Ukraine new competitor on EU poultry market

Published on
February 6, 2017

Despite the current import levy on chicken breast fillet, Brazil and now also Ukraine can be competitive at the EU market at this moment. The offer price of breast fillet in 2015 of Brazil and Ukraine was equal to or lower than the average EU price. In a scenario with 50% lower import levies and 10% lower exchange rate all countries in the study (Brazil, Ukraine and also Thailand, Argentina, the USA, and Russia) have a lower offer price for breast fillet compared to the EU poultry meat industry. This shows the report of Wageningen Economic Research examining how lowering import levies impacts the competitiveness of the EU poultry industry.

EU poultry meat producers have to comply with legislation on environmental protection, animal welfare and food safety. The additional costs of EU legislation on farm level were estimated to be 5.0 eurocents per kg live weight (5.8% of the total production costs in 2015). The EU is an important player in the international trade of poultry meat. In 2015, the EU exported 1.490 million tonnes of poultry meat with a value of €2.113 billion while it imported 0.871 million tonnes with a value of €2.329 billion. Import levies protect the EU from imports from the non-EU countries. However, even with substantial import levies, the offer price of breast fillet from Brazil and Ukraine is equal to or lower than the offer price of EU producers.

Compared to the results of the 2013 base line (van Horne and Bondt, 2014) the offer price of breast fillet of EU producers and all third countries did decrease. This was a result of lower production costs at farm level (lower feed prices) in all countries. Russia and Ukraine showed the largest decrease in offer price of 70 to 80 eurocents per kg breast fillet. The main reason for this was a lower exchange rate of the currency of these countries to the euro. In the scenario of the combined consequences of a 50% lower levy on imports (and no additional levy) and 10% lower exchange rates, all third countries obtain a competitive to strongly competitive position in the EU market for breast fillet.