Required Report - public distribution

**Date:** 8/29/2006

**GAIN Report Number:** UP6014

U

P6014

**Ukraine**

**Livestock and Products**

**Country Report**

**2006**

**Approved by:**

![](media/image1.wmf)Garth Thorburn, Agricultural Attaché

Office of Agricultural Affairs

**Prepared by:**

Oleksandr Tarassevych, Agricultural Specialist

**Report Highlights:**

Ukraine will remain a net importer of red meat and products in 2007
despite a slight rebound in the domestic pork industry and stable beef
production. Importers will attempt to satisfy the growing demand of
Ukrainian consumers and will offer pork as a substitutable product for
chicken. Ukraine will not longer be a transshipment point for South
American beef carcasses destined for Russia, due to the Russian ban on
meat exports from Ukraine. The signing of a U.S.-Ukraine protocol for
beef and pork could open the Ukrainian market for U.S. meat exporters in
2007.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Kiev \[UP1\]

\[UP\]

***Data included in this report is not official USDA Data. Official USDA
data is available at <http://www.fas.usda.gov/psd>***

# Section I. Narrative

# 

## Executive Summary

In 2007, Ukraine's pork industry will continue to recover. Substantial
foreign and domestic investments in pork production will lead to
expanded production capability and industry efficiency. This trend is
especially relevant for production in large industrial farms. Production
in the household sector will remain substantial but relatively
inefficient. The number of animals and productivity in households is
expected to decrease slightly. Imports of pork into Ukraine are expected
to remain significant (assuming no political changes). The trend is
being fueled by three factors: increased purchasing power of the average
consumer, slow domestic production growth and decreased poultry imports.

######### 

Beef production in both the household and industrial sectors will remain
highly inefficient in Ukraine. The stabilization of beef production was
achieved at the expense of the reduced number of head. No significant
investments have taken place in the industry and none are expected in
the short to medium term. Ukraine can no longer export beef to Russia
due to the Russian ban on Ukrainian products of animal products. Ukraine
will however remain a net importer of beef. The U.S. and Ukraine signed
a bilateral protocol for both pork and beef in March 2006, however U.S.
exports are still unable to enter the Ukrainian market due to unresolved
technical reasons.

## Production

###### [Swine]{.underline} 

Industrial production of pork continues to attract both foreign and
Ukrainian investors. Small to mid-sized international companies have
invested in industrial operations of 10,000 -- 40,000 head. FAS Kiev is
aware of approximately a dozen projects in Southern, Central and Western
Ukraine. Please note that the industry growth rate is much higher than
the numbers in the PSD table suggest, where both industrial farms and
household production is aggregated. Household production in the first
half of 2006 contracted by 0.2%, while industrial production grew by
23%. Investments were fueled by high pork prices. Despite some reduction
in pork prices in the beginning of 2006, Ukraine's domestic price for
pork remains well above the price of beef. Because the growing cycle is
much shorter in the swine industry relative to the beef industry,
investors are more willing to invest in pork production facilities to
take advantage of the much faster return on investment.

A significant increase in imports from Slovakia and Denmark of pedigree
pigs and piglets for further fattening also reveal significant
production changes in the swine industry. Emerging commercial hog
operations prefer to use productive nucleuses from Western-European
selections. Availability of cheap feed grain in marketing year 2006/07
in addition to the availability of cheap labor in rural Ukraine gives
the Ukrainian industry a significant competitive advantage. Ukraine's
weak ecological requirements also help to ensure that producers maintain
a healthy profit margin. Development of the swine industry was promoted
heavily by the Ministry of Agricultural Policy throughout 2006, but only
a few investment projects materialized from the well-advertised
"Ukrainian swine production" campaign.

######## Cattle

Ukraine's beef production remains a by-product of the dairy industry and
is highly dependent on dairy market fluctuations. Meat processing
enterprises continue to procure dairy (sometimes dual-purpose) animals
that have been rejected by a dairy operation or young calves (typically
1 -- 1.5 year old male calves, sold generally during the end of the
grass-feed season). The ban imposed by Russia on all Ukrainian products
of animal origin had a severe negative impact on the industry.
Industrial enterprises (and some household) began to slaughter their
animals because they were unable to sell milk. The GOU released multiple
statements during the early phases of the ban in which they proclaimed a
resolution was imminent. This helped to slow the herd reduction, but it
failed to stop the process. The number of animals is expected to
continue to decline in 2007 due to low cattle enterprise efficiency, and
prospects for a resolution to the Russian ban remain elusive.

