Consumer scrimping amid the global economic recession has proved a double edged sword for MHP SA, which has reported a 20% jump in second-quarter chicken sales but tumbling prices for its cooked meat products.

The Ukraine agri-industrial group attributed the rise in chicken sales to the opening of new poultry production facilities just as consumers were seeking to cut their food bills.

"Demand for chicken meat during the first half of 2009 remained high as consumers continued to substitute other meats with locally produced chicken," MHP said.

Prices rose too, up 6.5% at 13.25 Ukraine hryvnia per kilogramme, while costs fell for sunflower oil and corn feeds, which MHP produces itself.

Shares slide

However, the group's key sausages and cooked meats division saw prices fall 18% to 17.45 hryvnia per kilogramme as it refocused on value-for-money products.

"The company [shifted] its total product portfolio mix towards low price products in accordance with consumer demand," Wednesday's trading update said.

Nonetheless, the group said it was "satisfied" with its performance so far in 2009, "particularly the strong performance of the poultry business".

Its shares recovered from early weakness to close $0.13 higher at $8.13 in London.

Higher yields

MHP added that it expected yields from crops grown on its 180,000 hectares of farmed land to come in "significantly higher" than the national average.

Yields from Ukrainian crops are showing reduced yields this year, thanks largely to farm cutbacks on applications of fertilizer and herbicides.

MHP added that it had sold 80% of its rapeseed crop, which was coming in at 2.8 tonnes per hectare, at $375 per tonne, excluding VAT.

In Paris, where crops tend to sell for a premium over Eastern European produce, August rapeseed was selling at E279.50 ($390) a tonne on Wednesday.