Each year Ukrainian agriproducers increase their interest for the growing of soybeans. Agrarians acquire modern production technics, new types of soy seeds, which makes it possible to grow quality and high crop and as consequence to open new markets. However, does it that simple on the Ukrainian soybean market? This question was the main topic of our interview with the founder of GC UA GROUP and the owner of TH Soevyi Vik, Alexander Ushakov.
- TH Soevyi Vik has been successfully developing the soybean market in Ukraine for many years. Would You tell us how the soybean market has been changing in Ukraine for this time?
In Ukraine, the market of soybeans started as the several thousand hectares of land. And to date it is already 2 mln ha. The market development was quite dynamic. Moreover, despite the unfortunate 2017 for the soybean crop, the market still continues growing. Of course, in the current year there was the decline of the seeds sale for several reasons. The main of which was the weather issue last year that made farmers hesitate over the future soybean planting plans.
I believe that the soybean crop reduction this year would not be modest, despite the fact that many experts forecast the decrease of the planting areas for the oilseed (due to the weather conditions, and the insufficient legislative framework that partially is holding up the market development). In particular, according to common rule of the crop rotation, 20-25% of the land should be planted by the oilseeds. Thus, the average planted areas under soybeans should total 2.5-3 mln ha. And, I am concerned that we would be able to reach this number before long.
- How does the climate changes in Ukraine influence at the regional peculiarities for the soybean growing process?
Every year, we face the unstable weather conditions that at some point negatively affect the soybean crop. Here it is highly important to understand that it is necessary to distribute the possible risks among the different types of crops and selections in terms of the unstable weather conditions that differently emerge in a variety of natural climatic zones in Ukraine. In general, I would point out that according to our experts estimations the weather conditions in Ukraine are favourable for the soybean growing. But much depends on agrarians – i.e. the varieties of soybeans and the technologies of growing.
- What varieties of soybean make it possible to reach the high yield?
ANNUSHKA is the calling card of TH Soevyi Vik – the soybean variety, which was the cutting edge at the start of the soybean growing process in Ukraine. Back then this variety gave the opportunity to grow the crop not only at the center parts of Ukraine but also on the west and east regions. This variety has a short vegetation period – only 80 days. But, this factor actually allows the farmers to grow ANNUSHKA in every climatic zone of Ukraine. Moreover, today the variety BILYAVKA is very popular which has a vegetation period of 75 days. Such a vegetation duration is productive enough and the yield reached 4 t/ha on the west regions of Ukraine. Despite the fact that these varieties are early, hey can compete with middle and late ones, because they face less risks. In particular, dealing with the late varieties it is necessary to carry out the desiccation, and finish drying that brings extra cost.
Moreover, we have developed the technology of the postharvest planting following the winter barley or rapeseed. Today, many agrarians plant soybeans in order to harvest two crops for the season. For this reason, they use ANNUSHKA and BILYAVKA as they provide good yield – up to 2-2.5 t/ha for the second crop when the only costs are for the seeds and planting. It is possible not only to use the land twice a season, but to additionally supplement the land by the nitrogen for the next crop.
In general, each form the ten selection varieties of TH Soevyi Vik comply with the requirements of the different climatic zones of Ukraine – for the west there are Mavka and Anastasia, for the center – there are Alians, Sandra, Atlanta, Sribna Ruta.
- How has the cost of soybean production changed for the recent 3-5 years in Ukraine (including seeds, CPP, fertilizers)?
The prices have been increasing constantly. Each next planting campaign was more expensive than the previous. The reason for this can be both domestic and external. The price formation of the seeds, bioproducts and CPP on the domestic market highly depends on the fluctuations on the foreign exchange market. Moreover, the prices of the POL and energy resources constantly rise. The production of the fertilizers is energy demanding that is why it is expensive. The foreign-policy activity and the low-making processes affect as well. Thus, all these made certain corrections both up and down for the price formation of the some agriproducts in Ukraine.
- How big is the market of soybeans in Ukraine? What is the profitability of the production?
In general, I would point out that only 1% of the Ukrainian lands meet the requirements of the organic growing. In particular, in Ukraine there is 300 thsd ha that have the status of being organic and 90 thsd ha are in the transition period.
