The Association “Union of Ukrainian Poultry Farmers” calls for a moratorium on raising energy tariffs for the duration of martial law, so that the producers of poultry products could maintain the existing production volumes and not raise the prices of poultry products.
The industry association in the message on the site pointed out that the National Commission, which carries out state regulation in the field of energy and utilities (NKREKU) May 31, 2023 approved the decision to cancel the price limits on electricity for businesses from June 30 and released a draft resolution “On establishing the price limits of the market “day ahead”, the intraday market and the balancing market”, which provides for an increase in marginal prices of electricity to industrial consumers from June 30, 2023 by 35%.
“In the structure of the cost of production of poultry, electricity takes from 7 to 12%, and some types of products – up to 30%. (…) Production of poultry consists of different stages and therefore at each stage we will have an increase in the cost of components and respectively the cost of the final products of the industry will grow in “geometric progression”, – explained in the report of the Union of poultry farmers.
The business association points out that an increase in the cost of electricity will have a chain reaction and lead to an increase in the cost of most consumer goods. According to them, the producers will have to transfer the increase of electricity costs to the end users of their products, because “our own reserves for restraining the growth of selling prices have already been exhausted.
The Union of Ukrainian Poultry Farmers also pointed out that starting July 1, 2023, Ukraine is planning to return taxes on fuel to the pre-war level. Accordingly, “absolutely all goods and services that use fuel in the cost of production” will become more expensive.
In addition, the poultry industry will be negatively affected by rising prices of cereals, oilseeds and their processed products, which are the basis of animal feed and the largest share in the cost of poultry production. There will also be the same chain reaction to increase the cost of other components that form the cost of poultry meat and eggs production.
It is obvious that under implementation of the above initiatives the industry will face the consequences of increased energy costs due to the negative changes in the structure of the cost of production in July and in August the producers will have to raise wholesale prices for the poultry products to cover their own production costs, the industry association stressed.
The Poultry Breeders’ Union pointed out that all this is happening against the background of the gradual recovery of the volumes of poultry meat and eggs production, which were considerably reduced last year. At the same time, the industrial poultry sector continues to invest in production.
“The situation with the expected rise in energy costs may not only offset the long-awaited gains, but also return the industry to stagnation and a reduction in the number of poultry kept in agricultural enterprises,” argued the business association.
The report notes that the prices of poultry products are actually tied to the purchasing power of the population, which was and is low. Constant growth of production costs leads to a significant decrease in profitability. The result is a decrease in working capital, reduced competitiveness in foreign markets, unprofitability and reduced production volumes.
“Raising the selling prices of their own products is not a way out of the situation, for producers it is a forced step, because the consequence will always be a decrease in demand for products and accordingly the need for further expansion of production disappears,” – explained the association and called for a moratorium on raising energy tariffs.
