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Recent Study: Ukraine Agribusiness Report Q1 2014

New Food research report from Business Monitor International is now available from Fast Market Research

 
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Boston, MA -- (SBWIRE) -- 12/26/2013 -- We continue to favour Ukraine's grain sector and expect production growth and more diversity in export demand. While the EU has recently authorised imports of Ukrainian poultry, which will support export growth over the medium term, we do not see a similar opening for dairy exports in the near term. We therefore expect weaker dairy consumption growth, with growth coming strictly from domestic demand. We maintain our subdued outlook for Ukraine's real GDP growth in the near term and believe this will impact in particular demand for meat and dairy products, as they tend to be considered less of a staple food than grains. We highlight MHP's strong growth potential as the main beneficiary of our positive outlook for the local poultry industry.

Key Forecasts

- Corn production growth to 2016/17: 11.5% to 25.5mn tonnes. We are turning more optimistic on potential production growth on the back of increased investment in the country.
- Poultry consumption growth to 2017: 20.0% to 958,000 tonnes. Poultry demand will benefit from improving domestic income conditions as well as its preferred status as a cheaper and healthier alternative to red meat.
- Milk production growth to 2016/17: 14.5% to 12.8mn tonnes. Over the medium term, consolidation and increased investment are expected to start to compensate for industry exits, with production rising steadily over the forecast period to 2016/17.
- 2013 real GDP growth: -1.4%, down from 0.2% in 2012. Predicted to average 1.2% from 2012 to 2017.
- 2013 consumer price inflation: 2.0% average, up from 0.5% in 2012.
- BMI universe agribusiness market value: 16.4% year-on-year decrease to US$18.4bn in 2012/13, forecast to grow on average 0.02% annually between 2011/12 and 2016/17.

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Industry Outlook

We see downside risks to our 2013/14 wheat production forecast for Ukraine, as heavy rains across most of the country substantially delayed the harvest. We forecast wheat production to rise to 19.5mn tonnes in 2013/14, from 15.8mn tonnes in 2012/13. However, local industry sources have expressed concerns that production will fail to reach the 15mn-16mn tonnes level unless the harvest gathers pace, and provided damage to the crop is only minimal. A recent shift in the weather towards warm and drier spells in October has provided optimism that an acceleration in the harvest could limit losses for 2013/14, but uncertainty remains over the actual production growth potential for the wheat crop this season.

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