MHP poultry exports hit by both AI and Covid-19

19-05-2020 | | |
MHP production restored after their production area was affected by avian influenza. Now Covid-19 is disrupting export flows. Photo: MHP
MHP production restored after their production area was affected by avian influenza. Now Covid-19 is disrupting export flows. Photo: MHP

Ukraine’s biggest poultry producer MHP had to reduce its export volume in the first quarter of 2020 because of the outbreak of highly pathogenic avian influenza (AI) in Vinnitsa Oblast. The negative impact of the disease on the export is lessening now the virus is under control, but the possibility is there that Covid-19 will affect MHP’s international operations in the second quarter of 2020.

Avian influenza led to sales restrictions imposed by the EU and MENA governments, which made MHP to redirect its sales volumes to the countries which remained open at the time. MHP stated that it became almost impossible to follow the strategy of market and product targeting. At the same time, MHP continued to follow its strategy of export sales diversification as much as it could, the company added.

Poultry sales in 1st quarter 2020

During the first quarter of 2020, MHP exported 82,048 tonnes, which was 12% lower than than the same period last year, with a significant decrease of countries in its export portfolio. Exports account for around 52% of total poultry sales volume in the first quarter of 2020, compared to 57% in the first quarter of the previous year. Yet, most AI-related restrictions have now been removed. From April onwards the company has been running at its full designed production capacity again, MHP said.

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Covid-19 now disrupting Ukraine’s agricultural export

But even with the AI risks subsiding, all in not back to normal. The quarantine measures introduced in Ukraine in order to slow down the spread of Covid-19 have disrupted or significantly changed the logistics flows in the agricultural and food industry, said Yaroslav Navrotsky, senior researcher of the Ukraine’s Institute of Agrarian Economy.

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Both import and export channels have been partly blocked because of the border lockdown, he explained. The transport problems make it impossible to get all produce to market, a 10% drop of volume is already seen by the country’s State Statistical Service. Due to Covid-19 fall out, the owners of agricultural companies in Ukraine may experience difficulties in maintaining full production and this could impact both the quality of the products and productivity of their production facilities, Navrotsky said. On the other hand, the poultry industry could benefit from the existing problems on the domestic food market. According to Navrostky, the harsh economy environment prompts Ukraine citizens to switch to cheaper protein sources, meaning consuming less red meat and more poultry. Small-scale companies would not be able to take advantage of the quarantine, because food markets and trade fairs have been closed all over the country.

Vladislav Vorotnikov Eastern European correspondent