Pork Commentary

Jim Long President – CEO Genesus Inc.

August 12, 2013

 Road Trip to Ukraine

We continued our road trip that started in Austria with a stop in Ukraine. Ukraine was once considered the bread basket of Europe. Where as in Austria we saw farms of 50 to 100 acres (25-50 hectares). Ukraine is much different with large tracts of land with large fields. The scale is similar to the US Midwest. Ukraine’s history has not been kind. In the previous 100 plus years, saw communism, world wars and famine ravage. The loss of life in the multiple millions. With the many calamities the infrastructure of the country was destroyed several times. Its people have had to start over sometimes more than once. The Ukrainian people appear to have strong resolve with a stoic attitude to life’s journey.

Quick Facts

Aug19-2 The United States has more arable land, men live longer, and income is significantly higher. Ukraine agriculture significantly more important to its economy and employment.

Ukraine does not produce enough pork for consumption of its 45.4 million people. Significant imports are needed. Imports come in the form of meat and pigs. Feeder pigs coming from Europe are costing laid in between $100-120 USD per pig. Slaughter hogs are currently bringing $1.20 USD per lb. liveweight. ($2.65 a kilo).

Wheat is $200/tonne (about $5/bushel) Corn is $252/tonne (about $6/bushel) Barley is $221/tonne (about $5.40/bushel)

Ukraine has harvested repeatedly 24 million tonnes of wheat, barley, small grain. Corn crop look good but could use rain. Ukrainian hog producers are making money. We met with several who are looking to improve their swine genetics. Also some who have figured out they can produce feeder pigs for $70 or less per head versus buying for $100-120 each. The challenge in Ukraine is though it’s an agricultural society, it’s very difficult to get farm loans and when you do they are expensive, 13-16% interest. This in itself keeps a lid on pig expansion. Also the spectre of African Swine Fever (ASF) worries the industry. ASF in Russia is encroaching in on Ukraine. Ukrainian producers fear the spectre of total loss of al pigs with possibly no compensation. Ukraine has its challenges but also opportunities, caught between the pull of the west and Russia. If it moves to join the European Union the opportunities for agricultural development would be massive. Capital could flow in protected by EU laws. On the flip side Ukrainians are of the same tribe as Russia. They have much in common as Slavic people. Who knows what can happen that can or will ever develop Ukraine’s vast ag potential. Next week Road trip continues in Russia

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