A special EU commission last Thursday completed its inspection of
Ukrainian poultry producers before deciding on whether to allow exports to
the EU. The official report should be prepared and sent to Ukraine within
20 days. However, the commission that day also met with Ukraine's
Agriculture Minister, Yuriy Melnik, and the chairman of the Ukrainian
Committee for Veterinary Medicine, Petro Verbitsky, to discuss some of the
results. According to Verbitsky, the commission has only a few concerns,
and those relate to Ukrainian legislation rather than the quality and
security of poultry facilities. In particular, he noted the inconsistency
between Ukrainian and EU standards on the frequency of internal product
testing (which occurs every 10 days in Ukraine compared with every seven
days in the EU). He also mentioned discrepancies with regard to entities
issuing export quality certificates for poultry in both the EU and
Ukraine.
Troika's view: If the EU commission confirms that Ukrainian poultry
producers satisfy its quality requirements, we believe that the next step
should be an agreement on import quotas and tariffs. Poultry consumption
in the EU-27 is around 8.6 mln tonnes of meat per year, of which imports
comprise 0.6 mln tonnes (or 7% of the total). Poultry imports to the EU
are subject to quotas, with exporting countries having their own import
tariff within the quota (and, in practice, restrictive import tariffs in
excess of the quota). Overall, we consider the news to be neutral to
positive for MHP. Although it generates positive sentiment, there is still
a great deal of uncertainty regarding the commission's final ruling on
import quotas and tariffs as well as its timing.


A special EU commission last Thursday completed its inspection of
Ukrainian poultry producers before deciding on whether to allow exports to
the EU. The official report should be prepared and sent to Ukraine within
20 days. However, the commission that day also met with Ukraine's
Agriculture Minister, Yuriy Melnik, and the chairman of the Ukrainian
Committee for Veterinary Medicine, Petro Verbitsky, to discuss some of the
results. According to Verbitsky, the commission has only a few concerns,
and those relate to Ukrainian legislation rather than the quality and
security of poultry facilities. In particular, he noted the inconsistency
between Ukrainian and EU standards on the frequency of internal product
testing (which occurs every 10 days in Ukraine compared with every seven
days in the EU). He also mentioned discrepancies with regard to entities
issuing export quality certificates for poultry in both the EU and
Ukraine.
Troika's view: If the EU commission confirms that Ukrainian poultry
producers satisfy its quality requirements, we believe that the next step
should be an agreement on import quotas and tariffs. Poultry consumption
in the EU-27 is around 8.6 mln tonnes of meat per year, of which imports
comprise 0.6 mln tonnes (or 7% of the total). Poultry imports to the EU
are subject to quotas, with exporting countries having their own import
tariff within the quota (and, in practice, restrictive import tariffs in
excess of the quota). Overall, we consider the news to be neutral to
positive for MHP. Although it generates positive sentiment, there is still
a great deal of uncertainty regarding the commission's final ruling on
import quotas and tariffs as well as its timing.