Chicken eggs have become inaccessible to Ukrainians. From January 2020 to October 2022, the average price of chicken eggs has increased 3 times! The price of 10 eggs increased from UAH 21.07*1 to UAH 60.1.2 Over the same time period, the average cost of food in Ukraine increased by 42.1 per cent.5 And the average salary increased by only 5 per cent. **6
The industry is rapidly collapsing
Reasons for price increases are bad things in the industry. Since 2020, the cultivation of chickens for the production of eggs has been unprofitable. From the beginning of 2020 to the beginning of 2022, 30 egg production facilities closed. The number of chickens has decreased by 11 million.7
During the same period, egg production decreased by 15.9 per cent. In 2020, 16.19 billion eggs were produced in the country.8 In 2021, this figure was 14.06 billion units.9 In 2020-2021, egg exports decreased by 73.8 per cent. In 2020, the value of exports was $97.3 million.10 In 2021, this figure was $59.8 million.11 During the same period, Ukraine began importing eggs for the first time.12 In 2021, the value of imports amounted to $11.6 million.11 Egg consumption in Ukraine decreased from 278 eggs per person in 202013 to 272 eggs in 2021.14
A relatively small reduction in consumption is explained by a change in the structure of demand. Ukrainians began to buy the cheapest and low-quality eggs of category “C3”.15
Industry problems
Large enterprises lose competition to rural residents. Peasants produce almost half of all eggs in Ukraine.9 These people do not pay taxes and use cheap feed. Also, peasants do not build expensive farms. In winter, they do not use electricity and do not heat the chicken sheds. As a result, the cost of chicken eggs grown by peasants is less than the cost of eggs produced by large enterprises. Big businessmen are compelled to sell eggs in the summer cheaper than the prime cost. Businessmen do this in order not to lose price competition to the peasants. Only in autumn and winter, when peasants do not sell eggs, large businessmen can make a profit. Then there is the seasonal price increase. That is, only half of the year a large business can make a profit.16
However, even this half-bad situation was only until 2020. After that, things got really bad. The cost of energy carriers has increased several times.17 For example, the price of gas increased from UAH 12,000 or $431 per 1,000 cubic meters to UAH 36,000 or $1,366 per 1,000 cubic meters. Gas makes up 7-8 per cent of the cost of egg production.18 Due to the increase in gas prices, the price of electricity also increased. The price of electricity for enterprises amounted to 4 – 5.5 UAH per kWh or $0.1-$0.15.15 Because of this, the heating and lighting of farms has risen in price. The production of compound feed for chickens has risen in price by 2 times. And compound feed makes up 60 per cent of the cost of chicken production.19 Large enterprises became unprofitable. The losses of the industry for 2020 amounted to 4.9 billion hryvnias20 or $176.2 million. This was the largest loss among all branches of agriculture.
The situation has not improved in 2021. Production was unprofitable.21 And in 2022, the industry was hooked by the war with Russia.
How the war with Russia affected the industry
The war with Russia created new problems and increased old. A new problem was that large enterprises could not update the number of chickens. The fighting disrupted logistics. There was no fuel, no electricity. It was not known how far the Russian army would go. In such a situation, businessmen did not dare to buy chickens. As a result, most of the eggs are now produced by old hens. But old chickens are dying. Also, older chickens are less productive than young ones.22
Only from the second half of the year, enterprises in Western and Central Ukraine began to renew their livestock chickens. By the end of the year, businessmen want to buy 6.5 million chickens. However, these hens will only be able to produce eggs after 150 days. That is, the effect of updating the number of chickens will be no earlier than mid-2023.23
Enterprises in the south and east of Ukraine do not renew their livestock chickens. Businesses in these regions are destroyed during the fighting. And this is another new problem.
In May, the “Phoenix” farm was destroyed in the Slavyansky district of the Donetsk region. 800 thousand chickens died there. These chickens produced 500,000 eggs daily.24
Farms in the village of Chernobaevka, Kherson region, and farms in the towns of Makarov and Brovary, Kyiv region, were also destroyed. About 4 million chickens died on these three farms.25 In total, due to the fighting, the number of chickens decreased by 40 per cent.26
The war also accelerated the decline in production. Due to the Russian occupation, production decreased by 25-30 per cent.27 The war also accelerated the decline in egg exports. From January to August 2022, Ukraine exported eggs worth $26.1 million, which is 15.3 per cent less than in the same period a year earlier.28 Also during the war accelerated the rise in prices for eggs. The war period accounted for half of the price increase over the past 2 years.2
Industry development forecast
In Ukraine, the production of chicken eggs will continue. However, the volume of the industry will be approximately 2 times less than before. Production will be concentrated in the Western and Central regions of the country. By the beginning of October, enterprises located in these regions resumed livestock renewal and export of eggs.29
The blockade of the Black Sea by the Russian fleet will not allow Ukrainian enterprises to use the best transport routes. Therefore, the export of eggs and the importation of chicks will be done through Poland and Romania. This will create additional transportation costs and pressure on the business.
