) of an individual milking system the Ministry initiates additional charge of 5 thousand UAH per unit of such equipment. Overall, for 2011, 100 million UAH were allocated for the budgetary animal grants and state support of crop production. Over 3 billion subsidies of accumulated VAT the breeders will get as subsidies for milk - 30-35 copecks per liter in terms of basicity of fat. In the Agriculture Department they expect that the introduction of special subsidies is to help stabilize and increase the cattle in number, preventing slaughter of young cattle of light weight, stabilize and increase milk production.
If the money will go to support animal production immediately, rather than late, when the budget accumulates a certain amount of money, the Minahroprod can expect a positive effect. Otherwise, the trends emerging in the industry, cannot be stopped. The fact is that since last year inUkrainenot only cattle was cut but also pigs, and soon they may begin to reduce the production of poultry. The reason is trivial - the purse of the Ukrainians is unable to compensate expenses of producers and processors. It strongly concerns the pork. It has come to the fact that pigs in live weight has already been offered to be bought for 10 UAH per kg, while two or three months ago, the purchase price for1 kgof pork (live weight) reached 14-15 UAH. Now, analysts have calculated the price of pork at 13,80-14 UAH per kg depending on the region leads producers to nothing. To have a return of 20% and stop cutting pigs, processors have to offer producers the cost of over 16 UAH per kg. But the latter refuse to buy products at all - the Ukrainians do not buy it.
When supply and demand will be equal, and pig breeders get profitable prices for meat – that’s unknown for now. But that has already happened to beef. That’s why you can’t find the meat on the shelves of retail chains cheaper than 50 UAH per kg. They would say the Ukrainians could consume poultry then, if beef and pork are expensive. But even there was a growth of prices with the further decrease in sales. As a result three weeks ago poultry breeders were forced to start lowering prices. The wholesale prices kept falling to 13.20 UAH from 15 UAH per kg for a chicken carcass. The falling of purchasing power per capita affected the eastern regions most –Donetskand Dnipropetrovsk, where there were major investments into meat production inUkraine. Interestingly, even traditional terms of the highest demand for meat decreased. If earlier in mid-December till mid-January meat processors could be confident of a successful trade, this year was set to record all the years of independence ofUkraine- the peak sales lasted only two days - from 30 to 31 December. Then the Ukrainians cooled off to meat again. The gap between price for pork and beef - more than 10 UAH per kg is still unprecedented.
It’s difficult to tell, when demand for meat will allow breeders to straighten their shoulders. And state subsidies are just in time, if officials will not postpone them off. At least, analysts expect that, as before, in 2011, meat production will be at least 1.6 million tons, and the population will purchase at least 2 million tons of products. Whether the state coped with the decline in support for news, statistics will show soon.
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