To say 2013/14 grain season was especial for Ukraine means to say nothing at all. The grains record crop despite the unfavorable weather conditions, exports high potential and the export contract execution despite their possible failure due to the political crisis in Ukraine, expanding of Ukrainian grain supplies geography on the global market, jumping on the 2 position in the list of the global exporters as opposed to the 7th last year.. This is rather short characteristics of the major positive moments from the “life” of the Ukrainian grain market in the passed season. Unfortunately, the negative was brought by the economic and political crisis. The second half of 2013/14 season was passed not just under the new, but unpredictable conditions for all of us. Grain business had to consider new factor – political one, which was as strong as the weather one.
At the same time the organizers of the 13th International Conference “Grain Forum-2014” which took place on June 16-18, 2014 in the city called to date “Grain gates” or even “Grain capital” of Ukraine – Odessa. The place of the even holding was Bristol Hotel.
The way to the event was rather thorny, but as it says “through difficulties to the stars..”. Number 13 was the lucky one for the event. Forum was held on the rather high and official level.
Grain Forum-2014 had the especial meaning for the Ukrainian grain market due to the current year events and their further impact on the market development. The even was held on the edge of two grain seasons, in the period of changes. The Conference program was formed considering the most actual issues of the market and special aspects of the passing season, upcoming 2014/15 MY and the current situation in Ukraine. The key subjects of Grain Forum-2014 traditionally were the tendencies of the global grain market development tendencies in 2014/15 MY, the challenges for the Ukrainian grain market in the new season, grain quality issues, the legislative provision of the grain market, its infrastructure and functioning under the new realities. Organizers had also paid attention to the new conditions of the Crimean grain market functioning.
Besides within the conference there were held two round-table discussions: Summing up of the grain exports in 2013/14 MY. 2014/15 season prospects”, held under the support of the Ukrainian Grain Association and “Improvement of the agribusiness under the conditions of the heightened risk” under the support of Kiev-Mohyla Business School (KMBS).
Companies-suppliers of machinery for grain industry had offered the modern technologies and newest inventions in the stated sphere.
Note, the event was held under the support of the Ministry of Agrarian Policy and Food of Ukraine, Ukrainian Grain Association, Agroinvest USAID Project, Ukrainian Agrarian Confederation, Agrarian Exchange, KMBS.
The sponsorship support was provided by Buhler AG (the general sponsor), Global Ocean Link, LLC First Logistic Company, Grain Capital.
There were nearly 200 representative of the grain business from Ukraine, EU countries, USA, Turkey: agricultural producers, agroholdings, traders, logistic companies and other.
The active participation was also by the representatives of the official authorities which means they are ready to have an active dialogue with business in order to improve the grain industry work efficiency.
Thus, the Minister of Agrarian Policy and Food of Ukraine, Ihor Shvaika, on June 17, 2014 being in Odessa with working visit, participated in the work of International Conference “Grain Forum-2014: new markets, challenges and opportunities”. Minister opened work of the second session of event, devoted to the Ukrainian grain and by-products market. Within the delegation there was Nikolay Poyedinok the Head of the State Agriculture Inspection of Ukraine, Vadim Chaykovsky, the Deputy Director of the he Quarantine Service of Ukraine and Vitaly Sabluk, the Director of the Department of Economic Development and Agrarian Markets.
During the Conference, I.Shvaika discussed with the participants of the grain market the conception on the changing of the industry management format and next grain year development prospects.
On the other hand, there were a lot of questions for the Minister. The first one was about the prospective of the free land market in Ukraine, and the answer was the following. Thus, the and market as the free process of buying-selling by anyone, is not the best choice as of me. There is the clear position on land free trade ban. Market exists and is able to exist rather successfully on the conditions of lease relations.
Besides, the market participants were interested in issues on the preferential taxation, VAT-refund for grain exports, Ukrainian grain exports to China, grain destiny grown by the Ukrainian agricultural enterprises on the Crimean territory, logistic problems solving, issues of the agrarians' state support.
The discussion on the VAT-refund for grain exports was rather active, however I.Shvaika reminded the stated issue in under the authorities of the Ministry of Finance of Ukraine, being ready to consider the issue on the VAT-refund process improvement and provide the offers for consideration to the Ministry of Finance of Ukraine. The President of the Ukrainian Grain Association Vladimir Klimenko stated, the procedure of VAT-refund for grain exporters is to be renew on the other than previous experience. If there is the efficient fund in the Government for the state purpose, there should be the article for grain exports VAT-refund. Meanwhile in the Tax Code there should be the Law on the terms of VAT-refund for exporter within 2 months. Besides, V.Klimenko underlined that in the recent years in Ukraine there have been destroyed thousand exporters, meanwhile others did not become the ones.
