Consulting Agency UkrAgroConsult
It’s no secret that Ukraine’s agricultural sector has huge potential. Its value in the world market could grow even more if the sector focuses on producing final products with added value. Ukraine has the opportunity to get ahead of other countries by using its natural resources and technology more efficiently. To make that happen, it needs effective strategic planning, while national agricultural companies have to focus on supplying global markets with finished goods, instead of raw materials.
Business guidelines, proved to be right
Animal husbandry, which is one of the state’s priorities in agriculture, is a promising area for investment. The main issue is the efficiency of the business process. Only through becoming more efficient can Ukraine and its domestic companies become globally competitive. MHP provides a great example of how this can be done: this agro-holding produces everything – from crops to high-quality meat.
Today, MHP is continuing its rapid development, shaping the right values in collaboration with the state, business and communities. It takes risks and achieves sustainable development goals, making the best use of the available resources and opportunities. Over 20 years, the company has grown from a one-factory animal feed supplier into a massive agricultural holding with 30 enterprises and over 28,000 employees across the country. Most of the company’s investments go to the construction of new facilities, innovations, environmental protection, and corporate responsibility programs.
MHP is currently in the middle of the second phase of the construction of a poultry factory, LLC Vinnytsia Poultry Farm, in the town of Ladyzhyn in Vinnytska Oblast, in order to increase production. It is already the largest complex in Ukraine, and the second largest in Europe. The total amount of investment in the new capacities is about $420 million. Thus, while poultry production amounted to almost 260,000 tons of chicken per year earlier, this is expected to double by 2020.
A factory-based biogas plant with a rated capacity of 24 MW is being constructed at the same time. It is expected to be the largest in the world, and will use unique technology, that allows to generate heat and electricity from chicken manure and poultry waste, processing them without doing any damage to the environment.
Increasing meat production requires a respective increase in crop production, as well as increasing the capacity of grain elevators and constructing new recycling complexes.
“A simple increase is not an end in itself – the company will further strengthen its leadership of agricultural production, specifically in poultry production,” said Yuriy Melnyk, the first deputy chairman of the management board at MHP.
“We plan to increase poultry production by 200,000-250,000 tons by the end of 2019. Developing infrastructure to provide for more crop storage, oilseed processing and animal feed production is a related priority.”
Sustainable development goals
MHP is entering the global market as a high-grade, valuable player. Its strategic goals are aimed at food supply chain development and increasing sales of finished goods with added value. In order to achieve this, the company is focusing on the construction of new facilities and processing meat and poultry at its own factories, not only in Ukraine, but also globally. Thus, in 2016, MHP launched a poultry processing plant in the Netherlands, investing $3.5 million in this project. The plant has two lines for processing poultry from local producers. In 2017, another meat processing plant was launched in Slovakia in collaboration with a European distributor, with a $3 million investment.
And just recently the company announced plans to acquire Slovenia’s Perutnina Ptuj Group. Twenty years of expertise in effective strategic planning and vertical integration will make MHP a reliable strategic partner for Perutnina Ptuj.
Over the next five years, the company plans to invest around €200 million, mostly in the Perutnina Ptuj production base. The major changes will be aimed at renovation, modernization and increasing the efficiency of operational activities, as well as development and cooperation with all parties concerned – employees, farmers, etc. Since the beginning, this practice has also been applied in Ukraine, where MHP leases one of the country’s largest land banks of over 370,000 hectares, spread over 14 oblasts. This ensures the land’s sustainable development through social partnership with local communities, providing regular funding for local and state budgets, as well as offering local residents more employment opportunities.
The company operates in accordance with a vertically integrated business model, which has proved to be effective over the years. Product quality control is a mandatory part of all production stages from cultivating crops, producing animal feed and incubating eggs to breeding broilers and processing the final product. The same practice will be applied to international enterprises with a full cycle of production, from domestic poultry farming by local farmers, to the distribution process.
MHP is taking a strategic step towards expanding its activities, which will strengthen its position as a valuable player on the global market. The company’s brands are strong, its share of the meat products market is significant, and it is ready to make them even stronger in cooperation with global partners through investments and further improvement, all the while adhering to the principles of sustainable development.
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