If we speak in the context of soybeans, in the EU there is a deficit of this oilseed, which in turn opens good opportunities for the Ukrainian producers. The deficit of the organic soybean amounts to 50-100 thsd tonnes and the European producers are not able to cover it. As for today the prices of the European organic soy is at the level of $800 per ton. Thus, the interest from Ukrainian agrarians continue rising. However, it is necessary to understand that it is impossible to start growing the organic soybeans on the spot as the agrarian must go through the transition period and different types of certifications and so on. These take time. On the other hand, despite the obstacles Ukrainian farmers understand that the organic soybeans are more profitable.
- By different estimations, in Ukraine the share of GM free soybeans totals 20-40%. What are Your estimations?
If this was real, it would be a success. But in fact the share of GM soybeans in Ukraine still preserve at the level of 70-80%. Nevertheless, it (GM soy share) decreases from year to year. The reason for this is the premium prices for the non-GM soybeans and its by-products. Of course, the use of GM soybean seeds makes the growing cheaper. There is the non-selective herbicide, which can be used to cultivate the land just 1-2 times. However, you should remember that in Ukraine the use of GM seeds is prohibited. In theory, there should not be any GM seeds in our country. Thus, the farmers plant the cash grain. Usually, when you plant the cash grain you have no inspections or quality control. As the result, there are many products that do not meet the seed requirements. Subsequently we usually receive less crop.
- What is the share of TH Soevyi Vik seeds on the market? Do You have to compete with the domestic or foreign producers? What are the advantages of Your company?
The seeds of our company are planted throughout nearly 20% of the land in Ukraine. We compete usually with the foreign companies the amount of which is increasing in Ukraine. However, I believe the competition to be useful for every participant of the soybean market. To compete is to struggle, to develop. The main thing is to move forward and continue to develop the new and the most favourable conditions for our clients. This allows to have a good reputation and to receive high demand for our goods.
- What is the share of counterfeit seeds on the Ukrainian market? How can it affect the market development?
Unfortunately, the practice of the uncontrolled crop rotation still exists in Ukraine, when the same seeds are used for five, seven and even ten years. Thus, this seeds material has the high risk of diseases and many varietal mixture. This is not the seeds but the commercial soy. That is why, again, the production is low. But, we, as the producers, have too much to explain the reasons of the low yield – 1.5 t/ha instead of 3-4 t/ha.
- Does Your company work with any Ukrainian/foreign institution or companies?
By putting yourself in each Ukrainian agriproducer’ shoes, we came to understanding that our client needs the complex of the products and services from the approved companies. Several years ago we started to increase our portfolio and we continue to do it until now. We choose the extremely knowledgeable specialists in several areas. We work with different companies – with Biona and BTU-Centre in terms of bio products. If we speak about seeds this is the soybean selection of Soeviy Vik, corn of Hungarian selection Woodstock, wheat and sunflower of Austrian selection Probstdorfer Saatzucht. We also cooperate with some companies in terms of CPP production. Moreover, we have launched such services as the agronomic laboratory, satellite and aero-monitoring to conduct the effective control over the crop condition for our agrarians. The innovations are our priority, that allows to unleash the potential of the yield of the main crops grown in Ukraine.
- Does TH Soevyi Vik export the products?
There are some restrictions in terms of markets, because of the domestic legitimacy gap. To be precise, Ukraine has not adopted the European scheme of the seeds certification yet (developed by the OECD) and still cannot export the seeds to Europe. This question has not been resolved. As for today, many foreign companies bring the seeds to Ukraine, plant them and work at our market. Here, the inequity is that our seeds producers are blocked inside and cannot go on the global market.
- In Your opinion, how can the Ukrainian agrarians change their interest in soybean growing, due to the “soy amendments”? How can the soy areas change in the future season, and then, how would it change the demand of the Ukrainians on soybean seeds?
By the end of May the issue of “soy amendments” has been partially solved. Verkhovna Rada has passed a bill №7403-d under which, the VAT-refund has been renewed. In particular, this bill provides the VAT-refund for the agrarians who export their own grown soybeans and seeds. However, not all the producers can export the goods (small and medium). The explanatory note to the draft states that the agrarian companies-producers exporting the self-grown oilseeds will have the right to obtain the tax refunding from the budget.
At the same time, it should be noted, that such perturbations have already left the negative imprint on the market that also faced some price reduction due to the not very fortunate season. Nevertheless, I repeat we are aiming at reaching 2.5-3 mln ha of the soybean acreages in Ukraine. For now, I do not see any reasons not to do it.
Interviewed by Julia Shevchenko, APK-Inform Agency
