Public funding of € 100 million for Ukrainian poultry giant cancelled

Regular readers of this website are familiar with MHP – the company that has been inflated into a poultry meat giant by hundreds of millions from development banks. This is just one of several, but a particularly stark example of the misguided way in which international finance institutions deal with the public funds entrusted to them. Recent EBRD plans to allocate a further EUR 100 million to MHP have caused considerable resentment. After several postponements and the EU Commission’s request to the member states not to approve the project, it is now finally off the table. Read more in the Shifting Values press release:

Vienna, 29.10.2019: After months of struggle, the European Bank for Reconstruction and Development (EBRD) announced that the planned capital injection of EUR 100 million into the poultry company MHP has now been finally cancelled. The campaigns agency SHIFTING VALUES welcomes this development and calls on the EBRD to generally stop funding industrial animal farming.

MHP is a poultry company with its tax domicile in Cyprus and chicken facilities in Ukraine. Once active in arable farming, it has become one of the largest poultry groups in Europe, not least due to investment capital from development banks. Between 2003 and 2017, MHP received some USD 700 million in loans from International Financial Institutions (EBRD and World Bank Group). This unprecedented support using public monies has enabled MHP to become a quasi-monopolist in Ukraine and to build facilities with a capacity of 220 million (!) chickens a year in the Vinnytsia region, with the corresponding negative consequences for the local population. A complaint procedure of neighbouring communities with the EBRD is pending.

In early 2019, the EBRD announced its intention to provide MHP with another 100 million euros, this time for the takeover of Slovenia-based poultry company Perutnina Ptuj. The EBRD stated as the project objective “to support MHP Group’s strategy to expand its operations in the EU and other countries with the aim to become a multinational producer”. As a goal for a development bank, this is strange enough. Moreover, the acquisition was completed already in February without EBRD funds and the EBRD has since not been able to conclusively explain what the EUR 100 million would be used for.

In addition, MHP has repeatedly caused negative headlines in recent months. For example, footage from its foie gras facility were made public, showing unbearable cruelty to animals. And MHP attracted massive resentment by using a trick to exploit a loophole in the trade agreements between the EU and Ukraine and exporting tens of thousands of tons of chicken breast duty-free to EU countries in excess of the quotas.

Strong criticism of the EBRD plans was also voiced by the Austrian Green Member of the European Parliament Thomas Waitz and the Austrian poultry industry. And resistance also grew within the EBRD. (Note: The EBRD has over 60 shareholders and operates with public funds from these states. The member states of the EU together hold almost two thirds of the shares and thus of the voting rights. The EBRD is not the EU’s development bank – this is the EIB.) The vote on the capital allocation in the EBRD Board was postponed six times before it was finally cancelled.

“We urge the EBRD to draw the right conclusions from this disaster. Public funds must no longer be used for industrial animal farming. In view of the massive climate and environmental damage caused by mass meat production – not to mention the suffering of billions of animals – this sector should no longer be eligible for development funds,” said Nicolas Entrup of the campaigns agency SHIFTING VALUES.

2019-10-31T10:36:18+00:00