Omtron halts plans for US poultry operations
Aug. 8, 2011
by Meat&Poultry Staff
WASHINGTON – International corn market turmoil contributed to the decision by Ukrainian billionaire Oleg Bakhmatyuk to vacate a newly acquired role in the US poultry industry, according to the Aug. 5 edition of the National Chicken Council’s Washington Report. It was unable to cover costs of production, US managers of the company said.
Omtron, Bakhmatyuk’s US company, purchased the North Carolina operations of Townsends out of bankruptcy in February and invested $10 million in plants in Siler City and Mocksville before suddenly announcing last week it would cease its operations and close the plants.
According to Terry Bralley, president of the Davie County, North Carolina, Economic Development Commission, Bakhmatyuk planned to control costs by importing corn from Ukraine, where it has cost half the US price. But the Ukrainian government slapped export taxes on grain for the first time as of July 1, cutting exports to an “unprecedented low” in July, about 25 percent of June’s total, according to Sergey Stoianov, director of the Ukrainian Agrarian Confederation, quoted by Bloomberg.
July’s grain export decline “is most likely a reflection of the destructive effect of the export duty, which sterilizes the revenue which farmers can get from world markets,” Stoianov said in a statement.
Corn is subject to an export duty of 12 percent, Bloomberg relayed. The tax reportedly will be in effect through the end of the year at least.
Meanwhile, Dave McGlamery, manager of the Siler City poultry complex, said the regulatory changes in Ukraine undid the corn supply deal. “Whatever cost advantage importing the corn had just went away,” he said.
The current US market was less appealing to Bakhmatyuk, according to David Purtle, the veteran poultry executive hired as Omtron’s CEO. “He just didn’t like the environment in this country and the lack of discipline that the poultry industry had,” Purtle said, who added that the decision to shut down came as a surprise. Purtle told employees that “revenues have not kept pace with costs.”
“Our Ukrainian owners made the decision to cease operations in North Carolina, and we’re proceeding with their wishes for the company, as painful as it is,” McGlamery added. “They told us the business climate was not favorable for them to continue. They just decided to cut their losses and move on.”