MHP SE accountable for over 70% of the full quantity
5 September 2024
3 minute learn
Industrial rooster meat manufacturing dominates in Ukraine, with the family sector accountable for solely 9% of complete 2023 output. Its share in complete manufacturing dropped by two share factors in 2022 as a result of Russian occupation of Ukrainian territories. Family manufacturing is subsistent in nature, with a small share of rooster bought at open-air markets.
It is on a 10-year downward slope and can’t compete with industrially produced rooster. Spent hens, layers, and different sources of rooster meat are accountable for one other three % of manufacturing. Their share dropped by one share level from ranges following the destruction of a big egg manufacturing facility in southern Ukraine. Though part of the rooster meat stability, family manufacturing and different non-broiler industrial rooster meat manufacturing won’t be additional mentioned on this report as rooster meat from these sources doesn’t participate in worldwide commerce. All references to “poultry” or “rooster meat” within the evaluation beneath will to industrially produced pre-full-scale invasion refer rooster.
Ukraine’s industrial rooster meat manufacturing may be very concentrated, with one giant producer—MHP SE— accountable for over 70% of the full quantity. One other 5 corporations every management between one and 6% of the market, with the remaining share break up amongst many smaller producers.
Earlier than the full-scale invasion, MHP SE accomplished a major enlargement, concentrating on elevated effectivity, deeper poultry processing, and its personal chain of shops. The corporate reported working at full capability in Q1 2024. MHP SE accomplished the scheduled redemption of all excellent Eurobonds due in 2024, with a mixed nominal worth of USD 0.5 billion, which is able to guarantee the firm’s clean operations all through 2024 and 2025.
Most Ukrainian poultry manufacturing amenities are concentrated in central and western Ukraine, not immediately affected by Russian aggression; nonetheless, MHP reported a frozen poultry batch loss as a result of a missile assault in Could 2024. The corporate claimed a USD 8 million loss (guide worth USD 7 million) in the leased warehouse in southern Ukraine. It’s the second giant batch loss famous by the corporate publish full-scale invasion.
After the beginning of the Russian full-scale invasion, the business stopped investing in enlargement and entered “survival mode,” sustaining current manufacturing and gross sales ranges. Rooster meat producers confronted a number of challenges, together with foreign money devaluation, a sudden consumption drop as a result of inhabitants outflow, enter procurement issues, a scarcity of vans and containers, and conscription of employees.
An in depth description of Russian full-scale invasion-related challenges is supplied within the manufacturing part of the 2023 Poultry Semi-Annual GAIN Report.
In 2024, electrical energy provides and personnel conscription grew to become probably the most important issues for the poultry sector. They may worsen in 2025, slowing the manufacturing restoration course of.
Relating to vitality points, Russia intensified missile and drone assaults on the Ukrainian energy grid within the spring of 2024, inflicting extended blackouts in lots of areas. Though all manufacturing and most processing amenities possess backup energy mills, many aren’t designed to be the only energy supply for a chronic interval. Reliance on on-site energy era additionally will increase manufacturing prices. In spring 2024, Ukrainian authorities intensified their navy conscription marketing campaign, which business sources acknowledged resulted in labor shortages and manufacturing course of interruptions.
Decreased feed prices have been one of many components contributing to 2024 manufacturing restoration. Based on manufacturing value knowledge printed by the Ministry of Agrarian Coverage and Meals of Ukraine, the rooster meat manufacturing value dropped by USD 0.04 in 2024 to USD 0.71, primarily as a result of a drop in feed prices from USD 0.41 to USD 0.39.
This value lower helped Ukrainian rooster meat producers deal with decrease poultry costs. Business representatives are pessimistic, predicting an additional value decline towards the top 2024. The weakening Ukrainian foreign money could present solely short-term aid via boosted exports. Within the first 5 months of 2024, the industrial change fee dropped from 38.4 to 39.9 hryvnias per greenback, reflecting financial issues and decrease overseas foreign money reserves.
Illness unfold stays a manufacturing and export danger issue. An outbreak of extremely pathogenic avian influenza (HPAI) of the Н5N1 subtype occurred in central Ukraine in January 2024; nonetheless, the outbreak was removed from main manufacturing websites and didn’t influence manufacturing. Ukraine launched poultry manufacturing zoning to mitigate attainable dangers, receiving EU recognition. The variety of registered HPAI circumstances in Ukraine is considerably decrease than the variety of circumstances in neighbouring EU international locations.
