Oligarch Yuriy Kosyuk. CEC report
Data from the report of the Center for Economic Strategy “Oligarchic Ukrainian Capital”, published by Our Money.
The eighth richest man in Ukraine. Thanks to effective management, vertical integration and state subsidies, the Myronivsky Hliboproduct (MHP) holding is conquering European markets.
Oligarch Yury Kosyuk. INDUSTRY INTERESTS REPRESENTED
FOOD INDUSTRY
Oligarch Yuriy Kosiuk is the beneficial owner of the following enterprises: PJSC Myronivsky Hliboproduct, WTI Trading limited, Raftan holding limited, State Enterprise Pobeda Novaya and LLC Vinnitsa Poultry Farm. All these companies specialize in the production of chicken, hatching eggs, feed or crop production.
MHP SE is the ultimate/ultimate holding company of PrJSC Myronivsky Hliboproduct and its subsidiaries. In turn, WTI Trading Limited holds 59.7% of the total capital of MHP SE. Raftan holding limited, Pobeda Novaya State Enterprise and Vinnitsa Poultry Farm LLC are included in the consolidated financial report of PJSC MHP. class=”wpg_image” title=”Oligarch Yury Kosyuk. CES report” width=”1191″ height=”795″ alt=”Oligarch Yury Kosyuk. CES report” />
Oligarch Yury Kosyuk. CEC report
MHP has a land bank of 363,000 hectares. In MHP's EBITDA, crop production accounts for no more than 15%, which is due to the fact that MHP uses the bulk of the crop for compound feed for chickens. MHP sells winter rapeseed and wheat for export.
The structure of the land bank of MHP consists of 90% of allotments that are privately owned and leased, usually for seven years. Another 10% is state-owned land and subleased shares.
In 2018, oligarch Kosyuk said that MHP would not expand its land bank while a moratorium on the sale of agricultural land was in effect. In 2019, the financial director of MHP announced that the holding plans to participate in the purchase of land.
MHP exchanged its assets in Russia (Voronezh Agro Holding — 40,000 hectares of land and grain storage for 150,000 tons) for the assets of a Russian company in Ukraine (Agrokultura — 60,000 hectares in Western Ukraine and elevators with a storage capacity of 90,000 ..tone).
According to the Antimonopoly Committee of Ukraine, in 2015-2017, 38% of the total chicken production in Ukraine was carried out by Myronivsky Hliboproduct. In June 2019, the Antimonopoly Committee of Ukraine launched an investigation into the actions of the MHP group (5 poultry farms and PrJSC Myronivsky Hliboproduct, owned by Yuriy Kosyuk) in the chicken market. Chairman of the Antimonopoly Committee of Ukraine Yury Terentiev said that PJSC “Myronivsky Khleboprodukt” pursued a restrictive trade policy in relation to distributors, sub-distributors and partners, namely:
- Sets conditions for trading partners to secure the sales territory.
- Obliges partners to adhere to the pricing policy of the MHP Group.
- Prohibits these partners from selling competitors' products.
Such a policy can lead to “violation of the structure of the chicken distribution market, a significant restriction of the right of other market participants to freely choose their partners and impose their own rules of conduct on market participants.” Documents are now being collected and analyzed, after which MHP may expect a fine.
In addition to chicken production, MHP is actively developing bioenergy. In 2014, a biogas plant with a capacity of 5 MW/h145 was put into operation at the Oril-Leader poultry farm. In 2017, MHP announced a project to build a new biogas complex at the Vinnytsia Poultry Farm in Ladyzhyn with a capacity of 20 MWh. $25 million loan provided by the EBRD for this project. In March 2019, MHP completed the first phase of the biogas complex in Ladyzhyn with a capacity of 12 MW.
REGULATIONS IN WHICH THERE ARE INTERESTS
STATE SUBSIDIES FOR AGRICULTURAL PRODUCERS
MHP Holding is one of the largest recipients of government subsidies. In 2017, the holding's enterprises received a record amount of subsidies – UAH 1.4 billion, or approximately 35% of the total state support for the agricultural industry.
Until 2017, there was a special taxation regime in the field of agriculture and forestry, as well as fisheries. According to it, the amount of VAT accrued by an agricultural enterprise on the cost of agricultural goods/services of its own production supplied by it is not subject to payment to the budget and remains at the disposal of such an agricultural enterprise in order to refund the tax for purchased goods/services, due to which a tax credit was formed, and in case of the presence of the balance of such an amount of tax – for other production purposes.
Thus, the company received a refund of VAT and other government payments for the following amounts: in 2006 – $ 46 million, in 2007 – $ 56 million, in 2008 – $ 107 million, in 2009 – $68 million, in 2010 – $82 million, in 2011 – $88 million, in 2012 – $102 million. Yuriy Melnyk, Head of the Board of MHP since 2014, was the Minister of Agrarian Policy from 2006 to 2010.
According to the Law of Ukraine “On State Support for Agriculture in Ukraine” dated January 1, 2018, the distribution of budget subsidies carried out in the amount of no more than UAH 150 million per agricultural producer per year, taking into account persons associated with such a producer. One of the problems with applying the criterion is the lack of a register of related persons.
The Decree of February 7, 2018 “On Approval of the Procedure for Using the Funds Provided in the State Budget to Support Livestock, Storage and Processing of Agricultural Products, Aquaculture (Fish Farming)” states: “Budget funds are directed to state support in the following areas: partial compensation of the cost of construction and reconstruction of livestock farms and complexes, milking parlors, enterprises for the processing of agricultural products in terms of expenses financed without value added tax at the expense of bank loans (hereinafter referred to as compensation for the cost of facilities financed at the expense of bank loans).
