Ukraine: egg farmers to ramp up production once power outages end

In the past few years, Ukrainian egg producers operated at minimal profitability on the breakeven point, having virtually no opportunity to expand production capacities using their turnover, he said, adding that only companies with other businesses, like crop cultivation or those attracting investments from outside had an opportunity to develop.

However, currently, things have significantly worsened in the crop cultivation segment, and there is no longer an option to generate money on grain production to fund the egg division, he added.

Outages worsen

Ukraine is experiencing turbulence in the domestic egg market due to capacity destructions, as over half of Ukraine’s largest egg farms have suspended operations. The remaining farms suffer from repeated power outages.

Ukraine’s state energy company, Ukrenergo, said in a statement on 17 December that energy consumption had fallen by 50% due to Russian missile strikes and that it would take longer to restore the electricity supply than after previous attacks.

Energy infrastructure was hit across the country, resulting in complete outages in at least 2 regions, as well as outages and emergency power cuts to stabilise the grid in others, Ukrenergo added.

The power outages hamper the operation of poultry farms and meat-processing plants across the country, resulting in lower production and higher prices.

Export is still in disarray

Ponomarenko said that the problems of Ukrainian agriculture drove up prices in the global egg market in 2022.

“Perhaps nobody fully realised what a big role Ukraine really plays in the global agricultural market. A number of countries have not received a significant part of our cheap crops. This entailed a rise in prices for chicken eggs,” Ponomarenko said.

Ukraine was one of Europe’s largest egg exporters in previous years, selling egg products primarily to the Middle East and North Africa. However, this year’s export remains low as the key logistics routes were laying through seaports, which remained blocked since the beginning of the conflict. It is expensive and unprofitable to export eggs by land, Ponomarenko said.

On the other hand, Ukrainian egg farmers get some support from cheap feed grain on the domestic market. This factor, however, is expected to wind down in the future.

“We must understand that after the end of the war, when crop companies will have the opportunity to export grain raw materials through ports, the cost of poultry feed on the domestic market will also increase,” Ponomarenko emphasised.