OREANDA-NEWS  On 17 November was announced, that next year, chicken cost will rise by 20–30%, but other meat will be even more expensive, asserts Yuriy Kosyuk, the Сhairman of the Board of Myronivsky Hliboproduct company.

Yuriy Kosyuk is one of few Ukrainian businessmen who remain calm today, in crisis situation. The reason for this is that the economic problems will surely make the Ukrainians eat chicken.

– It may sound cynical, but the crisis will make many people eat more chicken than other kinds of meat. Chicken is almost by 50% cheaper than pork and almost twice as cheap as beef. Poverty makes people eat cheaper food.

Yuriy Kosyuk

Born on May 27, 1968 in Yekaterynopil, Cherkasy Region

1991 – broker at Kyiv Commodity Exchange.

1992 – graduated from Kyiv Food Technology Institute

1994 – founded Roda Trading House

1995 – President of the Food Industry Research Technical Center, later reorganized as Myronivsky Hliboproduct

Since 1998 – Chairman of the Board of Myronivsky Hliboproduct company

Married, has a son

The businessmen mentions, however, that the Ukrainian chicken meat producers will hardly be able to make advantage of the market situation to full extent: customs fees are too low and, consequently, import volume is large. But even taking these factors into consideration, Yuriy Kosyuk, whose fortune was USD 980 million by end of February 2008, as Focus estimates, will be none the worse. His Myronivsky Hliboproduct company is the largest player at the fowl market. The company owns Nasha Ryaba and Legko! trademarks and controls 40% of chicken market. This market is more than promising. According to Mr. Kosyuk, even larger import and domestic production volumes do not cover fully the Ukrainians’ demand.

– This year fowl consumption will increase at most up to 50 kg per man a year. The biological consumption rate is 70 to 80 kg. In the USA, this index is higher, 100 kg per man a year, and even in China, one person consumes 56 kg a year. Ukraine will move towards the American model, where fowl takes about 50% consumption. Popularity of chicken is easy to explain – low price and neither religious nor cultural restrictions.

Fat and lean

However, the crisis has not passed by Mr. Kosyuk’s brainchild. In May 2008, Myronivsky Hliboproduct attracted more than USD 322 million at the main trading floor of London Stock Exchange. During presentation at the exchange, capitalization of the company was estimated as USD 1.7 billion, now it is less than USD 1 billion.

– The company value lost more than USD 700 million. But I am not worried; I am none the poorer now. In my view, the company is now underestimated because of the pressure of the world crisis, panic and extra risks of Ukraine. This is proved by the conclusions of the UBS investment bank analysts who evaluate capitalization of the company as USD 2.2 billion. Therefore, I hope that investors will change their attitude to the company’s stock soon.

– Do you regret now not selling most shares of Myronivsky Hliboproduct when the company value was higher?

– No, I do not. I sold as much stock as it was necessary for the capitalization of the company. Frankly speaking, we could not even imagine that the world economy would find itself in such a deep crisis so soon. Some Ukrainian agricultural market players have already stopped paying to the growers for grain and other products. But Myronivsky Hliboproduct company feels quite good. Fortunately, we got to the exchange quite on time and received a lot of money.

– What did you spend the received funds for?

–We spent about half of this amount to refinance the debts and build a new plant in Vinnytsya. The company still has not spent the rest of the money, and we can use it at our discretion. The facilities operate at 100% load and the sales are good. We have enough funds at the account to survive for about two more years of such a situation. We will have to make the stock payment only as late as in the end of the year 2011. As they say, while the fat man gets thinner, the lean one dies.

– There is much talk about mass layoffs now. Are you planning to reduce staff, too?

– We have 20 thousand employees, but we do not expect dismissals. Although the labor market will suffer from great unemployment: I think, it will increase by 10% or even more during the next year. The government will do nothing about it. What can be done to metallurgy with its shut-downs, construction, light industry which is dying now when we joined WTO? We will have to go back to the protectionism – there is no other way out.

