Kazakhstan bans poultry imports from MHP factory

The products of MHP’s Myronivka poultry factory have been forbidden entry into Kazakhstan since August 1, the Interfax news agency reported on August 20, citing the Agricultural Ministry of Kazakhstan. The temporary ban on poultry products applies to one Ukrainian producer, MHP, and several Russian producers, according to an anonymous source within the ministry. MHP poultry is forbidden because of “an inability to check product quality due to hindrances from the supplier,” Interfax reported.

Alexander Paraschiy: The prohibition might carry some reputational risks for MHP, but it’s hard to shock anyone nowadays with being banned from exporting to Customs Union countries.

We do not expect the ban will affect the company’s fundamentals noticeably, even though exports are the only opportunity for MHP to increase its poultry sales in 2013. Recall, the company increased its poultry deliveries in 1H13 only thanks to 2.7x yoy growth in exports, while domestic supplies of chicken decreased 7% yoy.

Notably, in 2Q13 the company posted record-high exports of poultry (31.6 kt, which was 36% more qoq and 3x more yoy), even though supplies to Customs Union countries were banned for about three weeks in May 2013.