Russia to increase high oleic oilseeds production – ADVAG
Recently a lot of Russian market participants have become interested in high oleic sunflower. The stated market is rather tight and unexplored. The Chairman of the Board of Directors of “ADVAG”, Oleg Fesenko told about the major moments of high oleic sunflower market.
“ADVAG” is the groundbreaker in the segment of high oleic sunflower and rapeseed. The company provides agrarians with the full complex of agricultural services. The goal of the company is to introduce absolutely new vision of farming, adopt effective systems on plant industry managing to the Russian conditions, change business dealing approach of Russian agricultural producers and give them possibility to use all the potential of agriculture of the country.
- First, please, tell about ADVAG.
The company was founded in 2010 in cooperation with Canadian company FarmersEdge, the leading agro-consulting company in the North America, and became one of the leaders in high oleic industry. The company was started as the pilot project on high oleic Canadian sunflower in Russia. To date, we are the largest origination company in high oleic sunflower sphere.
ADVAG works with the best quality high oleic genetics of the company Dow Seeds (one of the largest seeds companies in the World). We provide farmers with seeds, crop protecting agents and fertilizers. Also ADVAG controls all development stages, our agriculturists control high oleic rapeseed and sunflower growing. Also, we guarantee harvest repayment in order to reduce risks, thus while seeds purchasing we make contracts with client on harvest re-purchase. The company organizes divided storing in order to guarantee high quality rates of high oleic products. ADVAG cooperates with a lot of processing plants in Russia, and annually the specialist of Dow Seeds from Argentina comes on the stated factories in order to certificate seeds for processing. Within the high oleic program we provide our clients and partners with Traceability Reports, which allow to control end products from seeds to harvest and oil as well.
In 2014 ADVAG became the partner-coordinator of Dow concern within the program on emission reduction of greenhouse gases (Dow Sochi 2014 Carbon Program).
- What are the differences between high oleic sunflower growing compared to the common one. Is there big costs difference while high oleic sunflower compared to the traditional one ore other oilseeds?
The stated question is popular among farmers, so we hold seminars, Field days and conferences on the stated issue. There is no costs or growing differences between high oleic and common sunflower.
Also, some agrarians stated that high oleic oilseeds have low yield. The yield of all import sunflower hybrids of leading manufacturers, including Dow Seeds, totals 3-3.5 t/ha. At the same time a lot of agrarians get 1.8-2.2 t/ha. It is necessary first of all learn how to realize seeds' potential, and then view on high oleic harvest.
Our sunflower seeds are unique and universal: they can be grew according to the Сlearfield™ system (that allows to work with hybrids more effective), and according to the classic system as well. There are high oleic sunflower seeds of other companies on the market as well, but they are grew according to the classic system only. At the same time, our price and credit policy allows us to be competitive.
The major reason of close cooperation with Dow Seeds is quality (high oleic acid content in seeds totals nearly 87-88%, at the same time the competitors reached only 82-83%).
As for high oleic rapeseed, to date ADVAG has no competitors and is the only company in Europe, which proposes high oleic rapeseed with such fatty acid content.
- Have you own capacities on sunflower seeds processing? Or the company works on tolling conditions?
To date we work on tolling scheme. Thus we have diversification effect by regions. We work all over Russia, and it is hard to have own factory in each region. On the current stage we consider issues on cooperation and building of own enterprise in order to reduce risks of dependence on foreign farms. At the same time the company plans to continue working on tolling scheme. At an early date, we will decide on high oleic sunflower processing capacities building, or partnership with some existing processors.
- Do you realize high oleic sunflower oil on the domestic or on the foreign market?
Mainly, we ship our product on exports. The company works with the largest-scale global consumers and traders from Europe, China and India. This year we start to work with large consumers in Russia, thus ADVAG has supplied high oleic sunflower oil on the Russian market.
Russian high oleic oil consumers' market is rather slowly developing, due to the unwilling of promotion costs bearing. We do not consider Russian processors as competitors because we work according to B2B. Also, the company works with the number of processors and provide them with origination within the high oleic program. The stated fact allows us to reduce some risks and reach raw-material stability.
- Did you face some difficulties while producing and sale of high oleic sunflower oil?
First of all, quality requirements in Russia are different compared to the quality criteria of West clients, in particular on phosphorus content, on color, etc. Thus, we need to work on quality rates with each processor in order to correspond to the customer.
Also, agro-logistics complex in Russia is undeveloped, so there is lack of capacities on harvest acceptance and drying, and car deficit for oil transportation in total.
There are some difficulties, but in the last four year we managed some of them. Everything starts with high quality raw materials supplies from households, where sometimes we face unfair suppliers. Surprisingly most of problems are with foreign companies. Our major priority is partly own capacities on acceptance, drying and processing in order to guarantee oil quality and reduce risks.
- To date there is a high interest for high oleic sunflower purchasing by the processing enterprises. Thus, have you increased sunflower planted areas?
Within the company's program we increase planted areas. Thus, in 2009 sunflower planted areas totaled 2 thsd ha, this year the stated rate to reach 80 thsd ha. Next year we expect high oleic sunflower planted areas to be at the level of 80-100 thsd ha, high oleic rapeseed areas – 60 thsd ha. The stated tendency is based on the advance orders of global and domestic clients and partners.
- Is there some bonus payment for high oleic sunflower and sunflower oil production?
To date there is high oleic bonus payment on the market. We give credits on seeds and crop protecting agents, thus households get additional profit, low risks and flexibility. We try to found more suitable way for each agricultural producer.
At the same time, every potential premium on oil has its volatile market and divided between market players. Agrarian get the stated premium while growing, further divided storing, processing and costs for quality increase. But, the premium will decrease in time, while market will saturate with high oleic oils.
- What about plans of the company? What should the market players expect?
Within out program, in 2015 in Russia high oleic rapeseed and sunflower planted areas will total 100 thsd ha. To date, we set up the same program in Poland, where this year there will be winter high oleic rapeseed plantings.
In 2015 in Ukraine we will add 10-20 thsd ha of planted areas while spring planting. Also, we plan to develop the stated program in the East Europe (Hungary, Romania) and the Baltics. To date, development rates will depend on the political situation in the World.
In the Lipetsk Region we purchase a lot and developed the project on elevator building, which will consider on acceptance of high oleic crops in Black Earth regions. We plan to start building in 2015.
Our target is to establish monoproduction of high oleic sunflower in Black Earth regions till the end of 2016 – the beginning of 2017. It will allow to except risks, connected with stability of high oleic oil quality.
Also, in 2016-2017 we plan to give new sunflower hybrids with oleic aid and saturated fat acids content at the level of 93% and 3% respectively on the Russian market.
Interviewed by Anna Skotar
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