No tsar

A few years ago, Igor Tarasyuk, Head of the State Executive Office at the President of Ukraine was said to be one of the main lobbyists of the interest of Myronivsky Hliboproduct. Mr. Tarasyuk once mentioned in an interview that he owned shares of Myronivsky Hliboproduct, but gave them to the Office. Now both Mr. Kosyuk and Mr. Tarasyuk insist upon their solely friendly relations.

– Igor Tarasyuk is an old friend of mine. I have friends who are in power now, but they are nothing more than friends whom I have known for a very long time and who just do their job. My interests are lobbied by 30% electors, 16 million people who now lose their money because of the price growth and permanent elections.

Commenting on the parliamentary elections expected to take place soon, the businessman says they will not affect his business. Mr. Kosyuk states that in Ukraine, business can be done without support from the authorities, and refers to the EU experience where, according to him, business is strictly separated from power and does not suffer from it.

– The country lives in the situation of permanent elections, and we have already got used to it. We even miss them when they do not take place for a long time. I am ready to accept permanent elections, but I do not agree to accept a tar, for example, like Putin in Russia. I have neither been a deputy myself, nor supported by lobbyists in the government or parliament.

Rural exotics

Although agriculture is called a refuge for the crisis, Mr. Kosyuk is confident: many companies will not survive in this branch. He said he invested about USD 750 million into foundation of his poultry business, whereas foundation of a profitable beef or pork manufacturing requires even more – USD 700–900 million.

– Everybody who comes to this market with USD 30 million is just a kid who will be broke tomorrow.

The fate of Ukrainian farmers in the situation when agricultural holdings dominate is unenviable. In the opinion of the owner of Myronivsky Hliboproduct, they will have to look for small specialized niches – from growing exotic fruit to making special kinds of meat for a solvent consumer. Mass consumer will remain for large makers able to ensure both low price and high quality of their products due to the mass production effect. However, in spite of share of the chicken meat market controlled by the company, Mr. Kosyuk does not think Myronivsky Hliboproduct is a monopolist, and believes that capital concentration in the industry is only a positive factor.

– We have no monopoly. After we joined WTO, the borders have been open; and meat can be imported practically duty free. Meat import will total 500 thousand ton this year – the largest volume in the history of Ukraine. As for the concentration, we have not made up anything new here. The industry model in which our company is represented is the same as in the most countries of the world. In Germany, the leading company controls 50% of the market, in Spain, 30%, in Italy, more than 30%, in the USA, over 20%, in Brazil. over 30%. Why? Because people want to eat inexpensive and safe quality food.

Dollar chicken

Beside poultry, Myronivsky Hliboproduct produces grain, sunflower oil, beef, potato, fruit, cultivating more than 150 thousand hectares land. Therefore. the problem related to the moratorium on selling agricultural land is a burning issue for Mr. Kosyuk.

– The land we cultivate is in the long lease, for 15 years, as a rule. We pay USD 60 to 100 per hectare a year. We are quite satisfied with this situation. If the moratorium on selling agricultural land were removed, we could buy the land. Still, our experience suggests that most of our lessors are unwilling to sell their plots. On the other hand, their position is understandable: actually, land cannot be freely sent and bought in any country of the world. For example, in Europe this issue has been regulated, it is not as simple there as it may seem.

Joining WTO is much greater concern of the businessman. Mr. Kosyuk admits that he is very unhappy about the terms on which Ukraine did it. For example, he disapproves of too low meat import duties. He sees the reason for it in frequent change of officials responsible for the issue.

– Twelve negotiators changed during the years of the negotiations. This leaded to a deplorable result. Once Ukraine joined WTO, the import duties were lowered, unlike the export ones. WTO members (EU countries, for instance) set non-tariff barriers, which complicate export of any products to these countries significantly.

The situation with import caused the dependence of prices for Ukrainian chicken on the dollar rate. If the hryvnya falls, the prices for chicken meat will rise. If the rate is stable, the prices will not grow much.

– The expected maximal price growth next year is 20 to 30%. Everything will depend on the dollar rate, however. We depend on import, and the importers will fix their prices by the actual dollar rate.