In 2014, the low quality of harvested wheat was the main problem. The millers stated there is a shortage of baking wheat in Ukraine. Andrey Yakovenko –Director of Novopokrovsky Bakery Products Plant (one of the largest grain milling plant in Ukraine) and the co-chairman of the noncommercial organization «Millers of Ukraine» to tell about the influence of economic situation and the shortage of the baking quality grain in the milling industry.
- Did you face any difficulties with your activity due to the situation in the East of Ukraine?
As of to date our enterprise has not faced any difficulties with our activity, though there is the risk of them being risen. However, there is the trust into our company owing to which we didn't face any difficulties with supplies.
- The millers state there is the baking wheat shortage. How heavy is this deficit, what caused it and how will it influence on the milling enterprises functioning in short-terms?
Despite the high general production of wheat, its qualitative parameters are low. The protein low content and the low mass of wet gluten were caused by the weather conditions (abundant rainfall before harvesting campaign) in Ukraine and EU as well and by the crop bad treatment during the maturating period. Due to the active political events in the period of March - July, 2014, the agrarians reviewed the financing program. Further there is a shortage of crediting in the agrarian and economic sectors. Thus, the milling wheat share will be low in 2014. Besides there was a large volume of germinated and fusarium grain. On my opinion, this problem will arise later due to the short storing time of the germinated grain. The violation of its storing conditions will conduct to parameters losses needed for its processing for feed. Thus, the milling wheat rate will decrease by January-February, 2015.
- But there are other problems?...
Unfortunately, yes. The economic situation is worsening. The shortage of financing during the planting campaign, the high prices for fertilizers, the USD volatile rate are the additional factors to our common problems with crop rotation, low level of agrarian technologies exploitation and other weaknesses on the grain production area. Due to the deregulation in all areas of agrarian sector we destroyed the agrarian inspection, we lost the possibility of phytosanitary, quarantine and the statistic control of the. Thus, due to the considerable shortage of milling wheat, insufficient planting campaign and the shortage of producers’ financing, we risk to not have the milling wheat in the crop 2015. We hope that the weather conditions not to affect the crop this year. Otherwise the milling wheat imports will be unavoidable in 2014/15 MY. Note, wheat imports after its exports in the same season have already being faced by Ukraine previously and it is not to be repeated under the current political situation. Note, the non-commercial organization «Millers of Ukraine», founded in 2014, is cooperating with bakers on this problem. We address to the President and the Prime Minister, explore a market, participate in the Governmental working group.
- In 2014 the EU countries to face milling wheat share decrease to 59% as opposed to 71% in 2013. How it will affect the flour global market?
Basing on the quality rate of the crop, the European Council of grain takes the decision on grains imports and exports, provides import/export quotas for tonnage. Note, the EU counties do not object the market regulation as in Ukraine. By analyzing situation it is possible to state the country is being given a purely agricultural raw-exports role due to the regulators purposeful disorganization. Of course it will cause the milling wheat shortage.
-Your enterprise is one of the leaders on the flour exports. Do you plan to increase the exports in 2014/15 MY?
We consistently extend the export geography and will try to develop it by using the trust in us.
-Do you plan to invest in the development of enterprise’ capacities in 2014? Which directions are preferred to be invested in?
On my opinion the most important direction to invest is the energy preservation. In 2014 we plan to re-equip our boiler station in order to function on the organic wastes. Thus, it will considerably decrease our charges and the dependence on the gas prices.
- Some producers increased the prices for bread. Which factors will affect the bread prices?
The milling wheat shortage, the non-planted areas and insufficient quantity of fertilizers, the energy sources' prices increase, the USD rate increase and the unstable political and economic situation will affect the bread prices. Meanwhile, the weather conditions (frosts, crust and humidity shortage) to cause the bread deficit.
-How the current economic situation will affect the milling industry?
The investment's shortage and the political uncertainty will cause the economic development suspension in the milling industry in particular. The Government should determine the directions for the country’s development, so there will be adopted programs on the technical modernization and projects on the new mills building. Meanwhile the actual potential and the industry’s structuring will favour the progress in the development. Thus in 2015-2016 Ukraine to become one of the product's export leader.
-Which are the primary targets for the successful work of milling industry?
First of all, it is the financing improvement, the absence of the profitability’ regulations in the industry, the creation of additional opportunities for grain by-products exports. The Association of millers of Ukraine adopted a program on the flour exports and it will be presented in the Government and is able to become national. The flour production appeals the development of bakery and paste industry. Thus, the flour industry development is the first and the most important step in the development of processing industry in Ukraine.
Interviewed by Eugene Severina
