The Ukrainian Chicken
Pfäffikon SZ, Switzerland – Chicken meat from the Ukraine has recently become the topic of discussion. In a publication of the “Nederlandse Volkskrant” the conclusion to the research done by the Institute of Research and Multinational Businesses (Stichting Onderzoek Multinationale Ondernemingen (SOMO)) is presented. It states that Dutch banks have helped a competitor get on their feet. The Dutch Institute “Wakker Dier” (Awake Animal) chimes in saying it finds the financing to be a stab in the back of the Dutch farmers.
Commotion
All of the commotion revolves around the Ukrainian Myronivsk Hilboproduct (MHP). I have been following MHP since 2008 when it went public on the London stock exchange. MHP, through Vinnista, owns of the largest chicken slaughterhouses in the world. This slaughterhouse is very advanced and the newest techniques in the livestock industry are applied. The chicken roams around in a large, modern, clean area and is not locked up in a small pen. The underlying reasoning is that this promotes better growth in the chickens. Moreover, hygiene is held to be very important at MHP.
Sanctions
The political leaders of the European Union – with the Netherlands leading the charge – have in their internal wisdom decided to impose sanctions on Russia due to a conflict in the Ukraine, of all places. The result is that these sanctions may start to work in the opposite direction. MHP in this respect is a decent example. Before the sanctions MHP was Russia oriented, but this is now changing. A land swap with no money exchanging hands of two large areas in Russia and the Ukraine underline this process.
Financing
The fact Dutch banks such as ING and Rabobank are involved in the financing of MHP is something I consider a good thing, as opposed to the critical note from a crying competitor. More than that, it underlines that when the Dutch farmers pursue their ambitions innovatively, Dutch banks are willing to finance that. Moreover it is worth noting that many investors consciously steer clear from this area, which makes financing a bit harder. The farmer, however, doesn’t notice.
Treaty
On January 1st 2016 the so-called association treaty between the Ukraine and the European Union takes into effect. This treaty should ultimately lead to a free trade agreement and an extensive cooperation between the Ukraine and Europe. A company such as MHP could benefit greatly from this, but in truth the European citizens benefit continuously from this advanced livestock entity in the European backyard.
Respect
I cannot help but come to the conclusion that the Institute Wakker Dier and SOMO have done their research diligently. Moreover it shows minimalistic European thinking. The current refugee crisis underline that picture. The fact that out of all companies, it is one in Ukraine that has managed to weather the storm, demands respect. Now there’s something the European farmer can learn from.
It remains for me to wish you a good weekend.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has position in Myronivsk Hilboproduct (MHP) and no position in the other above mentioned shares and has no intention of doing so in the next 72 hours.
