Poland and Ukraine to retain trade in oilseeds and by-products

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APK-Inform

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Traditionally, Poland and Ukraine are close trade partners. Trade relations cover oilseed and products market as well. However, the market develops constantly, competition grows, as well as requirements to goods and services supplied.

How did the market function in 2019/20 MY, and what did COVID-19 pandemic changed? Why do Polish processing companies prefer Argentinian soybean meal and what Ukrainian products could radically change the situation?

APK-Inform discussed all these question and many others with Vitaliy Postrigash, the head of procurement department of WIPASZ S.A., leading Polish producer of mix-feed and chicken meat.

 

In 2019, Poland was the largest importers of Ukrainian soybean oil and took the second place in the list of the main importers of soybean cake/meal and rapeseed oil, as well as the fourth and fifth places among leading buyers of sunflower cake/meal and rapeseed cake/meal. How do you think, was it the historically based preferences or price factor?

Prices of oilseed crops and vegetable oils increased in 2019/20 MY due to global decline of oilseed production at a time of higher consumption. Particularly, prices of Ukrainian soybean oil were more competitive for Polish buyers than those in European ports in 2019. Moreover, the demand for Ukrainian rapeseed was significantly higher due to poor crop in the EU.

 

— Last year there is an active discussion of the law on cancellation of the VAT refund for the exports of soybeans. Does Poland discuss this issue? In your opinion, how will this affect trade relations between countries?

This issue was discussed a number of times by the parliament, and the Ministry of Agriculture and Rural Development is aware about farmers concerns.

The problem is based on unfavorable prices on the domestic soybean market thus Polish farmers have to sell their products at low prices due to high supply of Ukrainian soybean. Upon that we understand perfectly well that low soybean price means low soybean profitability for Polish farmers.

Currently, Ukraine is the largest supplier of soybean to Poland. For instance, Poland imported about 47 thsd tonnes of soybean from Ukraine in 2016, the volume reached 107 thsd tonnes in 2017, 87 thsd tonnes in 2018, and just 61 thsd tonnes in 2019.

Poland has just 20 thsd ha for soybean cultivation. A dynamic of this oilseed production shows upward trend. However, low process for domestic soybean could break the trend.

Nevertheless, for today, I don’t think that Poland is going to make any dramatic changes in trade relations with Ukraine, and the reason is simple — so far there are no soybean volumes needed for production in the country.

 

— Today Wipasz S.A. is the integrated production systems owing mix-feed plants and storage capacities. The company buys the raw materials mainly from Polish farmers while the processed products are imported, right?

Yes, Wipasz S.A., that turned 25 in 2019, is the largest Polish producer of mix-feeds and the leading producer of fresh chicken meat.

Wipasz S.A. produces and sells more than 1 mln tonnes of mix-feed for poultry, hog and cattle sectors annually as well as produces 65 tonnes of chicken meat daily including 250 tonnes of chicken fillet. Our company is developing further increasing its capacities every year. Thus, we increase procurement of grains and oilseeds on both domestic and external market every year.

The highest quality raw materials are used for production of world-class mix-feed, concentrated feedstuff and mineral feed providing proper and natural animal development.

 

— What is the share of Ukrainian agricultural products in the import structure of your company?

First of all, it is sunflower products (oil, cake, meal), we import 90% of total volume from Ukraine. Moreover, we import Ukrainian corn (20-25%), yellow peas (90%) and sugar-beet pulp pellets (50%).

 

— As far as I know, you import sunflower meal from Ukraine and soybean meal from Argentina for mix-feed production. What is the reason?

That is true, we import sunflower meal from Ukraine, that is cheap and good source of vegetable protein. Sunflower meal protein has good amino acid content, contains more lysin and methionine compared to the other meals. It could be used as feed of many animals, however, the high cellulose content does not let to use it as feed for young pigs.

Almost all soybean meal on the Polish market is imported, mainly from South and North America. Soybean meal extract is a high-protein feed valued for its favorable amino acid content and high level of protein accessibility. That is why it is the most popular source of protein for poultry, swine and cattle mix-feed.

At the same time, one of the negative factors for farmers is frequent price fluctuation of raw materials that forces us to look for substitutions like other meals or legume crops. Despite that, it is impossible to fully replace soybean meal with other components.

Our company had several purchase contracts for Ukrainian soybean meal. However, we faced some difficulties. In particular, there were problems with quality and signing of forward contracts with price-fixing for a few months. Unfortunately, Ukrainian exporters do not offer their products for 3-5 months forward while dealing with exporters from South and North America we can fix the price of soybean meal for half year forward.

 

— You also tried to use Ukrainian high-protein sunflower meal, right? What product do you prefer taking to account prices, quality and logistical expenses?

We imported the first lot of Ukrainian high-protein sunflower meal in 2019. Technologists of Wipasz S.A. were really interested in this product as the min 46% content of protein is its main advantage.

Technology of maximum husk removal lets to raise protein content in final product from regular 36% to 46%.

Heat-treatment method we used to apply caused 46% protein folding. The new method lets us to preserve up to 90% of protein.

We keep in constant touch with Ukrainian producers, negotiate and discuss prices of further supplies of high-protein sunflower meal. I suppose that the Ukrainian high-protein sunflower meal will replace at least 20-30% of soybean meal from South and North America in our formula.

 

— How do you assess the level of supply of oilseed products and competition on the global market this season compared to the previous one?

Generally, it was good. There were no delivery interruptions both previous and current seasons while the prices were more favorable for Polish buyers.

 

— Mix-feed formula is rather flexible and significantly depends on prices. What product do you prefer taking to account prices of the current season?

Soybean meal is an important raw material for animal feed as a large source of protein. Additionally, it is valuable source of vegetable protein for human diet.

Sunflower meal is a great way for protein supplement in mix-feed. It could be successfully used for feeding of domestic fowl, mainly ducks and geese.

Corn has a high fat as well as starch and sugar content and, at the same time, low cellulose content, thus it is the most valuable in regards to energy. Corn price is lower compared to the other feed grains that also promote corn use for hog feed. Moreover, corn grain has higher homogeneity and is as nutrient rich as other grains.

These are the most important products for mix-feed formula and their prices change every day on both global and local markets. Our technologists correlate the share of each product corresponding to the certain price movement.

 

— Currently there are certain logistical difficulties due to quarantine restrictions caused by COVID-19 pandemic that could be critical for transportation of meals that are perishable. How did it affect your company (purchasing structure, prices of products, logistical expenses)?

Surely, there are problems with transportation by trucks due to the pandemic, however, railway logistics functions as usual. The railcars with meal arrive to Polish terminals.

In case of close of railway connection between Ukraine and Poland we could use our stocks for 3 months and supply our plants with needed volumes of raw materials.

Our elevators and storage capacities let us to buy ahead and store the raw materials. As of today, we can store 600 thsd tonnes of the raw materials.

 

— In concluding, I thank you for an informative talk and ask you to share your expectations regarding the further development of the situation and say a few words about the company's plans.

Wipasz is growing every year. We launched a new poultry plant in Międzyrzec Podlaski in 2019, we opened one more office in Warsaw that is practical for our local and international partners.

We plan to launch the 6th mix-feed plant in 2021, it will be the 2nd NON GMO plant in WIPASZ S.A. structure.

I take this opportunity to express gratitude to our Ukrainian friends, business partners for our joint work on behalf of WIPASZ S.A. We look forward to further long-term cooperation.

As well as the most sincere gratitude to APK-Inform for such excellent international agricultural conferences!

 

 

Interviewed by Anna Tanskaya, APK-Inform Agency

 

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