European farmers and officials oppose MHP: Does the company of the controversial “Chicken King” Kosyuk have alternatives to the EU market?

In 2023, the agribusiness holding Myronivsky Hliboproduct (MHP) of controversial Ukrainian oligarch Yuri Kosyuk captured 1% of the European poultry market, which has angered local producers, French President Emmanuel Macron, and the European Commission.

The threats from European officials vary, ranging from a complete ban on poultry imports from Ukraine to restrictions at previous levels.

Does Kosyuk Have Alternatives to the European Market? The European market, which could have brought the company about $300 million in revenue last year, was significant for MHP. However, Yuri Kosyuk has plans to capture even more markets outside Ukraine.

“We have built phenomenal relationships with the authorities of European countries,” said MHP majority owner Yuri Kosyuk in March 2021. “We are very satisfied with the European case; we managed to change the perception of Ukraine among Europeans.”

Three years later, he might not be able to say the same. In mid-March 2024, during a meeting in Berlin, French President Emmanuel Macron supported Polish Prime Minister Donald Tusk in his efforts to limit the export of Ukrainian agricultural products to the EU, according to Politico, citing unnamed diplomats.

“We are not interested in making money for this person [Kosyuk]; it does not help Ukraine,” said Macron at the EU summit in Brussels in early February.

The reason for Macron’s statements is the farmer protests that have been ongoing in EU countries for almost a year.

“Duty-free imports of poultry from Ukraine must be immediately stopped,” noted former Secretary of State for Agriculture and Polish Sejm deputy Janusz Kowalski in mid-February.

Currently, the EU is restricting poultry imports from Ukraine to appease its farmers. However, it remains to be seen if these restrictions will be effective. MHP, Ukraine’s largest poultry producer, has already established a developed ecosystem in Europe and continues to expand it.

After lengthy debates, the European Union decided to limit poultry imports from Ukraine. This decision is a compromise with associations and trade unions, which were not satisfied with the “soft” measures. They were particularly concerned about the influx of chicken meat.

In 2023, Ukraine exported 425,000 tons of poultry, with more than a third going to the EU. Unsurprisingly, European farmers began to complain.

The first to raise concerns were the Belgians. They noticed a flow of Ukrainian chicken meat through neighboring Netherlands.

“Of the 200,000 tons of Ukrainian chicken arriving in the EU monthly, 60% goes to the Netherlands,” complained the Belgian National Poultry Association. “This corresponds to the entire volume of chicken production in Belgium.”

Then the French and Dutch protested.

“The European market is flooded with 220,000 tons of cheap chicken meat from Ukraine that does not meet our standards,” stated Gert-Jan Oplaat, head of the Dutch Poultry Processing Industry Association (Nepluvi).

Complaints reached the highest level, with poultry farmers lobbying President Emmanuel Macron.

Why are Ukrainian chickens going to the Netherlands? MHP has a plant there. Established in 2016, MHP BV processes chicken carcasses.

“Our raw materials come from Ukraine to the Netherlands,” explains Yaroslav Mykhailovskyi, managing director of MHP BV. “There they are processed and reach the end consumer.”

Meanwhile, MHP was completing the construction of the giant Vinnytsia poultry farm in Ladyzhyn with a capacity of 440,000 tons of chicken meat per year. MHP’s total production capacity was about 900,000 tons of poultry meat.

The Ukrainian market could not absorb the expected production volume. The Russian market became unacceptable after the annexation of Crimea and the occupation of part of Donbas. The EU had an annual quota of about 40,000 tons.

Thus, MHP needed access to the European market. The EU quota applied to chicken fillets, while bone-in poultry was unrestricted. This led to the idea of building a plant in the Netherlands to import chicken carcasses from Ukraine and produce Dutch chicken fillets. After the opening of the MHP BV plant, exports grew from zero in 2015 to 27,000 tons in 2017.

Farmers were angered, and the plant was one of the reasons for the delay in ratifying the EU-Ukraine Association Agreement by the Netherlands.

“The resilience of Dutch poultry farming will be completely paralyzed if we have to compete with cheap chicken from Ukraine,” complained Henny de Haan, head of the Dutch Poultry Farmers’ Union.

But farmer protests could no longer stop the Ukrainian poultry expansion. MHP certified its poultry farms and products according to EU and UK standards and began expanding southeast. In 2017, MHP opened another processing plant in Slovakia following the Dutch model. In 2019, MHP acquired the largest poultry producer in the Balkans, the Slovenian company Perutnina Ptuj, from the Russians.

Business is going well. In early March 2024, Kosyuk’s Slovenian company reported an increase in poultry production volumes in 2023 to 132,000 tons and announced plans to acquire capacities in Albania.

“We are very satisfied with the owners, who have not taken a single euro in dividends for five years, allowing us to reinvest all profits into the group,” praised Enver Šišić, chairman of Perutnina Ptuj, Kosyuk.

According to him, MHP allocated about €160 million for various investment projects, including entry into the Albanian market.

In one of our previous materials, we wrote that MHP is currently trying to establish a presence in Croatia. Yuri Kosyuk personally discussed his grand plans in an interview with local media. According to him, the Ukrainian agribusiness plans to build more than 200 poultry farms, a feed plant, a hatchery, a processing workshop, and a slaughterhouse in five regions of Croatia. The production capacity of the complex will be about 30 million chicks per year. Kosyuk estimates the project cost at €340 million. Production could start at the end of 2025. Local farmers are unhappy, but Kosyuk has faced this before.

MHP’s Alternatives

In the first nine months of 2023, MHP’s revenue increased by 22% to $2.3 billion. Net profit was $122 million, compared to a loss of $269 million in the same period the previous year.

Based on supply volumes and average annual prices provided in MHP’s 2022 report, the company could have earned about $300 million from poultry exports to the EU. Information for the past year is not yet available.

“The European Union is an important market for MHP,” says Parashiy from Concorde Capital. “But the supply volume is relatively small. With stable port operations, it will not be difficult to redirect exports to other countries.”

These countries are primarily in North Africa and the Middle East, traditional markets for MHP before the Russian invasion, says Parashiy. In 2020, 40% of MHP’s products were exported to these markets, and in 2021, 38%.

MHP’s sales and distribution office in the UAE, oriented towards Middle Eastern and African markets, has been operational since 2017. In September last year, the company signed a shareholder agreement to create a joint venture with Desert Hills Veterinary, a subsidiary of Saudi Arabia’s Tanmiah Food Company, a leading supplier of poultry and other meat products in the Middle East.

If the EU reimposes restrictions on Ukrainian poultry imports, MHP will reorient its exports to the Saudi Arabian market and other growing demand areas.