FAS Kiev has noted some sporadic investments in the Ukrainian dairy
sector, but businesses are not yet ready to invest in the Ukrainian beef
industry and continue to target the poultry and swine sector because of
higher and faster rates of return. Low cattle prices (even lower than
for swine) is also a good indicator of the poor condition of the beef
industry. In an attempt to increase beef and dairy herds, the GOU
announced an ambitious support plan that includes per head payments to
all livestock owners possessing 15 cows or more. The payments were
supposed to reach 1,000 UAH per head (\$198) per year. If implemented,
the program could influence the cattle number in industrial farms, but
thus far no funds have been allocated from the budget.

Ukrainian households will continue to be the major producers of pork and
beef in 2007. In mid-2006, households accounted for 64% of all cattle
and 62% of all swine in Ukraine. Backyard production practices remain
very primitive with very little attention paid to animal genetics,
feeding rations and animal health issues. Contrary to the industrial
sector, subsistence beef and pork production is expected to be stable
and not subject to market fluctuations. Industrial production of beef
will continue to decline while industrial production of pork will
increase.

Cattle, cow and swine inventories for 2005 were changed in the PSD table
to reflect official changes in Ukrainian State Statistical Committee
calculations and official year-end statistics. Production (Pig crop and
Calf crop) levels are a bit higher than expected. As required by the
reporting instructions, beef import figures (including the growing HS
1602 category) for the PSD were converted into CWE.

Please note that retail price information previously published by the
State Statistics Committee is no longer available, so wholesale prices
for pork and beef from Vinnitsa region are provided in Section II of the
report. For beef and pork, procurement prices from slaughterhouses (in
UAH is for 1 kilogram of LWE) are provided.

## Consumption

Continued economic growth in Ukraine and an increase in consumers'
disposable income are the major factors fueling the consumption increase
recorded in 2005-2006. Traditionally, many low-income consumers chose
not to consume large amounts of red meat because of excessively high
prices for beef and pork. Presently, many of them are now in a position
to increase spending levels for food. (Note: the average monthly
disposable income in Ukraine remains quite low at UAH 495 (\$98) as of
May 2006.) The Ukrainian meat market remains extremely price sensitive
and 2007 consumption patterns will greatly depend on availability of
cheap product. Given recent developments in the beef and pork industry,
consumption in 2007 will largely depend on the availability of imported
product. In the submitted PSD table, consumption is forecast to remain
stable in 2006 due to uncertainties associated with the Ukrainian
government's import policies.

Large-scale imports of high-quality beef and pork (as understood in
Western countries) is unlikely in Ukraine for the near to medium term
because of traditional consumption preferences. Ukrainian consumers
traditionally prefer veal and fatty pork from 140-150 kilogram hogs. The
majority of Ukrainians are not ready to pay a premium price for beef
derived from beef cattle. Consumers also have a preference for fresh
meat (animals slaughtered the day before sale) that they purchase in
open-air markets and chilled beef that is sold in supermarkets. No
frozen meet is available for sale in retail chains.

Imported frozen beef and pork (mostly meat trimmings) are generally used
by meat processors to produce sausages, bolognas, canned meat and smoked
meat products. Consumption of processed red meat products in Ukraine is
on the rise and expected to grow in 2007. Semi-prepared meat products
(dumplings, meat cutlets, etc.) are also gaining popularity among
hi-income consumers in towns and cities. The urban lifestyle and a trend
for more family members to be employed have significantly changed
consumption patterns in recent years.

The traditional Ukrainian diet contained significantly less poultry then
beef and pork. Throughout the 1990-s, most consumers switched to poultry
because of the decrease in their relative incomes. However, with incomes
once again growing in 2003-2006, some elderly consumers have switched
back to more traditional red meat products. Concomitantly, many
low-income consumers will continue to purchase poultry in 2007 even at
somewhat higher prices.

## Marketing

The increased growth of red meat imports in recent years has formed two
distinctive market segments in Ukraine. Domestically produced chilled or
fresh beef, and pork are usually sold through the network of open-air
outlets, butcher shops and supermarkets. Imported frozen meat products
are sold to meat processing facilities for further processing. For this
reason, Ukraine imports mostly cheap meats and meat cuts.

