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25 Mar 2024

MHP gets a green light for Saudi Arabia poultry farm construction

MHP gets a green light for Saudi Arabia poultry farm construction
The Ukrainian antimonopoly committee has issued permission for the country’s largest poultry processor, MHP, to build a poultry farm near Er Riyad, Saudi Arabia, as a joint venture with local firm Desert Hills Veterinary Services Company Limited (DHV).

MHP signed a shareholder agreement with DHV for the poultry farm construction in September 2023. Under the project, DHV and MHP will invest over SAR200 million (US$53.3 million) in farming operations with the capacity of more than 1 million parent stock expected to produce approximately 175 million hatching eggs annually, a state-of-the-art hatchery and a poultry feed mill, MHP has said.

DHV will hold a 55% stake, while MHP a 45% stake in the joint venture.

Export hurdles

Ukrainian poultry farmers seek foreign business diversification as exports to Europe, the largest sales market, are about to be subject to restrictions.

On 13 March, members of the European Parliament voted in favour of amending an extension to the suspension of import duties and quotas on Ukrainian agricultural exports. The decision grants the EC the authority to “take swift action and impose any necessary measures in the event of significant market disruptions in the EU or in the markets of one or more EU countries due to imports from Ukraine”.

The European Commission’s initial proposal envisaged that all Ukrainian imports into the European Union would remain free of duties until at least June 2025, although some agricultural products would be capped to quell rising farmers’ fury.

The European Commission proposed imports of Ukrainian sugar, poultry and eggs – all of which soared last year — will be capped at levels from 2022 and 2023. The next step will be negotiations with the EU Council on the final shape of the decision.

Plan B

Saudi Arabia is the largest sales market for Ukrainian poultry outside the European Union. Official statistical data showed that in 2023, Ukrainian poultry exports climbed by 3% in physical terms to 425,000 tonnes worth US$800 million.

Nearly 46% of Ukrainian poultry and meat landed on the European market, while the share of Saudi Arabia stood at 15.6%, slightly lower compared with the previous year, the Ukrainian Institute of Agrarian Economy estimated.

It is not clear, however, how the new facility will impact MHP operations in Saudi Arabia. In September 2023, Dr John Rich, executive chair of the MHP board, said that the new agreement laid a foundation for MHP’s further development in the country.READ MORE

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