Present year provides a chance to Ukrainian flour millers, which they should certainly use!

Source

APK-Inform

5168

 

During recent 5-6 years Ukrainian flour millers used to accept their ineligible position as the layer between agricultural producers, bakeries, grain traders and the local administrations.

Since the end of 2010 and up to date the millers have the unique chance not only to earn the sufficient dividends but to become the real players of the grain market. Will they use this chance?

We took the interview with Andrei Yakovenko – Head of one of the leading milling enterprises of Ukraine – Novopokrovsk Grain Complex


Novopokrovsk Grain Complex (Kharkiv oblast), is one of the leading grain milling enterprises in the country and is the part of the State Agency of Material Reserves of Ukraine.

The enterprise was put into operation in November 1998, and consists of the milling plant, equipped with the licensed equipment “Buhler” with production capacity of 500 tonnes per day, combined feed factory with production capacity of 1050 tonnes per day and the elevator with storing capacity of 54 thsd tonnes. The company employs nearly 500 people.

Flour under the TM “Pokrovchanka” is known not only in Kharkiv oblast, but also in neighboring regions – Poltava, Donetsk, Lugansk, Sumy oblasts. The company exports flour, wheat bran and combined feed to more than 20 countries, including Georgia, Azerbaijan, Armenia, Syria, Egypt, Turkey, Greece, Italy, Morocco and other countries.


- Andrei, you are not the beginner in the flour milling business. How would you characterize the current season for the Ukrainian flour milling business?

If we discuss 2011 as the current flour milling business, it is obvious that the Government intervention becomes more and more active: all the market reacts in according to the statements from Kiev, the mess becomes less, the process of the flour milling business realization becomes more measured. In the certain way they are positive changes, especially in the context of the Government actions, directed for the limitation of the grain export. In favor of the stated the industry got the stimulus for further development. If you have the sufficient number of flour milling grain supplies and the active grain export duty, the Ukrainian flour millers get the second chance (after 2007-2008) to seriously state about themselves on the foreign markets. And the season-2011/12 may become the real break in the stated direction.

- So you estimate the grain export duties imposition as the positive action?

Yes, and I do not consider it ashamed. I defend my positions as the grain miller. Besides, it is necessary to remember that the raw material is been sold by only weak African countries, which are not able to offer anything else to the market. So there is no any difference between trade of cacao-beans, fruit, ore and grain. The higher is the level of the commodities production technological effectiveness, the higher is the level of added value and the tax in the country. At the same time flour is not the end product. So I support the active development of the end commodity production, but not grain trading. So I support the export duties imposition as the tool providing the flour production development in our country.

To date flour milling market is more alive, there is the real demand on the foreign markets. Grain traders start to sell flour.

It is necessary to remember that by flour production volume increase we get the larger volume of bran which favors the decrease of combined feed cost and favors the development of the domestic livestock sector. At the same time bran is the highly demanded export commodity.

- Novopokrovsk Grain Complex was in top-five of flour producers and its exporters. To date the positions of the enterprise are worse, but if we discuss the plans, what volume of output and export is the aim of your enterprise taking into account the production capacity of 500 tonnes per day? And what will be the ratio of flour consumption on the enterprise between the domestic and foreign consumers?

Our enterprise always used to be one of the leaders of the industry. The current company management of the State agency provided the congruence and systemacy for the work. There are no any voluntaristic decisions. They take into account the interest of the certain enterprises and do not make and even not to try to make us to do any unprofitable, wrong steps. We are ready in the case of necessity to fulfill the tasks incumbent by the Government on the Agency. In order to realize it we hold the necessary constantly fulfilled grain stock on the elevator. But we still realize the active commercial activity in order to create comfortable working conditions for the staff and support the level of the necessary technical condition.

To date nearly 70% of the commodity we supply on the domestic market, but there is the clear tendency for increase of the total export volume, due to the daily signing the export contracts. According to my opinion the ratio will be nearly 50 by 50. In this case the enterprise will be able to reach the full level of loading of their milling capacities.

- But will there be flour supplies shortage on the domestic market and as a consequence, the administrative interference of the local and central authorities with the further flour export limitations? There is the two years ago experience on the market of sunflower oil, which active export caused the domestic prices increase, and as a consequence – the Government imposed quotas for sunflower oil exports...

The export markets do not wait for our flour. We supply only flour with the certain characteristics, which are able to provide high-technological enterprises, and there are only few of them in Ukraine. The general share of such enterprises on the market, including ours, is nearly 30-40%. The rest of the enterprises, which are less technological, will be only glad that we switched over to the export market, and with a big pleasure will compensate the decrease of our absence on the domestic market. So the flour supply deficit is impossible on the Ukrainian market.

- We discuss the development of the flour business in our country and about the role of the state in the process. But at the same time we clear understand that flour millers support we have faced this year was the exclusion than the rule. And after cancellation of the duties for grain exports, flour milling enterprises will start the fight for grain with the exporters with the already known results. Is it possible to suggest that the Government is able to find the additional preferences for development of flour milling production?

Certainly it is. Of course, except of the duty there is another positive moment for us – the VAT refund cancellation. But I do agree that the current preferences for millers are more situational than directly organized. But of course there is the fault of the millers themselves. The agrarians have the range of non-governmental organizations. The traders have the Ukrainian Grain Association, which opinion sounds constantly and loudly. The millers have the positions of the certain enterprises, nothing more. So to date the idea of consolidation of the positions of the milling enterprise and announcing of these consolidated demands to the Government, agricultural producers, traders. It is necessary to unite and create the active authority which would be able to realize the negotiations and engage in debates and defend the position of the milling community.

- There is the idea of creating of the Ukrainian milling union all the time. The problem is who is ready to be the uniter?

Well, let's announce it together. I will do it on myself in the system of the State Reserve and the enterprises of Kharkov oblast, and you in APK-Inform and the magazine Grain storing and processing. Then we will see how many interested persons are ready in fact rather than in word to unite the interests of millers and consolidate our positions. And not only millers. Grain enterprises are in cooperation with us. And how many of  combined feed enterprises are the part of grain complexe? We should discuss the range of the question, find compromiss, and introduce the certain offers to the government and associations of other industries of agriculture of the country.

 

- That is the deal. And first we ask all the millers, grain processors, who do not like the position of the bufer between agricultural producers, traders and bakers, and worry about the situation in the industry of cereal products and grain segment of the agrarian complex of Ukraine, to introduce own offers and desires directly to Andrei Yakovenko [email protected] or Rodion Rybchinskiy [email protected]


 

Interviewed by Rodion Rybchinskiy

 

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