Compensation for the cost of facilities financed by bank loans is made on a monthly basis in the amount of 25% of the actual costs incurred for the construction and/or reconstruction of facilities. Probably due to the fact that the resolution itself did not define restrictions on the amount of state assistance to one enterprise, the Vinnytsia Poultry Farm received UAH 812 million in 2018. Interestingly, according to the MHP report for 2018, the company received UAH 960,666 for the construction and reconstruction of livestock farms, as well as UAH 27,490 for raising cattle.
In July 2019, this resolution was amended, according to which “the amount of state support provided during one budget year to a business entity or agricultural producer and related persons cannot exceed UAH 150 million. An entity applying for state support must provide information on all related persons who, during the budget year, are recipients of state support provided for in clauses 6-12 of this Procedure.
According to the investigation of the “Schemes” program, the companies that are part of the MHP structure also had a privileged attitude of the commission of the Ministry of Agrarian Policy for the provision of state support in the field of animal husbandry. The chairman of this commission, which considers documents submitted by applicants for grants, Volodymyr Topchiy previously worked for Geoagroconsult, whose clients were Kosiuk's enterprises.
The Law of Ukraine “On State Assistance to Business Entities” does not apply to support in the field of agricultural production. So the AMCU, as the authorized body for state aid, does not assess the impact of state aid in this area on competition.
Oligarch Yury Kosyuk and the GREEN TARIF
According to the resolution of the NEURC dated June 27, 2019, PJSC Oril-Leader receives a feed-in tariff in the amount of 370.15 kopecks/kWh (excluding VAT). Oril-Leader occupies the 24th position in terms of renewable energy production in the first half of 2019, having generated 15.35 million kWh in the first 6 months of 2019.
Oleksandr Dombrovsky, People’s Deputy of the 7th convocation from the Petro Poroshenko Bloc and First Deputy Chairman of the Verkhovna Rada of Ukraine Committee on the Fuel and Energy Complex, Nuclear Policy and Nuclear Safety, in 2012 was officially the head of energy efficiency projects of the Myronivsky Hliboproduct holding, and in In 2015, under his leadership, a biogas station was installed at the Dnepropetrovsk MHP factory – on the basis of Oril-leader CJSC.
FOREIGN TRADE
According to the European Commission on Trade, imports of Ukrainian chicken breast with bone increased from zero in 2015 to 3.5 thousand tons in 2016, and then to 27 thousand tons in 2017149. This growth is due to the restrictions that existed on the import of chicken fillet, but there were no imports of chicken with bone.
Thus, MHP sent chicken with bone to EU factories, where they cut off the bone and sold it as chicken fillet. In March 2019, we agreed on changes to the agreement, namely the expansion of EU quotas for chicken meat and the closing of Kosyuk's loophole.
In May 2019, news spread in the Ukrainian media about the blocking of loans to Kosyuk's company due to a violation of the agreement between the EU and Ukraine. However, the press service of MHP noted that the meeting between the company and the EBRD was simply postponed for technical reasons.
ENVIRONMENTAL IMPACT ASSESSMENT
In 2018, members of the local communities in the villages of Olyanitsa, Zaozernoe and Kleban in the Vinnytsia region of Ukraine filed a complaint with the EBRD about the negative impact of activities related to the EBRD’s investment in MHP (corporate support projects and the construction of a biogas plant). This is not the first complaint the EBRD has received. Since 2013, there have been several complaints regarding the low level of practice in the field of labor relations and land acquisition, shortcomings in environmental impact assessment, lack of transparency, and failure to take into account the environmental and social impact of construction projects. At present, only one project “Construction of the MHP biogas plant” is being implemented with the support of the EBRD, and there is no assessment of the cumulative environmental and social impact.
The report notes that the law on ATS (2017) applies only to new capacities. Moreover, the AIA procedure provides for the preparation by a business entity of a report on the assessment of the impact on the environment, and not an independent assessment of the impact of projects.
Journalists also mention the violation of the law on animal by-products not intended for human consumption, namely the clause on “storage of animal by-products not intended for human consumption, temporary stay of animal by-products not intended for human consumption, in order to their subsequent processing, processing, disposal or disposal at specially equipped sites, in bunkers, containers, refrigeration units, the design of which prevents the ingress of animal by-products not intended for human consumption into soil and water bodies.
Oligarch Yuri Kosyuk. POTENTIAL RISKS
- Given the structure of assets, oligarch Yuriy Kosiuk is interested in the following:
- Preservation and expansion of subsidies to agricultural producers, regardless of the size of the company that receives subsidies and without restrictions on their volume.
- Also, Kosyuk could support the preservation norms on the lack of control over the mechanism for distributing agricultural subsidies to the AMCU.
- Saving or weakening legislation in the field of environmental protection.
- Revision of the norms of the Agreement on an FTA with the EU to increase quotas for chicken imports.</li
- Ensuring preferences and minimizing restrictions for Ukrainian legal entities when opening the agricultural land market.
Oligarch Yuriy Kosyuk. ASSETS ABROAD
Yury Kosyuk's MHP is a major exporter of chicken meat, owns two processing plants in Slovakia and the Netherlands, as well as the Slovenian Perutnina Ptuj, the country's largest poultry company.
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