European poultry producers association AVEC said it was extremely surprised by the EBRD’s decision to award a €100m loan to MHP, Paul-Henri Lava, a senior policy advisor at AVEC, told GlobalMeatNews. Some officials in Europe have already described the decision as “betrayal”.
The EBRD was using European Union (EU) taxpayers’ money to facilitate MHP’s acquisition of Perutnina Ptuj, Lava added, with the risk that the European poultry market could be flooded by poultry products from Ukraine, where production costs are on average 40% lower than those in the EU.
AVEC has been urging the EU authorities to revise the trade agreement with Ukraine and close a loophole that allows Ukrainian companies to export the breast cap with a small piece of wing to European duty-free and cut them up into breast fillets in plants in the EU, according to Lava. As a result, MHP is able to sell breast fillets duty-free in the EU, a product that would be subject to duty if exported directly from Ukraine to the EU.
The practice is completely legal and, as the last stage of the production is performed in the EU, the authorisation stamp on the final product is an EU company stamp, Lava said.
Over the past few months, European poultry farmers have complained repeatedly about tough competition with MHP.
In the first quarter of 2019, MHP exported 93,000 tonnes (t) of poultry, 47% up on the same period the previous year. The company said that exports grew to all of its main destinations, including in the EU, but did not provide any additional details. Overall sales during this period reached 164,000t, rising by 21% compared to the same period the previous year.
In addition, several news media have claimed that MHP adheres to poor quality and animal welfare standards. However, MHP has always denied these allegations.
“We recognise the poultry market is highly competitive, but regret the use of misinformation on Ukrainian standards and MHP’s business practices by other producers and national poultry unions. We believe fair and strong competition is good for European consumers,” Anastasiya Sobotyuk, head of investor relations at MHP, told GlobalMeatNews.
Sobotyuk added that the trade agreement between the EU and Ukraine created a level playing field for all producers, underpinned by common standards on food safety and animal welfare, and said that a sensible compromise on poultry quotas would bring certainty to the European market.
“Like all major businesses, we require finance to support our ambitious plans to expand and have to attract new loans for growth. This loan will be used to finance our investments in Perutnina Ptuj, including the upgrade of its facilities across the region,” she said.
“EBRD loans are based on current market rates, are priced competitively and have stringent criteria placed on them. Ukrainian banks would be unable to offer a long-term loan of this amount to MHP,” she added.