Ukrainian meat producers do not brand, advertise or promote their
products (FAS is aware of one exception, when a single producer targeted
high-income consumers). This lack of advertising is a result of a large
share of production coming from households. These household operations
do not have an adequate level of funding to conduct marketing activities
and individually produce an insignificant amount of product when
compared to industrial farms. Processing companies do not advertise or
promote frozen imported products because of concern of being targeted by
the government, however they often do promote their end products. Low
prices continue to be the major selling point for imported red meats.

## 

## Trade

The Russian ban on all Ukrainian products of animal origin had a
tremendous negative affect on the Ukrainian beef and pork sectors. The
ban included all dairy, red meat and poultry products exported to Russia
or transshipped through the Ukrainian territory. It was imposed on
January 20, 2006, although the ban on transshipped red meats was
introduced in late December 2005. The Russian veterinary authority
claimed the ban was introduced because Ukraine failed to implement
sufficient veterinary controls over imported meat products (and
including transshipped products) and the generally low quality of
Ukrainian dairy products.

The ban resulted in a collapse in the price of Ukrainian raw milk and
facilitated an increase in the slaughter of dairy cattle for beef
production. The ban completely altered red meat trade patterns in
Ukraine. Ukraine became an importer of red meats and exports of meat
practically ceased. Ukrainian companies that used to import beef that
was subsequently transshipment to Russia under the existing Free Trade
Agreement stopped their activities.

The marginal decreased in August 2005 of import duties had a positive
impact on red meat imports (Refer to report number UP5014 for the new
meat tariff schedule). The level of red meat imports continued to
increase despite numerous attempts by the Ministry of Agricultural
Policy of Ukraine to stop trade. The import pattern recorded in late
2005 and first half of 2006 was unique because of the massive amount of
hogs imported from Poland into Ukraine for slaughter. Due to the low 5%
import duty for live pigs used for slaughter, many Ukrainian meat
packers began importing live pigs to avoid the excessive duty rates
applied to pork meat. The GOU responded with veterinary measures
designed to stop all imports from Poland. Imports of breeding pigs from
Denmark were not affected by these actions. Import of live pigs for
slaughter decreased sharply in February 2006. The forecast for imports
in 2007 assumes no resumption in imports.

In the past, the Ukrainian veterinary authority insisted that beef and
pork be imported only in carcass form, however recent trends suggest
that this requirement is not strictly enforced. Another important
justification for importing carcasses and halves was because Russia also
had a similar import requirement. Some of the imported beef carcasses
were re-exported to Russia but with Ukrainian seals. With the
introduction of the Russian import ban in January 2006, the demand for
imported beef carcasses and halves disappeared. Imports of boneless beef
and pork are increasing in 2006 and will continue to grow in 2007.

Ukraine's WTO accession will lead to a significant reduction in tariffs
and simplification of red meat import requirements. Despite numerous GOU
declarations of Ukraine's intention to accede to the WTO as rapidly as
possible, many in the new government appear more resistant to WTO
accession so the timeframe remains unclear. In March 2006, the United
States and Ukraine signed bilateral protocols for U.S. beef and pork,
however official imports have not yet begun due to unresolved bilateral
issues. FAS/Washington, FAS Kiev and USTR continue to work with the GOU
(specifically with the Ukrainian veterinary authority) in an attempt to
open the market for U.S. products.

Since October 2004, exports of all kinds of red meat remains subject to
export licensing; although the significant reduction in Ukrainian meat
exports made this trade-regulating tool redundant.

## Policy

######## Russian Import Ban

The government of Ukraine's regulatory policy throughout 2006 was
designed to combat illegally imported red meat and to limit the amount
of legal meat imports. These policies were designed to block imports of
meat through the use of veterinary measures and to secure a minimal
level of revenue for domestic agricultural producers. The Ukrainian
veterinary authority also attempted to overturn the Russian meat ban
with little success. Some of these goals were partially achieved, but
most of them were not. Despite the formation of a new government in
early August 2006, major changes in Ukraine's agricultural policy are
not expected in 2007.

