Ukrainian poultry products are flowing back in to Europe this week following the decision by the European Union to lift most of its import and transit bans.
It will allow Ukraine to effectively make use of the additional duty free quota of 50,000 tons of poultry meat per year that it obtained under the Agreement on Poultry concluded by the EU and Ukraine last year. The ban was originally introduced in January following the discovery of High Pathogenic Avian Influenza (HPAI) in the western part of the country.
Regionalisation of the country opens the way for resuming exports from parts of the Ukraine that are not affected by avian influenza. Photo: Jan Willem Schouten
In response to the outbreak, Ukrainian authorities implemented a stamping-out policy to control and limit the spread of HPAI. They also made use of Article 65 of the EU-Ukraine Association Agreement, which establishes a special procedure for the recognition of regionalisation decisions following a disease outbreak in the Ukraine. The regionalisation allows the country to be divided into different zones so that one part of the country cannot be considered free from HPAI, while the rest of the country can.
The European Commission’s Standing Committee on Plants, Animals, Food and Feed agreed the regionalisation policy, which allows major centres of commercial production of poultry meat in the Ukraine to fall outside the prohibited zone. Imports of poultry cannot come from the infected area around Bugakiv in Nemyriv province. Leading Ukrainian poultry business MHP welcomed the decision, adding that it hoped other countries that had introduced a ban on poultry products would reconsider their position.
Yuri Kosuyk, owner of MHP has revealed plans to build several new production projects in the EU. The company is looking at Serbia and Croatia as locations to build new production facilities from scratch with a combined investment cost would be around $ 100 million, Kosuyk told local news outlet Liga.
Additionally, MHP has plans to build new production facilities in the Netherlands and Slovakia, Kosuyk said. The production performance of Perutnina Ptuj – MHP’s asset in Slovakia – was expanded by nearly 30% in 2019 and there are plans to boost it by another 30% in 2020, Kosuyk said. In general, it is clear that the European poultry market is yet to be saturated, so there is a room for further increase in sales for MHP in Europe, Kosuyk said. In 2019, MHP exported 134,262 tonnes to the EU, 8.6% up compared to the previous year, the company has recently estimated.
Not only the EU
In addition to plans to increasing sales in the EU, MHP confirmed plans to launch a project in Saudi Arabia, where the company could enjoy support from the royal family. MHP’s key associate and sponsor in Saudi Arabia is Prince Turki Al Faisal, member of the royal family. Prince Turki is also a close associate of a member of the Board of Directors of MHP, the company said. MHP is planning a sizeable greenfield project in Saudi Arabia with solid local counterparties, the company said.
The proposal currently being discussed is an equity contribution of 30% by MHP and local partners, while the balance is funded through low-cost, long tenor loans provided by the state, which allows the project to achieve a high return and for the country considerable economic and food strategic benefits for the future, the company stated. So far, the company has not disclosed any further details on the project.