The Ministry of Agriculture and Food of Ukraine delegation participation in the Conference was greeted by all the participants of the event. The chance to have an open dialogue with the representatives of authorities, to share own hopes and pain is possible only face to face, and it was realized within the Grain Forum. We hope it will be heard and there will be the results of it.
Of course there were honorable guests in the first day of the Conference. Thus, Rajiv Shah, the Head of U.S. Agency for International Development (USAID) was the honorable special guest of the Grain Forum-2014. In his report he provided high estimation for the agrarian prospects and possibilities in Ukraine, by noting the favorable geographical position, favorable climatic conditions and the best black earth. These advantages influence on grain high quality. R.Shah advised Ukrainian agrarians to increase planted areas and yield of wheat, rye, barley, corn. It is necessary to export grains and by-products not only to Europe, Asia and Northern Africa, but to the countries counting billion population as China, India and also Latin America and Africa countries, which citizens face food provision shortage.
Besides within the first day of the Forum there was held Round-table discussion “Investments and trade in agriculture” participated by the Minister of Agrarian Policy and Food of Ukraine I.Shvaika, the Head of USAID R.Shah, the representatives of the Ukrainian industrial Associations and companies, working in agricultural sector of the country. Within discussion there were defined major issues of agrarian policy, which solving to improve the industry growth and increase investments in the agroindustrial sector of Ukraine.
The second day of the Conference was visited by the delegation of Ukrzaliznytsia and railway of Ukraine headed by the General Director of UZ Vitaly Zhurakovsky, which actively participated in the Round-table discussion “Summing up of the grain exports in 2013/14 MY. 2014/15 season prospects”, moderated by the President of the Ukrainian Grain Association Vladimir Klimenko. One of the key discussed issues was the new crop grain transportation organization.
Of course the most key issues of any of conferences is the forecast of the international experts and Ukrainian analysts of the upcoming season prospects and the factors estimation, forming the market in the new season.
According to the data of the economist of FAO, Nataly Merkusheva, the major factor forming the global grain market in the new season is the geopolitical situation, the conflict escalation in the Black Sea region and in Iraq in particular, weather conditions impacting on the growth and harvesting of crop in the Northern Hemisphere and planting in the Southern one (drought in US in the beginning of 2014, rains in Argentina, rains absence in the Central and Volga regions of Russia (May-June), El Nino – 2014, and also market conjuncture, currency exchange, etc.
Thus, the political situation in Iraq and Black Sea region to cause global demand decrease for grains, and also will impact the oil prices, which directly connected to the grain prices formation.
Meanwhile FAO forecasts 2014/15 season wheat production at the level of 702.7 mln tonnes, down 1.8% of the last year rate. Meanwhile wheat trade to reach 149 mln tonnes. Thus Asian countries to decrease the stated rate and Europe – to increase.
As for wheat global prices development in 2014, in the period of January-March they faced a significant increase, by slowing down in May, and facing a decrease in the recent months. Thus, unstable situation in Ukraine and US drought caused the prices rise, but after Ukraine confirming itself as the stable exporter the stated rate fall down.
Maize prices had faced the same trend, but with the less change, and in the recent two months have decrease. Meanwhile in Russia maize prices face more volatility and are higher compared to the Ukrainian ones.
Meanwhile Henri Barnabot, the agrarian counselor of the Ukrainian authorities, the Embassy of France in Ukraine, stated in 2014 EU-countries to harvest 300 mln tonnes of grains (270 mln tonnes in 2013).
Besides, despite the grain production increase, EU to remain large-scale netto-exporter of the products.
According to Andrey Kupchenko, the analyst of APK-Inform Agency, Ukraine in 2014 to harvest 59.6 mln tonnes of grains, down 9.7% of the last year record rate (63.1 mln tonnes) due to yield decrease, caused by insufficient financing of agrarian production. In particular, average yield of wheat in Ukraine in 2014 to decrease by 2.3% compared to the last year rate – to 3.31 (3.39) t/ha, barley – by 4.4% to 2.24 (2.34) t/ha, corn by 4.7% - to 6.14 (6.41) t/ha.
At the same time the Ukrainian grain export potential to reach 30.2 mln tonnes, down 6.3% as opposed to the last year rate (32.3 mln tonnes).
The second day of the conference was devoted to the key issues of infrastructure of grain market and its functioning under the new realities. The partner was “Interlegal” Law firm. The material is rather important so we will devote the special issues to it.
APK-Inform as the organizer of the International Conferences to watch for the market events, present them on our events and to contribute grain business development. In order to finish would like to thank all the participants, sponsors, speakers, and also industrial mass-media for the support provision to the thirteenth International Conference "Grain Forum - 2014: new markets, challenges and opportunities", and also wish good weather, crops and favorable conditions for development.
The Head of the Organization Committee