For Ukrainian agricultural producers the 2013/14 season was complicated: despite the record harvest, the profit was low due to the grain prices decrease. Besides, in the second half of 2013/14 MY in Ukraine the major development factor was not the weather, but escalation of political situation in the country. As the result the Crimea was annexed, and in Donetsk and Luhansk oblast faced the military standoff. The General Manager of HarvEast Holding, Simon Cherniavsky, tells about the influence of the current situation in the country on the business dealing.
Information
HarvEast Holding – is the Ukrainian agricultural holding, managing agricultural assets in Donetsk oblast and the Crimea.
Areas of activity:
- crop production (wheat, sunflower, barley, perennial grasses, maize, fodder sorghum growth);
- dairy farming;
- compound feed production, seed crop rearing.
Established on 10 March 2011, the Holding took control over the agricultural assets of Ilyich Steel Plant.
HarvEast Holding shareholders are SCM-Group and Smart-Holding Group.
- How can you characterize 2013/14 MY?
In the world, and in Ukraine in particular, the stated season can be characterized as the season of low prices for agricultural commodities. For example, there was sunflower oil global prices decrease, which totaled 20-25%. Thus, problem with the prices is the major trend for 2013/14 season.
- The company has few agricultural assets in two problem regions of Ukraine – Donetsk oblast and the Crimea. How did the events in Donetsk oblast influence on the spring-field works?
The company conducted all the works without accidents and according to all the planned technological processes. Meanwhile, change in exchange rate connected with the economic situation in the country influenced on agricultural workers of Ukraine.
Despite the current situation in Ukraine, our farms in the South part of Donetsk oblast and the Crimea worked satisfactorily. Difficulties in the Crimea are on the administrative and legislative level, but not on the production one.
- Is there an information on damaged planted areas due to the anti-terrorist operation?
The fields are in good conditions. Assets of the holding are located in the South part of the region, where there was no active military operations.
- Were there certain difficulties with the agricultural commodities shipment within or outside the region due to the current situation in Donetsk oblast?
To date there are no difficulties. But, there is a high probability to face them while harvesting works realization and commodities shipment to the end-buyers. To date, wage-workers, combines and vehicles prefer not to go to Donetsk region.
- Did you ship agricultural commodities through the Crimean ports? What are the difficulties on exports through Azov Sea ports for to date? Will the stated freight traffic flow be redirect to other ports?
Yes, previously the company used to export its commodities through the Crimean ports. Also, to date there are no problems with exports through Azov Sea ports. Our logistics works satisfactorily. There is the only problem. Traders do not want to make contracts due to the current situation, in Mariupol in particular. Besides, nobody wants to make forward contracts. But still we expect the spot markets to work normally in autumn. Meanwhile the Crimean cargoes are redirected to other ports of Azov and Black Seas (Nikolayev). To date, the company plans to work with produced commodities in Donetsk oblast in autumn through Mariupol. If there are difficulties on the stated issue, we will consider Nikolayev and Berdyansk.
- How did you regulate the issue on the assets ownership in the Crimea?
To date we work “in suspension”, as the most companies in the Crimea. The legal boundary is rather complicated, there is no clear understanding of processes, but we work satisfactorily. We leave the possibility to sell Crimean assets open.
- Was the Crimean planting structure reconsidered due to the water supplies problems? What were the changes? What is your estimations of the Crimean crop?
The share of irrigated land in the Crimea is rather low, which mostly are gardens. Also, this year the company decided not to develop seed areas, changed the planted areas structure and allocated lands under the current crop rotation. In total the stated share is nearly 20% of our Crimean lands.
- The harvesting works have already started, at the same time at an early date there will be autumn planting campaign. Did you change your plans on it due to the current situation?
No, the company works satisfactorily. In autumn we will realize planting campaign according to the annual plan and crop rotation.
Interviewed by Alina Styozhka
