Summary
The recent acquisition by Plukon highlights the pan-European nature of EU poultry companies. This potentially complicates the application of ACP SPS controls on imports of poultry meat from the EU, in the face of regular national outbreaks of HPAI, which requires the application of protective SPS measures. Intra-corporate trading raises the issue of need for country of origin labelling of EU products based on the country in which poultry was raised (not processed. This would facilitate effective SPS controls in the face of frequent outbreaks of HPAI in individual EU member states. Issues also arise around the application of country specific anti-dumping duties and rules of origin under EU trade agreements since such measures can easily be circumvented given the pan-European structure of many EU poultry companies, with this in some instances extending beyond the EU’s borders.
The ‘Dutch poultry meat processor Plukon Food Group has completed its acquisition of a majority stake in Polish poultry meat business L&B Wyrębski’, whose 25,000 tonne per annum slaughtering capacity is located in central Poland. Representatives of L&B Wyrębski highlighted how ‘the funds acquired by the company allowed it to finance the acquisition of assets in relation to the completion of an investment in the construction of a modern slaughterhouse and poultry processing plant’ (1). Poland is already the EU’s largest poultry producer with a 7.7% annual expansion in poultry meat production in the year to June 2018 (2).
The Plukon Food Group is the second largest EU poultry producers having pursued an active acquisitions policy. Prior to its most recent Polish acquisition Plukon successfully acquired French Duc Group poultry business, which at that time had 4 production facilities in France and 1 in Bulgaria. Plukon now reportedly has a total of ‘18 production facilities’ consisting of ‘10 poultry slaughterhouses and eight processing and packaging plants’. Their operations are focused on the Netherlands, Germany, France Belgium, and now Poland (1). Plukon plans ‘develop a greenfield slaughterhouse in the centre of Poland’ on the back of the recent acquisition (3).
The transnational nature of Plukon’s operations is a growing feature of the EU poultry sector, with the top 5 EU poultry companies which account for over 50% of the poultry meat production of the top 20 EU poultry companies all having operations in different EU member states. Each of these subsidiaries has their own export capacity.
Top Five EU Poultry Companies and the Scope of their Pan European Operations
| Company (Home Base) | Scope of Activities |
| LDC (France) | France, Poland and Spain, with expanding presence Poland and Spain (5) |
| Plukon Food Group (Netherlands) | Netherlands, Germany, France Belgium and Poland (1) |
| PHW Group (Germany | Germany, Netherlands, Poland and Bulgaria (6) |
| 2 Sisters Food Group (UK) | UK, Netherlands, in Poland (7) |
| Moy Park (UK) | UK, France (8) |
In addition Cargill has poultry operations in the UK and France, while Scandic Standard has operations in Sweden, Denmark, Finland and Norway where it is the leading poultry company and has recently acquired ‘Manor Farm, the largest chicken processor, and market leader, in the Republic of Ireland’ (9).
Of all of these pan-EU companies the Plukon Food Group has the widest national coverage for poultry production.
In some instances these corporate links extend beyond the EU’s borders with the Ukrainian food company MHP now having poultry meat facilities not only in the Ukraine but also in Netherlands, Slovakia and Slovenia (see companion epamonitoring.net article, ‘Ukrainian Poultry Company MHP Secures Third foothold inside the EU’, 22 October 2018).
Companies such as MHP play a major role in Ukrainian poultry meat exports to the EU, ruthlessly exploiting the various market access arrangements for poultry exports to the EU which are available. This exploits further processing opportunities available at the MHP owned European facilities to maximize export potential. According to press reports ‘MHP has managed to increase exports of chicken breasts containing the wing bone to the EU from 3,500 tonnes (t) to 27,000t’, with these imports then being sliced at MHPs European plants to allow the sale of ‘boneless chicken breast – a product with a higher added value’ (10).
Overall in 2017 MHP exported 64,000 tonnes of poultry meat to the EU. This export volume is expected to reach between 70,000 and 80,000 tonnes in 2018 (10). This would represent a level of supply which would leave MHP just outside the top 20 EU producers of poultry meat.
The expectations for MHP’s poultry meat exports to the EU are in line with the latest EU figures which showed a 75% increase in EU poultry meat imports from the Ukraine from January to July 2018 compared to 2017. This took Ukraine’s share of imports into the EU to 16.5%. This is a significant increase on calendar year 2017, when the Ukraine accounted for 9.9% of extra EU poultry meat imports. This in turn comes on top of a fourfold increase in EU poultry meat imports from the Ukraine from 2014 to 2017 (2).
