STRATEGY ▶▶▶


Table 1 – Ukraine egg production. 2016 2017 15 100


Total (million eggs)


Industrial production (million eggs) YoY increase in industrial production, %


Source: Ukraine State Statistical Service


Table 2 – Laying hen population in Ukraine as of the end of the year (million birds).


Laying hens


Backyard farms Industrial farms


Source: Ukraine State Statistical Service


The oversupply problem has already taken a toll on prices. The company estimated that they fell by 9% to US$ 0.061 per egg this year. Given the challenges currently facing Ukrainian egg companies, the company considers its operational per- formance in 2019 satisfactory, Tews noted. Ovostar Union sells its products to 55 countries in the EU, the Middle East, Southeast Asia and Africa. The company exports 50% of all eggs, as well as 71% and 48% of dry and liquid egg products, respectively. “To improve management, the company opened commercial representative offices abroad. The first one was launched in Latvia in 2015 to serve as a logistics centre for EU countries, with another one in the UAE in 2018 to manage product flows in the MENA region. In 2019, the company en- tered into a number of contracts to enhance its presence in the Asia-Pacific region,” Tews added. At one of the production sites, in 2019 the first poultry house was certified in accord- ance with the European BARN standard. Ovostar Union be- lieves that this will strengthen its position on the global market as an egg exporter. Inter Agrosila produces around 12% of all eggs in Ukraine but the company prefers to keep a low profile. It has not shared any information or details of its financial performance since 2011, nor is the company disclosing any details of its export campaign.


Avangard in trouble? It is no secret that during the period of instability, Avangard accumulated a large debt and in the past has been in negotia- tions with its creditors on how to manage this better. Howev- er, the recent conflict between Oleh Bakhmatyuk, the owner of Avangard, and the Ukraine authorities could indicate that the situation is getting out of hand. The total debt of UkrLand- Farming, Avangard’s parent company, is estimated to be close to US$ 2 billion. Avangard agricultural holdings’ international


22 ▶ POULTRY WORLD | No. 2, 2020


2016 2017 201,7


204,8


91,8 92,3 109,8 112,5


2018 2019* 211,6


220,7


92,8 92,1 118,8 129,2


creditors have recently written a letter to Prime Minister Alex- ey Honcharuk asking whether the National Anti-Corruption Bureau of Ukraine should investigate Oleh Bakhmatyuk. Speaking with the local press, Bakhmatyuk noted that the creditors had expressed their concerns about the National Anti- Corruption Bureau investigation of him, which included putting him on a wanted list in his country, stating that “with- out a constructive position it [a debt restructuring] will be hard to achieve for the shareholders and management”. Bakhmatyuk is now openly talking about the possible bank- ruptcy of his egg giant, saying “achieving a constructive posi- tion with creditors and the government will save far more than the value of the holdings, while attempting to sell off the assets in parts will only lead to a greater loss”. Bakhmatyuk warned that the first problems may already be seen in the spring of 2020, when the company would need funds to begin a sowing campaign to produce feed for its lay- ers. Apart from the company crashing, there is also the threat of an illegal takeover. “Oleh Bakhmatyuk is staying in Europe to avoid political pressure, manipulation, and to safeguard business security, since there is every reason to believe that under the guise of pre-trial procedures there is a risk of Ukr- LandfFarming’s assets and Avanguard seizure by government officials,” said Bahmatyuk’s lawyer, Tatyana Kozachenko, during a press conference in Kiev. The investigation has noth- ing to do with egg industry. The National Anti-Corruption Bu- reau of Ukraine 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 Bakhma tyuk.”The bankruptcy of Avangard would cause turbulence not only in Ukraine but also on the global egg market,” a source in the Ukraine poultry industry who wished to not be named told Poultry World. “Nev- er before has a company of such a scale stopped operating in the post-Soviet era, and there are no reasons for that to hap- pen – Avangard is a fairly efficient company. But there is com- mon sense and there is policy, and sometimes policy prevails”. The Avangard press office declined to provide any further comment at the time of going to press.


8 068 -


15 506 8 365 3,40%


2018 2019* 16 137


8 899 6,40%


16 702 9 397 5,60%


With domestic consumption maxed out, the focus is on export to 55 countries in total.


PHOTO: VADIM UVAZHNY


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