Pork shortage and rise in price of bacon: consequences of the African swine fever epidemic in Ukraine
22 October 2024 10:39
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The African swine fever (ASF) epidemic in Ukraine is escalating, and this could have significant consequences for the pork and lard market. The increase in the number of outbreaks has already affected pricing, and the private sector is suffering the biggest losses. This was stated by Mykola Babenko, Executive Director of the Ukrainian Meat Industry Association, in an exclusive commentary to "Komersant Ukrainian" .
The peak period of the ASF epidemic
Commenting on the situation, Mykola Babenko emphasises that it is not a short-term summer epidemic of African swine fever (ASF), but a long-term process.
“This is not a summer epidemic. It is a protracted epidemic, now at the peak of exacerbation and may not have reached this peak yet. That is, the number of outbreaks increased in the summer, but this does not mean that they will decrease by the end of the year,” he stressed.
According to Babenko, the losses incurred by the industry due to ASF may not be final.
He noted that the ASF virus is safe for humans, but for the pig business it is a death sentence, which in fact leads to 100% loss of pig population over time.
Rising prices due to shortages
According to Babenko, the shortage of pork is already affecting the market, as evidenced by the October jump in retail prices to 350 hryvnias per kilogram of pork.
“And then you understand that the shortage creates a price increase. Buyers must have noticed that there was a period in October when retail prices for pork rose to UAH 350, but then the price decreased. Obviously, this decline occurred against the backdrop of new ASF outbreaks, most likely at industrial pig farms, and probably even without notification of such outbreaks,” explains the executive director of the Ukrainian Meat Industry Association.
Why is lard more expensive than meat?
Today, lard is often more expensive than meat, and this is due to the losses of pigs in the private sector, where, according to Babenko, there are no official statistics. The private sector held a significant share of the pig population, and it was from this sector that lard was supplied to the market.
“Nowadays, lard is often more expensive than meat. This was not always the case, lard has always been cheaper, but when we read expert statements about the loss of 30-40-50% of the pig population, we should take into account that the private sector suffers the greatest losses,” Babenko said.
He explained that the private sector does not appear in statistical reports, and therefore there is no objective data on its losses. However, it is known that private farms have historically kept about the same number of pigs as industrial complexes.
“The private sector does not appear in the statistics. Although the statistics on industrial pig production are not objective for Ukraine, and the private sector is not represented at all. Therefore, if someone writes data on the number of pigs in the private sector, it is just a figure that is not supported by anything. And the private sector kept about as many pigs as the industrial sector,” he explained.
Private sector and the problem of lard shortage
The situation in the private sector remains difficult. For decades, about half of Ukraine’s pigs were kept on private farms that supplied lard to markets. At the same time, industrial pig farms have focused on breeding meat pigs, which are fast-growing but do not produce fat.
“The private sector is precisely the supplier of lard to the market, because the industrial sector has long been keeping pigs of meat breeds, hybrids that grow in a shorter period of time, and therefore they do not have lard that is sold on the markets,” Babenko explains.
The situation in private farms is now becoming critical.
“The private sector is in trouble. In some settlements, and even in entire regions, there is already such a negative forecast that entire settlements, and perhaps even regions, will be without pigs,” Babenko predicts.
He recalled a meeting of a working group of the Ministry of Agrarian Policy, where one of the heads of a pig farm said that in the villages around his farm “the stench of pig corpses is so bad that you can’t breathe in the evening”.
“That is, we can imagine the extent of the losses suffered by the private sector,” the expert said.
Problems of pig farms
However, not only private farms have problems.
“Hardly a week goes by without information about new outbreaks at industrial pig farms,” the expert adds.
The main factor behind the losses in the industry is the African swine fever (ASF) epidemic, which has long been spreading across Ukraine.
Babenko notes that it was possible to prevent these losses, as ASF vaccines appeared in 2023, but the opportunity to introduce them was not used in time.
“In 2023, the first vaccines against ASF appeared, and they could have been introduced in early 2023. There was such an opportunity. It still exists. We could have started research on the effectiveness of their use in Ukraine, and their use in the event of an emergency like the one that has just happened,” he said.
According to him, ASF has long been used as a tool to regulate the number of pig farms, and this has had serious consequences for the industry.
“But, unfortunately, there is another side to this coin. It is that ASF has been used for many years as a tool to regulate the number of pig farms. It was a kind of “sword of Damocles” to remove competitors from the market in a non-market way,” the expert said.
According to statistics, from 2015 to 2020, the number of pig farms in Ukraine decreased by two-thirds – only a thousand of the 3,200 enterprises remained.
“It’s just a coincidence, probably, and it’s also related to the war, because the virus itself is also a biological weapon. And it so happened that those who thought that they would continue to control the virus, the population of pigs and pig farms in Ukraine failed,” Babenko added.
Implications for the market
Currently, due to the impact of the war and the spread of ASF, the situation has worsened for all market players – both private farms and large industrial complexes.
“The virus has started to hit all pig farms without exception – from the most modern ones with the best biosecurity conditions to ordinary farms, traditional ones that are engaged in pig production at a low technological level,” Babenko explains.
He warns that by the end of the year, losses could reach 50% of the pig population.
“But no one knows how much we will lose by the end of the year, but we can already say that a third of the pig population has been lost, and in fact this is a very strong blow to the industry, which creates added value in the country, as opposed to crop production,” he concluded.
Does Ukraine import pork?
The pig industry in Ukraine is currently in a difficult situation due to the spread of African swine fever (ASF) and the lack of a systematic fight against the disease. As a result, Ukraine does not export pork, and imports remain minimal.
“We neither import nor export. The data that is available in the customs databases is meaningless. They are more of a confirmation that Ukraine, on the one hand, does not export anything because the ASF issue has not been resolved, and pig meat can pose a danger to the pig industry in other countries if it turns out to be infected with ASF,” Babenko said.
According to him, Ukraine does not import pork because of high prices for live pigs in the EU.
“On the other hand, we do not import because prices for live pigs in the EU are almost twice as high as in Ukraine. And in Asia, where the EU exports, they are three times higher than in Ukraine,” the expert explained.
However, according to Babenko, Ukraine could become one of the leading players in the global pork market if it began to systematically fight ASF.
“If we were to fight the ASF problem in 2023, or at least now in 2024, with the emergence of the ASF vaccine, then in six months – a year at most – we would have a chance to become one of the leading players in the global pork market,” he summed up.