The significant effort made by the GOU in 2006 to stop the inflow of
smuggled meat and meat products was partially inspired by the
allegations made by the Russian veterinary service (Rosselhoznador)
about Ukraine not controlling the volume of illegal meat that is
transshipped through Ukraine to Russia and partially by domestic
producers who wanted to eliminate foreign competition. Veterinary and
sanitary border controls were tightened significantly and an
anticorruption campaign was implemented by Ukraine's State Customs
Service. The campaign had only limited success and was disregarded by
the Russian veterinarians. The Russian meat import ban remained in place
at the time this report was drafted. Some analysts believe that the ban
was politically motivated and also condoned by the agricultural lobby in
Russia.

Inspired by the effectiveness of the measures used by the Russian
veterinarians to stop trade, the GOU decided to mirror their actions by
introducing similar import bans for meat from Poland, Belarus and
Moldova. Later limited imports from Belarus were allowed, while Poland
and Moldova continue to suffer significant losses. A separate ban was
introduced for live hog imports from Poland. The GOU stated the ban was
imposed because of veterinary concerns. Multiple meetings between Polish
and Ukrainian officials have not resolved the problem.

######## Price Control and Budget Support

In an attempt to reduce livestock slaughter, the GOU introduced some
price control measures. Introduction of minimal prices for milk in June
2006 met significant resistance from dairy processors. Due to the lack
of an effective enforcement mechanism, the GOU's policy is completely
ignored by the industry. An announced by the government to establish
minimal meat procurement prices in 2007 is expected to fail as well. The
GOU plans to force meat slaughterhouses to pay 8.77 UAH (\$ 1.74) per
kilogram of beef animal (LWE) and 9.46 UAH (\$ 1.97) per kilogram of hog
(LWE). Since these prices are, in most cases, above the market price
level (please refer to the price table at the end of the report) the
industry is likely to ignore them or retreat into the shadow economy.

The GOU continued its support programs for producers in 2006 and
proposed new ones for the 2007. In 2006, direct payments were paid to
slaughterhouses and constituted 1.30 UAH (\$ 0.27) per kilogram of
cattle slaughtered and 1.05 UAH (\$ 0.21) per kilogram of hog. In order
to prevent slaughter of young animals, a minimum weight requirement was
introduced. For industrial farms, the minimal weight of a beef animal at
slaughter should be 390 kilograms; for hogs 95-130 kilograms. The
government was concerned that the support program could lead to
"encouragement of slaughter", so the GOU proposed a new program that
featured per head direct payments. State support in 2007 may range from
1,000 UAH (\$198) to 2,500 UAH (\$495) per head for dairy cows and 600
UAH (\$119) per beef cow. At this point it is unclear if the Parliament
will endorse such a large agricultural support fund, since proposals are
calling for total increase of 194%. It is highly unlikely that these
measures will be approved by the parliament in it's proposed form, but
even a more modest proposal could increase beef and pork production as
well as the numbers of animals in the country.

######## Other Measures 

In February 2006, the Ministry for Agricultural Policy attempted to
adopt a new Law of Ukraine "On Meat and Meat Products". The Law
contained controversial measures such as meat and meat products price
controls, trade margin limits, regulating the use of additives in meat
products, packaging and technical provisions. The Law was adopted by the
Parliament but subsequently vetoed by the President after meat
processors and agricultural lobbing groups criticized the measures
outlined in the law.

In 2003, the Ministry of Agricultural Policies launched an animal
identification (tracebility) campaign that was supposed to cover all
live animals by 2006. Although the program worked for the larger
industrial producers, household producers never complied mostly due to
resource issues. Effective July 1, 2006, the program requires that no
animal slaughter or milk procurement take place without proof of
registration and a veterinary card. State support is also unavailable
for unidentified animals. The majority of Ukraine's livestock herds in
large farms were identified, but identification in most private
households remains elusive. Household animal owners generally try to
avoid expenses associated with the program since little or no state
support is available for their cattle.

GOU procurement programs in 2006 were highly ineffective and had no
market influence. The State Reserve Committee (SRC) was not able to
procure significant amounts of beef and pork. In 2007, the GOU is likely
to continue in its attempt to influence the market through the SRC,
however expectations that this approach will result in the desired
effect remain minuscule.

