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Ukrainian egg industry recovering

Ukraine will produce 18.5 billion eggs in 2016 which is 10% more than last year, according to a forecast by Union of Poultry Farmers of Ukraine (UPFU). This is good news for the sector which has faced multiple problems.

The poultry industry this year is aiming to restore its production indicators, because in 2015 the production volume dropped by 14.3% to 16.8 billion pieces, according to official data of the State Statistical Service of Ukraine.

Expansion of poultry production capacities

"The estimated rise this year is connected with the strong expansion of production capacities of the industry's leaders, including Avangard, Ovostar Union and Inter-Zaporozhie," explains UPFU head Sergei Karpenko. "Last year Ukraine faced a domestic deficit of eggs, since the production volume dropped by 2.8 billion pieces."

Leaders of the Ukraine poultry industry have been heavily affected by the Russian annexation of Crimea and the armed conflict in the Donetsk and Luhansk Oblasts of the country. As a result, Avangard and MHP lost access to part of their assets in the peninsula and rebel regions.

Also interesting: Poultry import from Ukraine to Crimea restricted

Russia is restricting the import of poultry from Ukraine to Crimea, allegedly over concerns regarding avian influenza (AI). Only a limited number of certified companies are allowed to export their poultry to Crimea.

Hostilities in the Crimea

"Large industrial companies which account for 80% of all egg production in the country last year lost a number of assets in the Crimea, Donetsk and Lugansk Oblasts due to the hostilities. This factor has not been aided by the devaluation of the hryvnia, which caused the decrease in operational capital of agricultural corporations and lead to their inability to fully resume poultry stock," explained Natalya Shpigotskay, analyst of Investment Company Dragon Capital.

Poultry export ambitions

Last year Ukraine exported nearly 1 billion eggs; Avangard launched their first deliveries of eggs to the UK, plus Ukraine poultry industry managed to enter the Israeli market. This year, the country is targeting access to the Chinese egg market.

"In general, it is hard to forecast the situation with the Chinese market, and when it would be opened for our manufacturers," Karpenko admits.

In the first months of 2016 Ukraine's egg exports were reduced, as Israel banned deliveries following the identification of Salmonella Enteritidis in the country's production. Ukraine supplied Israel with eggs during the period of September 2015 – January 2016, when it accounted for 20% of all deliveries.

Also interesting: Ukraine launches new poultry supply route to Asia

A new railway route from Europe to Asia, by-passing Russian territory, has been launched by Ukraine authorities. If successful there is great potential for poultry market expansion.

Focus on poultry exports

Despite this incident, major manufacturers confirmed that over the coming years they will focus on the development of export supplies. In particular, as CEO of Avangard Oleg Bahmatuk explained, until 2020 the company plans to boost exports to 50-60% of the total volume of production or to nearly 3.5 billion eggs per year.

Ovostar Union has a production target, this year, of 1.45 billion eggs, which is 21% more than in 2015, according to company's spokesperson Victoria Grigorenko. At the same time, she also notes that most of the production will be delivered to the domestic market. Last year, the company almost doubled its volume of exports.

"We are now implementing a second investment programme Stavishche industrial complex, which should result in an increase in the volume of production. In addition to the development of export markets, the demand for our products is consistently high in the local market. Thus, sales also increase. Processing capacities are rising accordingly with regard to egg production," Ovostar Union brand manager Nadezda Kichuk added.


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