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Production decline drives up eggs prices in Ukraine

A record-breaking drop in egg production in Ukraine since the beginning of 2021 is likely to drive egg prices on the domestic market to new heights, the Ukrainian Agribusiness Club (UCAB) business association forecasts.
From January to May of 2021, egg production in Ukraine dropped by as much as 25%, causing a temporary shortage in the domestic market. Photo: Ton Kastermans
From January to May of 2021, egg production in Ukraine dropped by as much as 25%, causing a temporary shortage in the domestic market. Photo: Ton Kastermans

Svetlana Lytvyn, an analyst with the Ukrainian Agribusiness Club, said the average egg prices are expected to double, reaching 40 hryvnias(US$ 1,50) per 10 eggs in the next few weeks. She anticipated the price to hold at this level until the spring of 2022 unless some major changes happen on the market.

25% decline in egg production

From January to May of 2021, egg production in Ukraine dropped by as much as 25%, causing a temporary shortage in the domestic market. This was the strongest decline recorded in the last 2 decades, Lytvyn said. As a consequence, egg export halved in 2021 year-to-date. The production drop is a result of a 60% increase in prices of corn and wheat for feed, Lytvyn added. “It is hard for producers to operate in such conditions due to low level of business profitability,” she said.

Conflict

The production decline is primarily attributed to the problems of Ukraine’s largest egg producer, Avangard. The company reported it had to shut down 13 poultry farms in Ukraine due to a conflict with the National Anti-Corruption Bureau of Ukraine.

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Oleg Bakhmatyuk, owner of Avangard, said that monthly egg production dropped to 170 million eggs in May of 2021, compared to 350 million in May of 2020, while egg exports shrank to 20 million units in May of 2021, compared to 170 million units in the same period of the previous year.

Ovostar increases production

Meanwhile, Ukraine’s second-largest egg producer, Ovostar Union, slightly increased output by 5% to 831 million eggs in the first half of 2021, the company said in a statement posted on the website of the Warsaw Stock Exchange. The average price increased by 34% on a year-to-year comparison reaching $ 0.059 per egg, the company reported.

That said, Ovostar Union also experiences problems. The company is haunted by assets it bought from the bankrupted MakarOvo in the past. The former owners filed a lawsuit at first, but now offered to drop the lawsuit if Ovostar makes them a lump-sum cash payment. “A swift and sustained end to the legal harassment of Ovostar Union will have a direct and positive influence on Ukraine’s investment climate,” a spokesperson stated.