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WAR AND BUSINESS | INTERVIEW OF THE PRESIDENT OF AVA GROUP MAKSYM SHEVCHUK FOR AGRO TIMES

In a time of war, Ukrainian businesses should focus on keeping the economy afloat, supporting the Armed Forces, and adapting their work processes to the new wartime realities...

AVA GROUP is one of the leading groups of companies in Ukraine’s feed additives market. It has a market share of over 12% and is trusted by more than 1500 farms. However, the war has brought about significant changes in the company’s operations. Nonetheless, the team was able to regroup and optimize their work and even offer their support to both Ukrainian farmers and soldiers.

 

 

We spoke with the company’s president, Maksym Shevchuk, who told us how AVA GROUP managed to maintain their position in the market and shared their idea of what the future holds for the animal husbandry business in Ukraine.

 

 

— Maksym, could you share some details about AVA GROUP’s business operations at present? How long did it take you to adapt to the new wartime realities?

 

The war has changed our attitude to pretty much everything. In the first days of the invasion, we found ourselves struggling to comprehend what was happening. You see, in a situation like that, your brain just goes into denial and refuses to believe that war has really broken out; consequently, it refuses to look for ways out of the situation. We were actually imagining that perhaps all of that was going to be over in just a few days… But as days were passing by, the situation was obviously deteriorating, so the tension was building up. I think it took us 10 days to finally accept the fact that that was a new reality and that life would never be the same again. We had to build a totally new behavior model: how to deliver goods under artillery fire, how to procure raw materials when intense fighting is continuing around Kyiv, and the warehouses in Bucha, Irpin and Brovary are either half destroyed or closed. Transporting goods was the biggest issue at the time – it was impossible to find any commercial driver who would agree to make such a trip, even being offered 10 times the regular fare. But the animals were waiting, so we had no other choice than to find a solution. We were going out of our way to continue our work for as much as possible wherever it was safe enough for our people.

In the first weeks of the invasion, some of the farms became absolutely inaccessible. The dairy business was hit the hardest: many farms were faced with severe feed shortages, and their productivity fell sharply. On top of that, our clients often found themselves unable to pay for the animal feeds, so we had to show some understanding and compassion there: otherwise, they simply wouldn’t be able to pull through, and everything we had been working for would go in vain. There would be no one left to feed come tomorrow.

 

Understanding the gravity of the situation, we made a plea to our western partners to extend a helping hand to our clients. There’s already been some progress: certain products that our clients can use in their business were given to us as charity.


That was a time when we tried our utmost to give our clients as much support as possible, despite the fact that we ran up a massive debt. I am mentioning debts because this sector has always relied heavily on uninterrupted funding. Consequently, when the war broke out, our clients stopped making payments all at once but they still wanted us to keep the shipments going. At the same time, the raw materials had to be paid for – nobody was going to just ship them to us for free.

 

That was an enormous burden for us to bear. With banks shutting down their lines of credit and no other alternatives available, we were left to deal with all those problems all by ourselves, and I am not exaggerating here.

 

After a while we realized that the severity of the situation could be downgraded from critical to moderate: getting things delivered was still no mean feat, but things were finally moving somehow. We were gradually getting used to working in a time of war.

 

We basically had to rearrange the entire business process step by step. But thanks to our team of true professionals, we managed to create a totally new behavior model. I must also add that we kept revising and adapting it in the course of the following month. We introduced planning sessions to our daily work routine: that kind of communication helped us stay connected to each other and helped us feel that we are not alone, that our colleagues are there for us, it helped the team get into a productive mood. After all, it was important for us not to lose our faith and awareness of the fact that despite all the atrocities of war we must keep on working, earning money, paying salaries, that we just cannot let our clients and our army down.

I can honestly say that the most difficult time was the month when we were unable to do any kind of planning and had to just take it one day at a time. At the end of the month, we were able to count our losses and see what resources were available to us. That is how we managed to save our company and remain in the market.

 

— War inevitably brings losses, though it doesn’t mean that one cannot gain anything from it at the same time. Have you, by any chance, gained any useful experience from all of this?

 

— Certainly. As they say, what doesn’t kill you makes you stronger. We have discovered new ways to optimize the efficiency of our work in future.

 

Our continuous search for new suppliers of raw materials revealed how vulnerable our procurement system was. That dire situation showed us that having only one supplier entails the risk of not being able to get raw materials when we desperately need them. We were forced to work in an “emergency mode” and hectically look for a substitute. We also came to realize that we should place greater focus on external markets and enter into direct contracts with foreign manufacturers.

 

Aside from that, we were able to identify our possible strategic priorities, particularly our export potential. You see, most of the revenue used to be generated in the domestic market; but in today’s conditions when domestic trade has come to a halt, it makes a lot more sense to explore foreign markets.

