Ukraine food giant MHP warns of ‘catastrophic’ risk to food supply

Harvesting in Kharkiv Ukraine in 2017

Around 30% of the world’s wheat comes from Ukraine and Russia

The boss of one of Ukraine’s biggest food producers said that if its operations fail, it would have a “catastrophic” impact on the country’s population.

MHP is a London listed poultry company with over 30,000 workers in Ukraine.

It is a big supplier to the country and has been involved in the humanitarian effort.

It has delivered food to isolated communities across the country.

These deliveries have often been undertaken for free and at great personal risk to MHP SE’s employees.

The company’s Australian chairman, Dr John Rich, has been running the company from its offices in Slovenia and said its survival is critical to the country.

Failing n its production or distribution operations would have a an “enormous humanitarian effect” in Ukraine because MHP is the last company standing in this area of food supply, according to Dr Rich.

“A lot of our competitors, particularly in the east of the country, have ceased to exist”, he explained.

Five days without food

MHP has thousands of vans at its disposal which has made it an important part of the humanitarian effort. Delivering it’s own products and other aid has been particularly important for towns and villages that have become isolated following the invasion where Dr Rich said some people have spent up to five days without food.

“We’ve been delivering ready to eat food, because people can’t cook outside, and delivering to villages that have become cut off,” Dr Rich said.

“At present, the company is operating like a war room. No question,” he explained.

“Frankly the drivers going into those areas – It’s like a suicide mission, particularly getting into the cities that have been under heavy attack.”

Woman grocery shopping in a supermarket holding a bottle of sunflower oil

Ukraine produced 48% of the world’s sunflower oil exports in 2020, according to the US Department of Agriculture

“It’s an enormous challenge for our staff and we have to try and incentivise people, pay them more, and guarantee to look after their family if something happens”, he added.

In addition to its poultry operations, MHP has a major presence in the country’s agriculture sector, growing wheat and grain on thousands of hectares of land.

The firm is also a big exporter of sunflower oil, though the company’s exports ground to a halt following the invasion.

Both Ukraine and Russia are both major exporters of basic foodstuffs, and the war has already hit crop production, driving up prices.

On Monday, one of the world’s biggest fertiliser firms, Yara International, warned that the war would deliver a shock to the global supply and cost of food.

No sowing season?

The next few weeks are critical for sowing wheat and other crops, and Dr Rich said the situation is on a knife edge. At the moment the firm has the ability to sow crops within two to three weeks but this could be impacted by the advances of the Russian army which have occupied 15% of the land so far, Dr Rich explained.

“If this continues, of course our ability to sow rapidly diminishes, particularly if they (the Russian army) moves into the west of the country where a large part of our operations are based”, he added.

Dr Rich said this could could lead to the complete failure of Ukraine to produce anything, but also has implications globally.

“The consequences are unimaginable as far as Ukraine is concerned,” he said.

“For the wider world, it’s simple. The price of wheat will continue to rise, the price of corn and other commodities will rise significantly, and you’ll have spiralling inflation at a time when we’ve already had problems with the global supply chain because of COVID,” he added.

The head of the World Food Programme, David Beasley, has also warned that the conflict in Ukraine could send global food prices soaring, with a catastrophic impact on the world’s poorest.

Analysts have forecasted that the war could even double global wheat prices.

MHP has appealed for donations to its charitable foundation so they can continue to distribute food. Dr Rich explained he was trying to cover the enormous costs of giving away poultry for free when the firm’s input costs were “sky rocketing”.

“We cant continue to exist like this without some sort of support. That’s the reality.”

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