# Section II. Statistical Tables

## Ukraine Cattle PSD Table (1,000 Head\*)

  ------------------ ---------- ---------- ---------- ---------- ---------- ----------
  Country            Ukraine                                                

  Commodity          Animal                                                 
                     Numbers,                                               
                     Cattle                                                 

                     2005       Revised    2006       Estimate   2007       Forecast

                     USDA       Post       USDA       Post       USDA       Post
                     Official   Estimate   Official   Estimate   Official   Estimate
                     \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year Begin             01.2005               01.2006               01.2007

  Total Cattle Beg.  6992       6992       6712       6704       6510       6570
  Stks                                                                      

  Dairy Cows Beg.    3914       3914       3826       3708       0          3670
  Stks                                                                      

  Beef Cows Beg.     58         58         54         58         0          58
  Stocks                                                                    

  Production (Calf   3019       3098       2910       2980       0          2910
  Crop)                                                                     

  Intra EC Imports   0          0          0          0          0          0

  Total Imports      1          0          1          1          0          1

  TOTAL Imports      1          0          1          1          0          1

  TOTAL SUPPLY       10012      10090      9623       9685       6510       9481

  Intra EC Exports   0          0          0          0          0          0

  Total Exports      3          2          3          1          0          1

  TOTAL Exports      3          2          3          1          0          1

  Cow Slaughter      0          0          0          0          0          0

  Calf Slaughter     0          0          0          0          0          0

  Other Slaughter    3228       3307       3043       3042       0          2908

  Total Slaughter    3228       3307       3043       3042       0          2908

  Loss               69         77         67         72         0          72

  Ending Inventories 6712       6704       6510       6570       0          6500

  TOTAL DISTRIBUTION 10012      10090      9623       9685       0          9481

  Calendar Yr. Imp.  0          0          0          0          0          0
  from U.S.                                                                 

  Calendar Yr. Exp.  0          0          0          0          0          0
  to U.S.                                                                   
  ------------------ ---------- ---------- ---------- ---------- ---------- ----------

\*These are not USDA official numbers

## Ukraine Beef and Veal PSD Table, 1000 MT CWE (1,000 Head\*)

  ------------------ ---------- ---------- ---------- ---------- ---------- ----------
  Country            Ukraine                                                

  Commodity          Meat, Beef                                             
                     and Veal                                               

                     2005       Revised    2006       Estimate   2007       Forecast

                     USDA       Post       USDA       Post       USDA       Post
                     Official   Estimate   Official   Estimate   Official   Estimate
                     \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year Begin             01.2005               01.2006               01.2007

  Slaughter          3228       3307       3043       3042       0          2908
  (Reference)                                                               

  Beginning Stocks   15         15         15         15         15         15

  Production         532        562        500        514        0          490

  Intra EC Imports   0          0          0          0          0          0

  Total Imports      25         42         35         50         0          65

  TOTAL Imports      25         42         35         50         0          65

  TOTAL SUPPLY       572        619        550        579        15         570

  Intra EC Exports   0          0          0          0          0          0

  Total Exports      85         62         90         1          0          1

  TOTAL Exports      85         62         90         1          0          1

  Human Dom.         472        542        445        563        0          554
  Consumption                                                               

  Other Use, Losses  0          0          0          0          0          0

  TOTAL Dom.         472        542        445        563        0          554
  Consumption                                                               

  Ending Stocks      15         15         15         15         0          15

  TOTAL DISTRIBUTION 572        619        550        579        0          570

  Calendar Yr. Imp.  0          0          0          0          0          0
  from U.S.                                                                 

  Calendar Yr. Exp.  0          0          0          0          0          0
  to U.S.                                                                   
  ------------------ ---------- ---------- ---------- ---------- ---------- ----------

*\*These are not USDA official numbers*

## Ukraine Cattle Export Trade Matrix

  ----------------------- -------------- -------------- -------------------
  Time Period                            Units:         Heads

  Imports for:            2004                          2005

  U.S.                     0             U.S.            0

  Jordan                  2904           Lebanon        1771

  Lebanon                 1683                           

  Syria                   795                            

  Total for Others        5382                          1771

  Others not Listed       727                           0

  Grand Total             6109                          1771
  ----------------------- -------------- -------------- -------------------

Data Source: State Statistics Committee of Ukraine

Note: There were no cattle imports into Ukraine in 2005

## Ukraine Beef Import Trade Matrix\*

  ---------------------- -------------- ------------------- --------------
  Time Period                           Units:              1000 MT

