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Expensive gas drives Ukrainian poultry production out of business



Soaring natural gas prices have contributed to the closure of 20 egg farms and 10 broiler farms in Ukraine, Sergey Karpenko, director general of the Ukrainian Poultry Union, told a news conference. in Kyiv.

Photo: Tetiana Shevereva

Photo: Tetiana Shevereva

At the beginning of 2020, Ukrainian poultry producers had to spend an average of 1.6 hryvnia (0.059 USD) to produce 1 kg of chicken meat. At the beginning of 2021, this figure increased to 2.11 hryvnia (0.075 USD), rising to 6.4 hryvnia (0.23 USD) in December, Karpenko said, adding that this increase is coupled with a sharp rise in the price of food. for animals.

The poultry market could become uncompetitive

He added that small and medium poultry producers were at risk of closing their doors due to rising prices. Currently, Ukraine exports 30-40% of chicken meat and eggs produced. However, the further rise in production costs risks making Ukrainian exports uncompetitive in the global market, which would affect the entire poultry industry, he added.

Small and medium poultry farms are estimated to account for 25-30% of Ukrainian poultry production.

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During 2021, wholesale gas prices in Europe increased by more than 400%, setting new records. In early January, gas prices in Europe surged after the breakdown of security talks between Russia and the United States heightened concerns over supplies. The situation is thought to be similar across eastern and central Europe, where harsh winter conditions are prompting poultry farmers to spend more money on heating.

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“Poultry companies use gas in fattening complexes. The process [of growing poultry] takes 1.5-2 months, during which time it is necessary to maintain a certain temperature in the poultry houses,” said Alexander Bakumenko, President of the Ukrainian Poultry Union, adding that previously natural gas accounted for 5% of the costs of production, but now this share is at 30%.

Curb domestic consumption and exports

According to Bakumenko’s estimate, this situation could lead poultry farmers to raise prices by 15 to 20 hryvnias (0.53 to 0.71 dollars) to compensate for the losses. However, he warned, this would be bad for both domestic consumption and exports.

Not only poultry producers have raised concerns about the rising price of natural gas. Ukraine’s dairy processing plants may have to shut down if prices rise again, the Ukrainian Union of Dairy Enterprises said, estimating that natural gas accounts for around 25% of production costs.

In this context, the Ukrainian government has rolled out plans to limit the price of natural gas in the market, but so far this proposal only concerns bread producers.