Avangard to close several production facilities in Ukraine
In 2020, Ukraine’s biggest egg producer Avangard shut down 8 production facilities, cutting 3500 jobs.
Avangard operational director Vladimir Rudenko told local press that this decision was made partially due to a continuing conflict with the Ukraine National Anti-Corruption Bureau. If the administrative pressure, which the company deems unjustified, remains, Avangard would have to close several more facilities in 2021, Rudenko added. “Our company holding is dealing with legitimacy issues. The Ukraine National Antimonopoly Committee is putting forward some ridiculous cases, stating that 2 of our biggest and most modern poultry farms, which have been running for 7 years, are non-existent,” Rudenko said.
The administrative pressure has stripped the company of bank loans and negatively impacts its financial performance, according to Rudenko. “The consequences of such a war between officials and business is extremely negative for the economy. Every Ukrainian will experience the negative consequences. A decrease in our supply in the domestic market may lead to further price hikes,” he said. The Ukraine National Anti-Corruption Bureau suspects that in 2014, there was an abuse of power when a UAH1.2 billion (US$ 50 million) stabilisation loan was provided by the National Bank of Ukraine to the VAP Bank, which used to belong to the Avangard owner Oleg Bakhmatyuk.
Egg production shrinking
In 2020, Avangard reduced egg production by 25% compared to the previous year due to the conflict with authorities, estimated Natalia Belousova, head of analytical website Agropolit. This was one of the factors contributing to a sharp growth in prices on the country’s egg market. “Recently, livestock industry associations claimed that due to a poor harvest, grain prices jumped by 75% to 80%, and consequently, the price for poultry and eggs increased by 45% to 50%,” Belousova said, adding that a similar picture is seen on the global market against the backdrop of the Covid-19 pandemic.
The laying hen population in Ukraine was reduced by some 4 million birds in 2020, the Ukraine poultry farmers association estimated. However, government agencies have not recorded a sharp drop in egg production. In January-November of 2020, Ukraine’s egg production totalled 15.1 billion eggs, which was 2.2% lower than the same period of the previous year, State statistical service estimated. The downward dynamics could be partly attributed to export issues. In the first 11 months of 2020, Ukraine exported 101,000 tonnes of eggs, 21% down compared to the same period of the previous year.
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