  Imports for:           2004                               2005

  U.S.                   1,2            U.S.                0

  Others                                Others              

  Brazil                 0,5            Brazil              18,9

  Argentina              1,2            Argentina           5,7

  Georgia                0              Georgia             4,7

  Australia              0,2            Australia           0,5

  Hungary                0,5            Hungary             0,4

  Russia                 0              Russia              0,1

  Total for Others       2,4                                30,3

  Others not Listed      0                                  0,6

  Grand Total            3,6                                30,9
  ---------------------- -------------- ------------------- --------------

Data Source: State Statistics Committee of Ukraine

\* Ukraine's Imports in Product Weight Equivalent (Appropriate
conversion rates are applied to HS 020220, HS 16025 and HS 020210); No
coefficient is applied to HS 020230. Imports of chilled pork were
insignificant.

# Ukraine Beef Export Trade Matrix\*

  ---------------------- -------------- ------------------- --------------
  Time Period                           Units:              Heads

  Exports for:           2004                               2005

  U.S.                    0             U.S.                 0

  Others                                Others              

  Russia                 63,6           Russia              44,6

  Belarus                0              Belarus             0,1

  Total for Others       63,6                               44,7

  Others not Listed      0,2                                0,1

  Grand Total            63,8                               44,8
  ---------------------- -------------- ------------------- --------------

Data Source: State Statistics Committee of Ukraine

\* Ukraine's Exports in Product Weight Equivalent (DLP defined
conversion rates are applied to HS 020220, HS 16025 and HS 020210) No
coefficient is applied to HS 020230. Imports of chilled pork were
insignificant.

## Average Monthly Beef Wholesale Prices in Ukraine, LWE

  ----------------- -------------------- --------------------- -----------
  Country           Ukraine                                    

  Commodity         Meat, Beef and Veal                        

  Prices in          UAH                 per uom                1 kilogram

  Year              2005                 2006                  \% Change

  Jan               5,7                  7,8                   37%

  Feb               6,4                  7,8                   22%

  Mar               6,7                  7,2                   7%

  Apr               6,2                  6,6                   6%

  May               5,8                  7                     21%

  Jun               6,5                  6,1                   -6%

  Jul               6,8                  5                     -26%

  Aug               6,8                  5,5                   -19%

  Sep               7,2                                        

  Oct               7,4                                        

  Nov               7,6                                        

  Dec               7,8                                        

  Exchange Rate     5,05                 Local Currency/US \$  

  Date of Quote     08/19/2006           MM/DD/YYYY            
  ----------------- -------------------- --------------------- -----------

*Data Source: Agricultural Marketing Project; Post's own estimates*

## Ukraine Swine PSD Table (1,000 Head\*)

  ------------------ ---------- ---------- ---------- ---------- ---------- ----------
  Country            Ukraine                                                

  Commodity          Animal                                                 
                     Numbers,                                               
                     Swine                                                  

                     2005       Revised    2006       Estimate   2007       Forecast

                     USDA       Post       USDA       Post       USDA       Post
                     Official   Estimate   Official   Estimate   Official   Estimate
                     \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                 01.2005               01.2006               01.2007
  Begin**                                                                   

  TOTAL Beginning    6461       6466       6480       7052       6550       7970
  Stocks                                                                    

  Sow Beginning      510        509        520        580        0          690
  Stocks                                                                    

  Production (Pig    6120       6865       6240       7250       0          8280
  Crop)                                                                     

  Intra EC Imports   0          0          0          0          0          0

  Total Imports      0          139        0          35         0          30

  TOTAL Imports      0          139        0          35         0          30

  TOTAL SUPPLY       12581      13470      12720      14337      6550       16280

  Intra EC Exports   0          0          0          0          0          0

  Total Exports      0          0          0          0          0          0

  TOTAL Exports      0          0          0          0          0          0

  Sow Slaughter      0          0          0          0          0          0

  OTHER SLAUGHTER    5301       5852       5370       5747       0          6225

  Total Slaughter    5301       5852       5370       5747       0          6225

  Loss               800        566        800        620        0          725

  Ending Inventories 6480       7052       6550       7970       0          9330

  TOTAL DISTRIBUTION 12581      13470      12720      14337      0          16280

  Calendar Yr. Imp.  0          0          0          0          0          0
  from U.S.                                                                 

  Calendar Yr. Exp.  0          0          0          0          0          0
  to U.S.                                                                   
  ------------------ ---------- ---------- ---------- ---------- ---------- ----------

