17 May 2022 17:27

Ukrainian agricultural holding MHP maintaining exports, facing logistics problems

KYIV. May 17 (Interfax-Ukraine) - MHP agricultural holding, which is Ukraine's biggest chicken producer, exported 25,000 tonnes of sunflower oil and 35,000 tonnes of chicken in April, as much as it was shipping abroad prior to Russia's special military operation.

"We've reached 100%" of previous export volumes, Oleh Upatov head of MHP Logstics, said at a roundtable dedicate to the opening of EU and UK markets for Ukrainian exporters.

"We've reached those volumes, but unfortunately it's very costly," Upatov said.

"We've already exported half of that in May," he said.

This took an unbelievable effort and it will be a huge job even to maintain it as new problems arise like fuel shortages and longer queues against the backdrop of a gradual recovery of other exporters with limited border capacity, he said.

In his opinion, it would make sense to look into segregating goods at the border into perishables, grains and metallurgical, as well as simplifying customs procedures, in particular, for empty transport.

But requests to expedite some customs or veterinary processes with the Polish or Romanian veterinary services were resolved within a month, which is very fast by European standards.

The issue is not only the border, but also that logistics in the EU proved to be unprepared and unable to process such export volumes from Ukraine. Upatov said that in the case of MHP this concerns about 400,000 tonnes of chicken per year and the same amount of sunflower oil.

The company has to export products through four ports: Constanta in Romania, Gdansk in Poland and Klaipeda in Latvia, and now Koper in Slovenia.

"Even in such conditions, they cannot cope with this traffic, traffic jams are appearing, the veterinary service, the port entry service, and the customs service are working very hard - they are not designed for such a volume of exports that has started to move through them. Now everyone needs to understand that it is necessary to work not only on [facilitating] border crossings, but also with EU ports to develop their infrastructure," Upatov said.

Another future problem will be a shortage of containers, which remain in Ukraine, but which are likely to disappear as international container lines are not very willing to supply container equipment to Ukraine.

"We, as a company using special refrigerators, are already facing [this problem]," Upatov said, adding that container companies require a deposit of $8,000 to $25,000 per container, and "it would be good if the state could act as a guarantor of payments."

MHP is the largest chicken producer in Ukraine. MHP supplies the European market with chilled half-carcasses of chickens, which are processed, including at its factories in the Netherlands and Slovakia. The founder and majority shareholder of MHP is Ukrainian businessman Yuriy Kosiuk.

MHP swung to net profit of $393 million in 2021 from a loss of $133 million in 2020. Sales revenue grew 25% to $2.37 billion.