Europe’s largest poultry plant set for max output

Even from the air, the fields in Ukraine look huge. The country is the largest on the European continent and only slightly smaller than Texas.

What differentiates it from Texas is the abundant water and fertile land – almost half the country is a flat plain. It is also gifted with a fairly benign climate. If you could design an ideal place for growing crops, Ukraine would probably be it.

That gives an agri-business an immediate advantage, and Mironovskiy Hleboproduct (MHP) has used the productive environment to build an integrated poultry business that equates to almost one-third of the entire throughput of the UK broiler industry, currently finishing 4.9 million chickens a week.

MHP produced 404,000t of poultrymeat last year, and is scheduled to double that by 2018, when its new Vinnytsia complex comes fully on stream. The site began production earlier this year, and the facility has also been certified to export to the EU.

“It’s no secret that the competition is scared,” says Yuriy Kosyuk, the man who built the company up from a grain exporter to a poultry colossus.

The business was floated on the London Stock Exchange in 2008 and is Ukraine’s largest agricultural holding. But the domestic market is static, and pushing forward with expansion means cracking other countries.

Expanding exports

Mr Kosyuk says that, currently, MHP’s customer base is spread over about 25 countries, but expanding that base to 30-35 would be “fantastic”. The company is seeking a diverse set of countries to sell to: “External markets give us optimism,” he says.

The firm is inching closer to parity with Brazil on price, he adds, and currently exports around 30% of its produce, accounting for 50% of sales. The aim is to bump up the amount it exports to half of total produce, without losing any of its 50% domestic market share.

In the past few years the firm has delivered on its intentions. “From year to year in exports of products we are up three times,” says Mr Kosyuk. “We didn’t just add one country, we’ve expanded dramatically and we’ve expanded in countries for which we produce special products.”

Those external markets are established in the countries immediately around Ukraine, and extend south and east as far as Africa and the Middle East – a new market that will pay a premium for a smaller bird.

“We first looked at it and weren’t interested,” Mr Kosyuk recalls. “But when we found out how much they were prepared to pay for it, we began to pay attention.”

Eye on Europe

Another external market MHP has its eye on is Europe, though import tariffs are currently a barrier to trade. But free-trade negotiations are ongoing with the EU Commission, (see right). Mr Kosyuk says; “If the country receives the green light, then we’ll be the first to go.”

MHP is not hanging around, though. It’s pushed ahead by making sure its slaughterhouse at the new Vinnytsia complex is at or above EU minimum standards, and the company is looking at the acquisition of a finishing plant within Europe, for final processing. Uncut poultrymeat is currently subject to a €149/t import tariff, compared with €795/t for breastmeat.

Mr Kosyuk says the firm will focus on added-value within Europe while trade barriers remain up, likening the practice of finishing products after import to “adding wheels” to cars – the parts are taxed less individually than the whole car.

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