Success on the foreign market is the reputation issue – Grainrus
In the current season, Russia is forecasted to keep the tendency of boosting the export volumes of alternate crops due to increased planted areas in terms of its high profitability of production. Therefore, new players are appearing in the market. However, in the conditions of high competition it is necessary not only to conquest but also to maintain the positions.
Despite the current situation, the Grainrus company remains the leading exporter of pulses and brewing barley for several recent years. Thus, the Head of procurement department at Grainrus LLC, Sergei Pluzhnikov reported about the activity of the company, the work strategy on the domestic market, and global platforms in an interview to APK-Inform Agency.
– In August 2017, the Grainrus company celebrated it’s 20 anniversary. Sergei Sergeyevich, would You tell us about the starting of the company’s activity, and the results You have achieved for these years?
The history of the company began with the supplies of imported malt. In 1997, the brewing industry began to develop promptly, and the great demand on qualitative raw materials as well as stable deliveries were observed. Volumes of malt increased, new warehouses were required therefore the company acquired the grain Volga terminal in the Ivanovo region for an opportunity to operate with ship batches and to lower the logistic expenses. After that, there was an awareness, that it is also necessary to be engaged in production of own malt and to develop the agricultural project. Today our production cluster is LLC Russian Barley that has more than 40 thsd ha of lands, the modern elevator with the capacity of 100 thsd tonnes, high level of energy services and a solid team of employees. Our "Kursk Malt" is a modern processing plant with annual volume of crushing of more than 100 thsd tonnes. In 2015, we set two frying drums on malt-house in Kursk. That is a modern equipment produced in the Czech Republic.
This investment has allowed to close almost completely one more niche for the foreign producers of malt – a niche of special malts. The Managing director of LLC Grainrus, Vladislav Chernov noted: "I think, there is no Russian brewer, the brewer from the neighboring countries who don't know about our production. The brends of Grainrus and Kursk Malt brands are symbols of the best quality, service and decency today".
Our last project is the water terminal bought in the autumn 2016 in the Samara region which is our base and the most important point in the Volga region especially as the seed plant on premium cleaning and calibration of leguminous seeds is located there.
- What factors, in Your opinion, did help You to achieve these results?
Success in business, according to us, is the consequence of such qualities as persistence, persistence, flexibility and creative approach. The company is the team of adherents first of all. It is impossible not to love what are you doing. One more factor of the success is the ability to study and develop constantly. The world is too dynamic, therefore it is necessary to open incessantly the new trends, the new markets and new directions.
- Foreign economic activity is one of the most priority directions. What leguminous crops do You export, and who are the main buyers?
Since 2014, Grainrus (the first year of presence in the Samara region) has been entered in TOP-10 exporters of chick-peas from Russia. We are concentrated on alternate crops, such as chickpeas, peas and lentils in the Volga Federal District. Consumption of these crops within the country is much less, than production. At the same time, beans is a traditional and irreplaceable product in a daily diet for the Asian and Middle Eastern countries. You shouldn't forget that most of the population in India, Pakistan, Myanmar are traditional vegetarians. Peas, chickpeas, haricot are an important and sometimes the only source of a protein in a daily diet of the population in developing countries. Therefore, the directions of deliveries are vectored by the geography of beans consumption, first of all. Thus, the main buyers of the production are the countries of Asia and the Middle East as well as the countries where there are big Indian and Pakistani diasporas, for example, Great Britain.
– What problems do arise when forming the export batches of the specified crops?
Logistics is the main problem when forming the export batches. Chickpeas and lentils are practically not cultivated in the Black Sea Coast of Russia and the main area of their cultivation are Volgograd, Samara, Saratov and Orenburg. This year we were comprehended by traffic standstill as a result of the record harvest. According to data of railway statistics, Grainrus is the only one company in Russia which shipped chickpeas by the rail in September, and the share of railway delivers in October equivalent to the third of all Russian volume. The other difficulty is the unwillingness or inability of many elevators to work with chickpeas. The reporting crop is specific therefore non-compliance with technology of storage can negatively affect the quality of the shipped goods. However, the acquisition of the terminal in the Samara region has solved this problem.
Shipment from October grain base No. 25 is possible by car, railway or water transport. This is a big competitive advantage. Besides, we have two lines of acceptance and it means that crops aren't crossed. Therefore, we may took both chickpeas and brewing barley at the same time during the most active period of transport drawing and the drivers shouldn’t wait for switching and cleaning of lines.
