OREANDA-NEWS. July 29, 2010. The Ukrainian Union of Poultry Breeders requested that the Cabinet of Ministers introduce a minimum price for eggs in order to level the playing field on the domestic market, claiming the majority of local egg producers were on the verge of shutting down otherwise. The union claimed that the average cost for production of ten eggs was UAH 4.7, whereas market leader Avangard (LSE: AVGR LN) was selling at UAH 1.7. Avangard representatives dismissed the claims, responding that efficiency enables the company to maintain low prices during the seasonal decline over the summer.

Concorde Capital: we see the request as evidence of strong competition, as Avangard is enhancing its market position with no adverse impact on profits. The company’s vertical integration, achieved via its own fodder plants and rearing capacities and strong market share (23% for shell eggs in 2009) allows for lower production costs compared to domestic peers, which suffer from less efficient operations. In the meantime, we see a low probability of the State Antimonopoly Committee or other government bodies interfering in the market as Avangard’s market share is still below 33%.