From January to July 2018 the unit value of EU poultry meat imports from Ukraine (€1,734.4/tonne) was substantially below the unit value of EU imports from both Brazil (€1,903.7/tonne) and Thailand (€3,193.4/tonne). This reflects the composition of these imports from the Ukraine. In 2018 fresh and chilled bone in cuts falling under the other category (i.e. not halve, quarter, whole wings, wing tips, backs, necks, legs, or breast) accounted for 41% of Ukrainian exports to the EU from January to July 2018, up from a 33.8% share in 2017 and only 7.6% in 2016 (2).
| Comment and Analysis
For pan-European poultry companies it is far easier to circumvent nationally specific trade restrictions than it is for purely nationally based producers. In terms of trade with ACP countries the transnational structure of EU poultry companies makes it easier for such companies to circumvent anti-dumping duties where these may be applied as part of trade defence measures and nationally designated SPS related import controls. In the case of MHP it also raises important rules of origin issues given the tariff preferences and other preferential treatment extended to EU poultry meat exporters under certain EU trade agreements with ACP countries. The relative ineffectiveness of nationally targeted South African anti-dumping measures would appear to be testimony to the ease with which such nationally defined anti-dumping measures can be circumvented. In the two main categories of imports affected by the anti-dumping duties (offal – 02071420 and boneless cuts – 02071410) affected by the July 2014 measures introduced against Dutch, UK and German companies, within two year EU export volume to South Africa had grown 111% and 57% respectively compared to the calendar year before the introduction of the anti-dumping duties. These measures were thus entirely ineffective in curbing imports of poultry meat from the EU. Similarly the increase in EU imports from the Ukraine of fresh and chilled bone in cuts which do not fall into the categories of halve, quarter, whole wings, wing tips, backs, necks, legs, or breast (from 3,675 tonnes to 31,122 tonnes) suggests a re-export trade is taking place which claims EU origin for the exported products so as to secure any tariff preferences which might be available under EU trade agreements but which are not available directly to Ukrainian exported poultry meat. This would be a violation of the rules of origin of such trade agreements if Ukrainian produced poultry meat was to be re-labelled as EU poultry meat prior to export. There can be little doubt that sub-Saharan African s would be a major market for such relabelled exports, given the low level of demand for these low value poultry meat products in the EU. Finally there is the issue of the undermining of African SPS controls through the relabelling of Ukrainian produced poultry meat as EU poultry meat simply by virtue of the final cutting and packing operations taking place at an EU located poultry facility. This SPS dimension needs to be seen in the context where import restrictions in the face of HPAI outbreaks are introduced in regard to specific EU countries not the EU as a whole. The pan-European nature of some EU poultry companies makes it much easier to redirect poultry production to plants in countries not affected by SPS restrictions, where no cross border restrictions have been placed on the movement of poultry products within the EU in response to outbreaks of HPAI. This highlights the need for country specific labelling of poultry products based on the country of production of the poultry bird and not the country of final cutting or packing in the EU export trade to ACP countries. |
Sources:
(1) Gloablmeat.com, ‘Dutch poultry group completes Polish acquisition’, 7 August 2018
https://www.globalmeatnews.com/Article/2018/08/07/Plukon-acquires-L-B-Wyrebsk
(2) EC, ‘EU Market Situation for Poultry Committee for the Common Organisation of the Agricultural Markets’, 20 September 2018
https://circabc.europa.eu/sd/a/cdd4ea97-73c6-4dce-9b01-ec4fdf4027f9/24.08.2017-Poultry.pptfinal.pdf
(3) Plukon Good Group, ‘Plukon Food Group has finalized the acquisition of Wyrebski’s new slaughterhouse project’,
https://www.plukonfoodgroup.com/plukon-food-group-has-finalized-the-acquisition-of-wyrebskis-new-slaughterhouse-project/
(4) Rabobank, ‘EU poultry outlook 2020: Shapen the industry from a global perspective’, 9 November 2016
https://www.bordbia.ie/industry/events/SpeakerPresentations/2016/PoultryEggConference2016/EU%20Poultry%20Outlook%202020%20-%20Nan-Dirk%20Mulder,%20Rabobank.pdf
(5) LDC, International division: A relay for the future
https://www.ldc.fr/en/rubrique/our-activities/poultry-division/international-poultry-division/
(6) PHW,’ Independent action on the market’
http://www.phw-gruppe.de/subsidiaries.html
(7) wikipedia, ‘2 Sisters Food Group’
https://en.wikipedia.org/wiki/2_Sisters_Food_Group
(8) Moy Park, Moy Park’
https://www.moypark.com/about
(9) Scandic Standard, ‘Agreement to acquire Manor farm – The leading Chicken Processor in Ireland’
https://investors.scandistandard.com/afw/files/press/scandistandard/201706278976-1.pdf
(10) Globalmeatnews.com, ‘MHP reacts to claims about bypassing EU import restrictions’, 23 July 2018
https://www.globalmeatnews.com/Article/2018/07/23/MHP-responds-to-bypassing-EU-import-restriction-claims