Ukraine calls for calm over meat price rises

Related tags Ukraine Livestock Meat

Sharp increases in meat prices at the end of September have
prompted Ukraine's Ministry of Agriculture to call for tighter
measures to prevent speculation and ensure more stable pricing. But
market observers claim that the increases are justified by higher
input costs further up the chain.

According to the Ukrainian Finance Ministry, meat prices have risen by 37.8 per cent this year, rising the most in the Volini, Zakarpatie, Odessa, Nickolaev and Kiev districts.

Yuri Melnik, deputy agriculture minister, said he believed that the particularly large increase in meat and milk product prices in some regions of Ukraine in September was unjustified and speculative, as there were sufficient supplies of both products available. Melnik said that both the meat and milk markets in Ukraine were operating at capacity and that there were no concrete reasons for any price fluctuations.

Indeed, far from suffering from a shortfall, Melnik said that Ukrainian meat product output had increased by 21 per cent over the first eight months of 2004, and that livestock numbers, and cattle productivity levels, were stable. Indeed, he suggested that the additional payments currently offered to farmers by the Ukrainian government for ever larger cattle, pigs and chickens for processing had helped push up supplies.

According to the Ukrainian State Statistics Committee, sales of cattle and poultry for processing in August increased by 6 per cent in comparison with the previous month, reaching 156.9 thousand tons.

So why did prices in some western parts of the country increase so rapidly in September? Once suggestion is that some meat processors offered farmers higher-than-normal prices in order to build up stocks of meat for processing, passing the increase further on up the chain, but other observers claim that the increase was simply due to particularly low volumes of pigs for processing and that the pigs being processed had been fed on forage from the previous year's harvest, when costs were higher and had to recouped through increased selling prices.

Most experts agree that prices are likely to remain high until the next batch of pigs for processing, fed on forage from this year's (lower cost) harvest, become available.

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