Russian grains quality – main influence factors

Reference data. CJSC "SGS Vostok Limited" was founded by the company SGS S.A., and comes to the structure of the group of companies SGS, which is the world leader on the market of controlling, expert appraisal, testing and certification.

- Sergey, is it true that services in grains area play the key role in agricultural sector of the activity of SGS company?

Yes, sure it is true. Even despite grains export ban in the current season, our clients clarified that domestic wheat and barley supplies in many cases need the independent quality assessment. For example, feed barley after the special segregation and working-out become conditionally milling grain (for brewer purposes) with absolutely different quality demands and good selling price. Wheat usually has the same quality problem between supplier and buyer – it is gluten content and gluten deformation measurer, due to the fact that these two parameters are key rates of grain rating, which as a result effect the commodities price. However, grains export absence also played the positive role, due to the fact many grains producers started thinking about tomorrow during the standstill period.

- Do you mean next crop?

Yes, I am talking about the harvest-2011.

- According to your opinion, what is the positive role in the situation?

The problem is that while talking about Russian grains quality, we rather rare refer about applied agrochemical technologies during grain growing, and that is the beginning stage, from which quality of grown grains depends on a lot. And it is first of all, the issue of soils, the issue of fertility. From how the area is leveled by nutrients and microelements content, not only yield depends on, but also the rating of grown wheat. Accurate agriculture removes the fully problem, and some producers already applied the new technologies, which allow even to  save with applied fertilizers at the expense of dosated distribution, and as a result, to receive crop volumes increment to 30%. According to my opinion, during the nearest years we will see the essential increase in the sector. Our enterprise also works rather successfully in the market segment.

- But if the soil is the beginning stage, then what other factors do effect essentially on grown grains quality?

A lot of factors effect grains, and annually we get the weather surprises, like last year for example. The droughts not only destroyed almost 50% of the sowings and even more on the some territories of the Black Earth region and the Volga region, but also essentially effected wheat quality. By the way, if the export appears, wheat would not be qualified enough for exporting at least by two rates, as nature, hollow and cracked kernel. Except of the weather and climatic conditions for growing, the key factors are the following ones: seeds material quality, additional fertilizing, treatment (herbicides, pesticides) and also the terms and quality of all the operations compliance. The necessary amount of applied nitrogen fertilizers along with other nutrients will allow to increase protein content (gluten), meanwhile the modern double treatment by pesticides will allow to destroy corn-bug on the stage of ageing and to save gluten quality and grain quality in general. And by the way, during the last years there is the positive dynamics in the direction.

- Would you tell more detailed about it?

From year to year, when we used to receive feed grains new crop volumes, we stated the fact that 20-30% of feed – is gluten quality feed. In other words, the commodities could become milling wheat, if the timely treatment by pesticides be applied. The losses were due to dereliction of a duty, financial funds absence, bad quality (sometimes fake) preparations. However, the life continues and introduces own corrections. Thus for example, in September 2009 GASC (the General Agency for Supply Commodities of Egypt) introduced new quality demands for Russian wheat, where "kernel rate damaged by corn-bug" is fixed at the level of 1% (previously it totaled 2%). We had good crop volumes that time, and were able to choose, though of course we faced the difficulties, due to average quality, according to our data, for 4-grade wheat was within 1.6-1.8% according to the rate. Taking into account that Egypt was wheat importer #1 for Russia, it certainly effected the reaction of domestic grain producers. Qualitative parameters of wheat of the harvest-2010 was awesome in the South of Russia. The average rate of corn-bug for 3 and 4-grade wheat totaled just 0.7%, and other rates were also in accordance with the most of contracts. And it is grain producers large achievement, who were in accordance with the modern technologies, and just only the weather in further crossed their plans for the commodities selling for exports in the current grain year.

- And if we talk about other quality rates, what could be critical for export supplies in the current season?

I would note natural weight (in average it totaled 770 g/l), and also gluten (24% at ICC for 4-grade wheat). Other wheat key qualitative parameters at the program of our "Qualitative card", the one as W (160 min.), falling number (250 min.) and etc., always stayed on the contract level.

- From January 2011 Russia renews flour exports. As it is known, Russian processors have serious competitors on the world flour market – Kazakhstan and Turkey. What can you say about the quality accordance of Russian wheat of the current season to flour producing purposes and what are flour exporters demands to export contracts?

If we talk just only about Russian flour quality, there should not be any problems. Last season, Turkey imported just only 2 mln tonnes of Russian milling wheat (3-grade mainly), including 1.45 mln tonnes controlled by our enterprise during shipment from Russia. It is obvious that our wheat was purchased for flour producing purposes, and flour on its turn was for the domestic market purposes, as well as for exports to other regions. As about Kazakhstan, during the last years the country factually caught the markets of Middle Asia and Afghanistan, meanwhile Siberian wheat and flour were sold mainly on the domestic market. As about quality specifications, main flour rates, as gluten, protein, moisture, ash content are almost in all the contracts, however with different standards, depending on flour purposes. Usually they notify 3-5 additional rates depending on the country of destination (falling number, W, P/L, vitamins, iron and other).

- Will Russian flour be able to compete to Kazakh flour on its quality?

Siberian flour quality is excellent and not worse than Kazakh one, and the main problem of competitiveness is only in logistics. It is obvious that Kazakhstan has the advantage for supplies to the Middle-Asia, meanwhile Russia gets some profit by supplying to the certain countries of the South-East Asia.

- You have already notified about "quality card" of your company. Would you tell about it at least briefly?

If talking briefly, then during the harvesting campaign we harvested new crop samples (sometimes enterprise and elevators provide us with samples) and test them in own laboratories by 10 base export rates, including also gluten accordance to the GOST (All-Russian State Standard) and IDK (gluten deformation measurer). Researches are realized in almost all grain producing regions of Russia – from Bryansk to Altai – during the period of 4 months (July-October). The card is interactive and allows to take a look at commodities quality as general in Russia as in the District of the certain oblast. The analogical researches for wheat and barley, including rapeseed we realize in Kazakhstan, and even in Ukraine.

- So do trade companies become your clients during commodities purchasing?

As about purchasing of "quality card", then yes, large-scale international trading enterprises purchase the card for their purchasing planning, contracts preparations and risks estimation. However, the commodity is very useful for us too. During our work in one or another region we already suppose what rates will demand the essential attention during wheat quality control while supplying.

- We talked about grain quality generally, but probably there is a point to move on and define also the crop harvested volumes?

The subject is very interesting. Especially taking into account the fact that as for the moment, we factually have one source of information about the issue, and domestic stocks estimation difference, as for July 2011 are within the range of 3-16 mln tonnes! It is due to the wrong crop volumes estimation, and also overestimated domestic consumption volumes.

We have everything to start the program: wide territorial covering (over 40 offices in these regions, over 1 thsd of workers), specialists availability in the field of grain and marketing, required technical possibilities. If we combine everything and support out "quality card" with  face-to-face interview with the enterprises in the different regions of Russia and to use satellite monitoring of yield by sowings density, then, according to my opinion, finally we will get rather good commodity. But at first we have to estimate how it will be demanded by the market and at what price. It will take about the year for it.

Interviewed by Elena Cherednichenko