 

So, I can say that extreme circumstances can sometimes present a great opportunity for your company to thoroughly revise its production and management processes. Normally, you would find yourself struggling to find the time for that.

 

— In your opinion, what impact did the two months of war have on Ukraine’s livestock farming business?

 

— The situation is obviously dire in areas that witnessed fighting – a lot of businesses have suffered there. As for the rest of the country, not much has actually changed. The only noticeable change is that businesses are no longer capable of doing any long- or medium-term planning, and that is true not just for livestock farming – virtually all business sectors are in the same boat. Everybody is just trying to get through one day at a time. A business’s ability to plan for the future depends on how far it is from the combat area, whether it is within reach of Russian missiles etc.

 

Therefore, all investment projects and projects aimed at improving efficiency, reducing production costs etc, had to be put on hold altogether. Keeping your business going has now become the most important thing.

 

As the first month of the full-scale war went by, we observed a positive trend in the livestock market. It became clear that adapting to the new wartime realities and being able to rapidly mobilize resources should now be the primary focus of Ukraine’s economy. We have even seen some competition reappearing, because a considerable number of enterprises had moved west, which contributed to the growing demand and rising prices.

 

So, the recent trends in Ukraine’s livestock farming have been largely predictable and similar to those in other business sectors. Today, it is the responsibility of every Ukrainian business to contribute to the stability of our economy, to hold “the economic front”. This means we must roll up our sleeves and work hard to make sure that our economy can keep functioning, that we can continue paying salaries to our employees and being a highly reliable partner for our clients.

 

— Today, the whole world seems to be concerned about a looming food crisis which is closely linked to the war in Ukraine. Do you think that Ukraine is also facing the threat of food shortages?

 

— The demand for food is certainly going to continue to grow. The crisis will be felt both in Ukraine and around the world. For instance, 75% of sunflower oil on the global market used to come from Ukraine and Russia. Currently, there is an embargo on Russian products, and Ukrainian sunflower oil processing plants have suffered war damages, so sunflower oil is in short supply. There are similar problems with durum wheat flour. Therefore, a food crisis is inevitable, so we need to get ourselves ready for it.

 

— One of the amazing character traits that Ukrainians have demonstrated to the world is the ability to stand united in the face of a threat. All this time, you have continued to work and support the national economy, while also contributing to the efforts of the army. How do you manage to balance these responsibilities effectively?

 

— When the war began, we initiated humanitarian relief efforts with the “Agapit Pecherskyi” Charitable Fund. Our mission was to provide humanitarian aid, including food, to the population of Ukraine, particularly to internally displaced people. In addition, we had assistance coming from abroad, as we have long-term partners who have become our good friends in nearly every European country. We focused mainly on those whom we had been working with for a long time – they helped us deliver humanitarian aid to Ukraine, particularly to the most affected parts of the country. There’s another project worth mentioning here: delivery of charitable Easter gifts for children from internally displaced families who had been forced to flee their homes and seek refuge in the western regions of our country. Our charitable work is also about using our company’s resources to attract more help for our country, thus bringing the day of our victory closer.

 

 

We have also been giving away our own products. We are producers of pork, so we’ve been making canned pork and distributing it across the country.

 

Speaking of supporting the army, we see that as our obligation. Around 40 employees of our company have joined the Armed Forces. To tell you the truth, they had some issues with getting military protective equipment, so we got them fully equipped ourselves. Apart from that, our company has also been engaged in supplying body armor and cars for the army.

 

— How do you see the development of Ukraine’s animal husbandry business in the near future? When do you expect things to go back to where they were?

 

— On the condition that Russian troops don’t make any significant advances and the front line remains stable, businesses should soon adapt, and investment should start flowing again. Even if the fighting is to continue for a few more months, as experts are predicting it to.

 

Seeing that our ports are closed, and Ukrainian agricultural products cannot reach foreign markets, while the domestic market sees a drop in grain prices, livestock farming was able to provide added value to the local crop farming industry. This way the cost of grain is falling whereas the demand is still there. As for investment, it is likely to resume when the business sector regains stability.

 

 

We haven’t really gotten back on track yet, as we are still not in a position to do any business planning. We are just getting our first taste of the feeling that we are finally able to plan at least one month ahead rather than just taking it one day at a time. But for a business to grow, it must be able to have a vision of its future for at least one year ahead. Some areas of the country have been showing a growing demand for pork among the population, youngstock prices have gone up, poultry farming is beginning to bounce back, and Ukraine is exporting again as Europe has lifted poultry import quotas. But we do realize that everything depends on how things develop on the front.

 

It is an undeniable fact that in current conditions livestock farming has become a source of added value for crop production. Investment in the sector is very much welcome and necessary, particularly in businesses whose products can be exported.

 

 

Author: Lyudmila Morozova

Source: https://agrotimes.ua/interview/vijna-i-biznes-grupa-kompanij-ava-group/ 

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