*\*These are not USDA official numbers*

## Ukraine Pork PSD Table, 1,000 CWE (1,000 Head)\*

  -------------------- ---------- ---------- ---------- ---------- ---------- ----------
  Country              Ukraine                                                

  Commodity            Meat,                                                  
                       Swine                                                  

                       2005       Revised    2006       Estimate   2007       Forecast

                       USDA       Post       USDA       Post       USDA       Post
                       Official   Estimate   Official   Estimate   Official   Estimate
                       \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                   01.2005               01.2006               01.2007
  Begin**                                                                     

  Slaughter            5301       5852       5370       5747       0          6225
  (Reference)                                                                 

  Beginning Stocks     22         22         22         22         22         22

  Production           475        493        490        485        0          530

  Intra EC Imports     0          0          0          0          0          0

  Total Imports        75         52         60         45         0          45

  TOTAL Imports        75         52         60         45         0          45

  TOTAL SUPPLY         572        567        572        552        22         597

  Intra EC Exports     0          0          0          0          0          0

  Total Exports        6          11         10         1          0          0

  TOTAL Exports        6          11         10         1          0          0

  Human Dom.           544        534        540        529        0          575
  Consumption                                                                 

  Other Use, Losses    0          0          0          0          0          0

  TOTAL Dom.           544        534        540        529        0          575
  Consumption                                                                 

  Ending Stocks        22         22         22         22         0          22

  TOTAL DISTRIBUTION   572        567        572        552        0          597

  Calendar Yr. Imp.    0          0          0          0          0          0
  from U.S.                                                                   

  Calendar Yr. Exp. to 0          0          0          0          0          0
  U.S.                                                                        
  -------------------- ---------- ---------- ---------- ---------- ---------- ----------

*\*These are not USDA official numbers*

## Ukraine, Pork Import Trade Matrix\*

  -------------------- --------------- ------------------ ----------------
  Commodity            Meat, Swine                        

  Time Period                          Units:             1000 MT

  Imports for:         2004                               2005

  U.S.                 4               U.S.               0

  Others                               Others             

  Brazil               16              Brazil             23

  Poland               12              Poland             5

  Belarus              0               Belarus            1

  China                2               China              9

                                                           

  Total for Others     30                                 38

  Others not Listed    3                                  2

  Grand Total          37                                 40
  -------------------- --------------- ------------------ ----------------

*Data Source: State Statistics Committee of Ukraine*

*\*Ukraine\'s Pork Exports in PWE (Conversion coefficients are applied
to the HS020321 020322, 160249 and 160241 as required by DLP). No
coefficient is applied to HS 020329. Import of pork in Ukraine under
other HS Codes is not significant.*

## Ukraine, Pork Export Trade Matrix

  ---------------------- -------------- ---------------------- ------------
  Country                Ukraine                               

  Commodity              Meat, Swine                           

  Time Period                           Units:                 1000 MT

  Exports for:           2004                                  2005

  U.S.                    0             U.S.                    0

  Others                                Others                 

  Russia                 9              Russia                 8

  Total for Others                                             

  Others not Listed      2                                     0

  Grand Total            11                                    8
  ---------------------- -------------- ---------------------- ------------

*Data Source: State Statistics Committee of Ukraine*

## Average Monthly Pork Wholesale Prices in Ukraine, LWE\*

  -------------------- ----------------- ------------------ ---------------
  Country              Ukraine                              

  Commodity            Meat, Swine                          

  Prices in             UAH              per uom             1 kilogram

  Year                 2005              2006               \% Change

  Jan                  10,8              10,2               -6%

  Feb                  10,8              10,2               -6%

  Mar                  10,8              9,0                -17%

  Apr                  10,6              9,8                -8%

  May                  10,7              9,3                -13%

  Jun                  12                7,2                -40%

  Jul                  11,2              7,2                -36%

  Aug                  11,2                                 

  Sep                  11,3                                 

  Oct                  10,2                                 

  Nov                  9,9                                  

  Dec                  9,8                                  

  Exchange Rate        5,05              Local Currency/US  
                                         \$                 

  Date of Quote        08/19/2006        MM/DD/YYYY         
  -------------------- ----------------- ------------------ ---------------

*Data Source: Agricultural Marketing Project; Post's own estimates*

*\* Live weight procurement prices of meatpacking companies in Vinnitsa
region.*

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