Billionaire Yuriy Kosyuk. CEC report
Info from the report of the Center for Economic Strategy “Oligarchic Ukrainian Capital”, released by Our Money.
The eighth wealthiest person in Ukraine. Due to efficient management, vertical integration, and state subsidies, the Myronivsky Hliboproduct (MHP) holding is making progress in European markets.
Oligarch Yury Kosyuk. INDUSTRY INTERESTS REPRESENTED
FOOD INDUSTRY
Oligarch Yuriy Kosiuk is the actual owner of the following businesses: 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 top holding company of PrJSC Myronivsky Hliboproduct and its subsidiaries. WTI Trading Limited holds 59.7% of MHP SE's total capital. Raftan holding limited, Pobeda Novaya State Enterprise, and Vinnitsa Poultry Farm LLC are included in the consolidated financial report of PJSC MHP.
Billionaire Yury Kosyuk. CEC report
MHP possesses a land bank of 363,000 hectares. Crop production makes up to 15% of MHP's EBITDA, as most of the crop is used for compound feed for chickens. MHP exports winter rapeseed and wheat.
MHP's land bank structure consists of 90% privately owned and leased plots, typically for seven years. The remaining 10% is state-owned land and subleased shares.
In 2018, oligarch Kosyuk stated that MHP would not expand its land bank during the moratorium on agricultural land sales. In 2019, MHP's financial director announced the holding's plans to engage in land purchases.
MHP swapped 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 tons).
According to the Antimonopoly Committee of Ukraine, from 2015 to 2017, Myronivsky Hliboproduct accounted for 38% of total chicken production in Ukraine. In June 2019, an investigation was launched by the Antimonopoly Committee of Ukraine into the actions of the MHP group (5 poultry farms and PrJSC Myronivsky Hliboproduct, owned by Yuriy Kosyuk) within the chicken market.
This policy could result in “disruption of the chicken distribution market structure, significant restriction of other market participants’ rights to freely choose their partners, and imposition of their own conduct rules on market participants.” Currently, documents are being gathered and analyzed, after which MHP may face a penalty.
Besides raising chickens, MHP is actively working on bioenergy. In 2014, a biogas plant with a 5 MW/h145 capacity was started at the Oril-Leader poultry farm. In 2017, MHP announced a plan to construct a new biogas complex with a 20 MWh capacity at the Vinnytsia Poultry Farm in Ladyzhyn. The EBRD provided a $25 million loan for this project. In March 2019, MHP completed the first phase of the biogas complex in Ladyzhyn with a 12 MW capacity.
REGULATIONS IN WHICH THERE ARE INTERESTS
STATE SUBSIDIES FOR AGRICULTURAL PRODUCERS
MHP Holding is one of the main recipients of government subsidies. In 2017, the holding's businesses received a record amount of subsidies – UAH 1.4 billion, or around 35% of the total state support for the agricultural industry.
Until 2017, there was a special tax system for agriculture, forestry, and fisheries. Under this system, the VAT amount calculated by an agricultural enterprise on its own produced agricultural goods or services is not required to be paid to the budget. Instead, it stays with the agricultural enterprise to refund the tax for purchased goods or services, creating a tax credit. If there is a remaining balance of such tax, it can be used 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, budget subsidies are distributed in an amount not exceeding UAH 150 million per agricultural producer per year, considering related persons. A challenge in implementing this criterion is the absence 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. Possibly because the resolution itself did not specify limits 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, stating that “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.
Based on the investigation by the 'Schemes' program, companies within the MHP structure were given special treatment by the Ministry of Agrarian Policy's commission for state support in animal husbandry. The chairman of this commission, Volodymyr Topchiy, used to work for Geoagroconsult, whose clients were Kosiuk's enterprises.
The Law of Ukraine 'On State Assistance to Business Entities' does not cover support for agricultural production, so the AMCU, as the authorized body for state aid, does not evaluate the impact of state aid in this area on competition.
Oligarch Yury Kosyuk and the GREEN TARIFF
According to the resolution of the NEURC dated June 27, 2019, PJSC Oril-Leader receives a feed-in tariff of 370.15 kopecks/kWh (excluding VAT). Oril-Leader ranks 24th in renewable energy production for the first half of 2019, generating 15.35 million kWh.
Oleksandr Dombrovsky, a People’s Deputy and First Deputy Chairman of the Verkhovna Rada of Ukraine Committee on the Fuel and Energy Complex, was previously head of energy efficiency projects at the Myronivsky Hliboproduct holding. Under his leadership, a biogas station was installed at the Dnepropetrovsk MHP factory based on 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 on the import of chicken fillet, but there were no imports of chicken with bone.
As a result, MHP sent chicken with bone to EU factories, where the bone was removed and sold as chicken fillet. In March 2019, changes were made to the agreement to expand EU quotas for chicken meat and close Kosyuk's loophole.
In May 2019, reports surfaced 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, MHP's press service stated that the meeting between the company and the EBRD was only postponed for technical reasons.
ENVIRONMENTAL IMPACT ASSESSMENT
In 2018, members of local communities in the villages of Olyanitsa, Zaozernoe, and Kleban in the Vinnytsia region of Ukraine filed a complaint with the EBRD regarding the negative impact of activities related to the EBRD’s investment in MHP, such as the 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 about the low level of practice in labor relations and land acquisition, shortcomings in environmental impact assessment, lack of transparency, and failure to account for the environmental and social impact of construction projects. Currently, only one project, the 'Construction of the MHP biogas plant,' is being implemented with the support of the EBRD, and there is no assessment of the overall 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.
The activities of the oligarchs during a full-scale war
MHP uses its facilities to provide food as humanitarian aid. According to the head of the CSR Department of MHP, the holding transferred 12.8 thousand tons of various products for a total of UAH 750 million.
Kosyuk’s enterprises are not among the ten largest war-hit industrial assets of the oligarchs.
DOSSIER: Yuri Kosyuk – “Chicken God” and friend of all Presidents
Yuri Kosyuk enters the sand business
The Russian edition published an investigation into smuggling in ORDLO, where Kosyuk appears
How Kosyuk hacked the land reform