The cost of eggs will increase by another 10-15 per cent. Price cuts will begin in the second quarter of 2023. Then favorable weather conditions will come and the peasants will return to the market.30
In general, the industry will not return to the indicators of 2018, when there was a peak of development. After all, Ukraine will not be the same as before.
*In dollar terms, the price almost doubled from $0.9 (3) to $1.74
** With a projected 17.4% pay cut in 2022.
References
1. http://www.agroperspectiva.com/ru/news/182276
2. https://minagro.gov.ua/news/zrostannya-cini-na-kuryachi-yajcya-zupinilosya
3. https://index.minfin.com.ua/exchange/archive/2020-01-20/
4. https://index.minfin.com.ua/exchange/archive/2022-10-10/
5.1 https://www.rbc.ua/ukr/news/tsini-produkti-pochatku-roku-zrosli-bilsh-1665406155.html
5.2 https://www.epravda.com.ua/rus/news/2022/01/10/681271/
5.3 https://apostrophe.ua/news/economy/2021-01-11/inflyaciya-v-ukraine-v-2020-godu-uvelichilas-do-5-procentov-chto-podorozhalo-bolshe-vsego/219977
6.1 https://www.rbc.ua/rus/news/utverzhden-pokazatel-zarplaty-rascheta-pensiy-1612952575.html
6.2 https://www.epravda.com.ua/rus/news/2022/01/28/681884/
6.3 https://fakty.ua/ru/407352-zarplaty-ukraincev-nachnut-rasti-v-kabmine-obyasnili-kogda-eto-proizojdet
7. https://agroportal.ua/ru/news/zhivotnovodstvo/ukraina-vpervye-importirovala-yaitsa-iz-belarusi
8. http://www.agroperspectiva.com/ru/news/182198
9. https://ukragroconsult.com/ru/news/proizvodstvo-yaicz-v-ukraine-po-itogam-2021-goda-upalo-na-13/
10. https://dia.dp.gov.ua/ru/top-5-stran-importerov-ukrainskix-yaic-v-2020-godu/
11. https://ukranews.com/news/868534-v-1-polugodii-eksport-yaits-sokratilsya-na-42-do-228-mln-shtuk-soyuz-ptitsevodov
12. https://fbc.ua/ru/news/obshhestvo/ukrainskie-biznesmeny-reshili-podzarabotat-na-belarusskih-yajtsah/
13. https://ptichki.net/publishing/news/15442-potreblenie-yaits-v-ukraine-sokratilos-do-278-shtuk-cheloveka
14. https://ptichki.net/publishing/news/16656-potreblenie-yaits-v-ukraine-v-2021-sokratilos-do-272-shtuk-chel
15. https://news.obozrevatel.com/economics/economy/tsenyi-na-yajtsa-v-ukraine-vzleteli-chto-proizoshlo-i-kogda-podesheveyut.htm
16. https://thepage.ua/economy/pochemu-v-ukraine-dorozhayut-kurinye-yajca-v-2022-i-kogda-nachnut-snizhatsya-ceny
17. https://fbc.ua/ru/news/ekonomika/v-ukraine-rekordno-podorozhali-yajtsa/
18. https://ukragroconsult.com/ru/news/ubet-li-dorogoj-gaz-pticzevodstvo-v-ukraine/
19. https://www.5.ua/ru/ekonomyka/zolotie-iaitsa-pochemu-v-ukrayne-dorozhaiut-produkti-ptytsevodstva-y-chto-hovoriat-fermeri-260797.html
20. https://fbc.ua/ru/news/ekonomika/v-ukraine-podorozhayut-myaso-i-yajtsa/
21. https://www.rbc.ua/rus/styler/ukraine-vzletyat-tseny-ytsa-eto-proizoydet-1625650618.html
22. https://news.obozrevatel.com/economics/analytics-and-forecasts/yaits-ne-budet-pochemu-ih-proizvodstvo-v-ukraine-mozhet-ostanovitsya.htm
23. https://minagro.gov.ua/news/zrostannya-cini-na-kuryachi-yajcya-zupinilosya
24. https://news.obozrevatel.com/economics/economy/rossiya-unichtozhila-odnogo-iz-samyih-moschnyih-proizvoditelej-yaits-pogib-pochti-1-mln-ptits.htm
25. https://delo.ua/ru/agro/vedushhii-proizvoditel-yaic-v-ukraine-soobshhil-o-riske-masstabnoi-katastrofy-iz-za-voiny-394086/
26. https://dia.dp.gov.ua/ru/ukraina-vozobnovila-eksport-yaic/
27. https://focus.ua/economics/534899-podorozhanie-yaic-v-ukraine-priostanovilos-chto-budet-s-cenami-dalshe
28. https://ukragroconsult.com/ru/news/vyruchka-ot-eksporta-yaicz-za-8-mesyaczev-sokratilas-na-153/
29. https://dia.dp.gov.ua/ru/ukraina-vozobnovila-eksport-yaic/
30. https://vikna.tv/ru/dlia-tebe/ekonomiya/pochemu-podorozhali-kurinye-yajcza/
