Chicken and Egg Shortage in Ukraine After Attacks on Warehouses: Poultry Farmers Oppose New Retail Demands

There is no shortage of poultry meat and eggs in Ukraine, and the reduction of the assortment of these products in certain retail chains and regions is solely related to missile strikes on distribution centers. At the same time, producers oppose shifting the military losses of retailers onto suppliers.

Suppliers are unable to deliver their products.

They reminded that today the food supply system to the networks, which had been functioning effectively for many years, has been destroyed. Suppliers delivered their products in large batches to distribution centers, from where smaller batches were then distributed to the final points of sale.

Due to the damage or destruction of distribution centers, suppliers cannot deliver their products to them, leading to delays in supply and a temporary reduction in the assortment in certain networks and regions of the country.

Currently, networks are suggesting restructuring the logistics of poultry and egg supplies directly to supermarkets, bypassing distribution centers; however, this approach is unacceptable for many suppliers who do not have their own logistics to deliver goods to retail points, of which there are hundreds across Ukraine, according to the relevant association.

For this, producers need to increase their own transport fleet for timely delivery of goods (delays are penalized by the networks), drivers are currently in short supply and need to be booked for normal operations, and the workload on accounting increases due to the rise in paperwork, delays in unloading large quantities of goods at various points, where technical and physical logistics are not always available.

This requires additional financial investments, which producers cannot afford under conditions of working capital shortages and military risks.

"At the same time, in our opinion, it is quite illogical and outrageous at this time to propose (or rather, probably, 'demand') by some networks from poultry suppliers to distribute the risks of property consequences of accidental destruction, damage, or loss of unsold goods at distribution centers, stores, or en route to them," he said.

They add that there are networks proposing to transfer all 100% of losses from destroyed goods due to military actions onto the supplier, while some suggest a 50-50 split. At the same time, as already noted, suppliers are subject to the condition of further cooperation ensuring direct supplies of products directly to the final points of sale, and other contract conditions remain in effect, particularly regarding penalties for under-deliveries, retro bonuses, other marketing payments, and long settlement periods.

"We believe that the retail demands for compensation of their losses due to military actions at the expense of suppliers are unacceptable. Producers also lose production capacities, warehouse premises, transport; all are in the same conditions of military risks," emphasized the association.

The refusal of suppliers to accept the new retail conditions may lead to reduced competition, a decrease in assortment and production, which will ultimately cause price increases for consumers.

"Producers of poultry products are ready to consistently and uninterruptedly provide the domestic market with socially significant goods in necessary volumes; however, market participants should not be subjected to pressure and blackmail, but rather build partnerships in these difficult conditions, ensuring food security and accessibility of food products for Ukrainians."

A series of massive enemy attacks on Kyiv and the Kyiv region has caused extensive damage to the region's logistics infrastructure and has significantly harmed retailers, distributors, and postal operators.

One of the latest strikes occurred on the night of August 20: Russian troops hit a warehouse in Boryspil, where part of the stock of the Varus supermarket chain was stored.

However, the most extensive attack occurred on the night of August 5, when shelling hit ten warehouse facilities in Kyiv region.

In particular, during this strike, two sites of the "Epicenter" network and the Novus warehouse complex were destroyed. The warehouses of the Rozetka company in Brovary were also hit by missile strikes. Co-founder Vladislav Chechetkin estimated the damage in billions of hryvnias.

Fires at two distribution centers of Fozzy Group ("Silpo") claimed the lives of six employees.

As stated by the Minister of Agrarian Policy and Food Taras Vysotsky, after the destruction of distribution centers of major capital retailers, the state is looking for reserve premises for storing goods to replace lost logistics capacities. About 30-40% of volumes can be relocated or restored quite quickly.