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Why Ukraine echoes Brazil, but is unlike China

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Ukraine is a bit like Brazil, but not like China. And that makes it the ideal place to base what will be the world's biggest egg producer, according to Oleg Bakhmatyuk.

Ukraine, once known as the breadbasket of the Soviet Union, is akin to Brazil in its agricultural potential.

"It has some of the best land on the planet," he tells Agrimoney.com

And lots of it. Enough to produce 120m tonnes of grain, Mr Bakhmatyuk says, quoting an estimate from Leonid Kozachenko president of the Ukrainian Agrarian Confederation, and a need to "embrace farming technology".

"Ukraine is like Brazil, but 10 years behind."

'Producer on a global scale'

Importantly for Mr Bakhmatyuk, chairman of, and the biggest shareholder in, Avangard, an increasing amount of this grain looks like being corn, "the base ingredient for most feed regimes" as needed by the group's 26.0m-head poultry flock, as confirmed in results on Thursday.

Avangard past and planned laying hens and (egg production capacity)

2013: 28.9m head, (7.9bn)

2012: 28.0m head, (7.6bn)

2011: 24.9m head, (6.0bn)

2010: 18.9m head, (4.4bn)

2009: 18.9m head, (3.3bn)

2008: 15.7m head, (2.4bn)

That's more than enough to meet Ukraine's own needs and leave a stack for exports. Which is one way in which the country differs markedly from China.

China is increasingly spoken of as a corn importer. Indeed, to meet its shortfall "Chinese will have to resort to corn imports big time", he says.

Pork vs eggs

That's a bonus for Ukraine grain growers, such as the Ukrlandfarming operation which Mr Bakhmatyuk also controls.

Indeed, he has forecast that it was "quite possible" that China will import 1m-1.5m tonnes of Ukrainian corn over the next three years, after an initial 50,000-tonne shipment started on this route earlier this month.

However, it is a boon for egg exporters too, in that China's "preoccupation in protecting food security" is on protecting domestic hog farming, given priority over the likes of egg enterprises.

Avangard, which on Thursday revealed a jump to 110.8m eggs in exports in the first three months of the year, from just 1.3m in the same quarter of 2011, has named China as one of its priority markets for boosting shipments to in plans for 2012 onwards, with Malaysia and the Philippines among other Asian targets.

'Will achieve first place'

The aim is to turn Avangard, which currently ranks second to US-based Cal-Maine Foods, into the world's biggest egg group, with the group's laying hens, 20.5m in the first quarter, set to hit 28.9m head next year, when egg production is expected to hit 7.9bn.

World's biggest egg producers

1: Cal-Maine Foods, (US)

2: Avangard, (Ukraine)

3: Proteina Animal, (Mexico)

4: Rose Acre Farm, (US)

5: Moark, (US)

"But we will see how things evolve".

That would be quite some improvement from the Avanagard business which he took over some 10 years ago, once one of the biggest Soviet egg enterprises, with 1m laying hens, which had shrunk to a bankrupt business with just 50,000.

Grain sheikhs?

But he has market dynamics in his favour, with world egg imports growing, expanding by well over $100m a year even during the world recession, as the likes of the Middle East and India catch up with Western-style rates of egg consumption, in pharmaceuticals and cosmetics as well as food.

And then there is, of course, Ukraine's corn production, the potential for which Mr Bakhmatyuk, a former energy executive, illustrates by bringing a further country into the mix.

"The value of corn to Ukraine is the same as oil to Saudi Arabia."

By Agrimoney.com

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