The problem which was sharply designated this year is the existence of peas seeds practically in all batches of chick-peas. While last year it was a single phenomena, then it is the mass problem in the current one. 1% of peas will turn to 5% in chickpeas this year and the next one it will be non-contractual quality. Insufficient purity of seed material is observed even in those farms which didn't cultivate peas for a long time already. We have solved this problem by start of seed plant and provide only extra-cleaning seeds to our partners. There won’t be such a surprises with our seeds.
- For the last three years, You are in the TOP-10 exporters of chickpeas from Russia. How do You manage to support the positions within such a high competition?
You are right. The competition is extremely high, but if the export statistics being studied constantly, it is possible to notice that there is no more than 10 constant players on the market while the other list of exporters is changed all the time. It is a very complex market, and hardly anyone manage to keep it’s positions for a long time. An indispensable condition of long and fruitful presence in the market is correctly built up relationship with all participants. That implies also the full-time employment with the suppliers by providing them with analytical information which is inaccessible or remote.We are always sharing the information about the current situation in the international markets therefore the farmers working with us make more weighed decisions on sale and the vast majority of suppliers pass into the category of constants.
Being the agricultural producers by itself, we do perfectly know all the expectations and fears of farmers, such as payment to be fast, laboratory to be honest, weights to be reviewed, documents to be processed accurately and in time.
It is no less important to have continuous contact with buyers also. East is a delicate matter, where the great value is attached to ability to share and interact, therefore one batch of sub-standard goods can cross out all future deliveries. We know all our buyers personally, we always maintain contractual obligations and we value our reputation. The policy of the maximum openness is the standard of our work and success in foreign market is always a question of reputation.
- Comment on development of the price situation on the domestic and foreign markets of peas, chickpeas and lentils in the start of the current season? What will be the trends throughout 2017/18 MY?
Analysts have a consensus in opinion that bearish price trend which can break in March will be observed in the first quarter of 2018 as market attention is concentrated on India where the record harvest of beans is possible. The main producing countries have rather high carry-over stocks, therefore if the forecasts for the Indian harvest will realize, then the tendency to decrease will remain. On the other hand, the market price of chickpeas during this time grew by 2-3 times in comparison with the price of 2013, and there were periods when it exceeded it in 4 times! Such a dynamics couldn't be eternal. Thus, when and with what speed the price will be modified down are the main questions for the time being. If this speed will be contrary to the speed of traders, it is possible that we will become witnesses of leaving some companies from the market.
- Well known foreign breweries are the clients of Your company, in spite of the fact that the relation to brewing barley of Russian origin is quite ambiguous. Tell us, please, in detail about the activity of Grainrus as a supplier in the segment of the reporting crop.
The time of the alerted relation to the Russian barley has passed, the quality of our grain isn't worse than foreign analogs, and the grades cultivated and used by brewers today are that only of import selection. Therefore, our barley is the same quality as in Denmark, Germany. The only problem is weather conditions in Russia, which are not such stable as, for example, in Finland, Denmark or France. They are closer to the sea, therefore their climate is more predictable in terms of amount of precipitation and temperature. Our company exports barley to neighboring countries, for example, there was a delivery to Uzbekistan this year where brewers have passed from the Danish barley to Russian one. In it’s turn, last year we sent the malt ship from the Russian barley to Denmark and Vietnam so the vigilance concerning the quality of the Russian barley is no more than remained myths. LLC Grainrus is a permanent participant and the sponsor of many industry shows, both Russian and international therefore we receive very impressive feedback about quality. We introduce and popularize import grades of barley very actively. Thus, our seed plant in Kursk region supplies with seeds our own production and realizes them to contractors.
– What is the development strategy of Your company in the nearest future? Are there any obstacles to realization of Your plans?
A long period of investments is a constant peculiarity of any agricultural business. The peak of prices for the raw materials was three years ago. In this situation the main strategy of the company is to work for decrease of prime cost and improvement the quality of production.
Thus, there are practically no barriers. Perhaps, the main vector of development is the progress without sharp breakthroughs, our strategy is increase of efficiency, but not extensive growth.
Interviewed by Alina Timofeeva, APK-Inform Agency
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