Flour milling and groats segments occupy significant positions in the Ukrainian agro-industrial complex. However, there are many barriers for the stable development of the reporting segments and expanding of the sales markets, primarily at the expense of increasing of the export supplies. At the same time, the reporting market segments are the mirror reflections of all difficult economic and political processes developing in the country to date. Experts of APK-Inform Agency realized monitoring of the domestic and world markets of grain raw materials and its by-products, and came to conclusion that it is necessary to found the certain platform, which would allow to all representatives of the strategically important market segment for Ukraine, not only to get fruitful cooperation, discuss the modernization issues, increase the exports, but also to jointly look for solutions of the urgent problems. The first international conference "Flour & Groats: raw materials, market, technologies", which was held in Kiev on September 24-25, 2015, eventually became the reporting platform, which covered the most pressing issues of the functioning and development for the markets of finished products.
APK-Inform Agency and the scientific and practical magazine "Grain storage and processing" were the organizers of the conference event. Representative office of the Swiss company Bühler AG in Ukraine became the General sponsor of the conference. Also, the following leading companies provided its sponsorship support: Olis LLC, Kastenmüller GmbH, UĞUR MAKINA, and the trademarks Healthy Line (“Barvenkovo"), Pokrovchanka (State Enterprise Novopokrovka Factory of Bakery Products).
More than 150 market participants from 11 countries gathered together to discuss all significant problems of the reporting market, including representatives of the authorities, flour-milling, export-oriented and logistics companies, producers of technical equipment, agrarians, etc.
Full house of the conference-hall, and lively discussions after presentations of the speakers, confirmed the urgent character of selected topics for conference reports.
The conference participants showed high interest in the speech of the Deputy Minister of Agrarian Policy and Food of Ukraine, Volodymyr Lapa. His speech opened up the conference. The official informed the delegates about major trends on the grain market of Ukraine. Also, he focused on some crucial issues of the grain processing industry. First of all, flour millers were interested in the issue of qualitative indices of new crop wheat. V.Lapa said that according to estimations of the Ministry of Agrarian Policy, the share of 1-…5-grade milling wheat in the grain harvest-2015 in Ukraine varied within 50-53%. The speaker noted that to date, the Ministry is considering the issue of simplifying of the estimation processes of wheat qualitative indices. The Ministry proposed to establish only two grades of grain assessment - milling and feed wheat, as it is enacted in France.
The conference participants had rather many questions to representative of the relevant Ministry, including the problem of regulating the profitability of production at grain processing enterprises, and stepping up of work of the Antimonopoly Committee of Ukraine against the companies dealing with production and processing of niche crops, including buckwheat. As for regulating the profitability of grain processing enterprises, V.Lapa said that the reporting issue is under approval in several Ministries, and to date the officials are discussing the possible cancellation of the mandatory declaration of prices by grain processors. At the same time, some limitations of profitability and price premium for socially important products, including bread, will continue working on the market.
Another representative of the Ministry – Head of the food processing division of the food department, Valentina Zayats supplemented the previous speech of the Deputy Minister. The speaker informed about the main legislative initiatives of the Ministry, and reminded that on September 20, the Law of Ukraine "On Basic Principles and Requirements for Safety and Quality of Food Products" entered into force, which is the maximally adapted to the European Union legislation. Also, the department continues actively working out the issue of raising additional financial resources for development of the grain processing industry. Also, V.Zayats informed about the technical issues of functioning of grain processing enterprises. In particular, the department initiated revision of the current standards of energy consumption, which are rather outdated and overpriced in terms of modern technical provision.
The presentations of APK-Inform experts and representatives of grain processing companies covered the major market trends in the segments of raw materials and finished products. Thus, the presentation of the grain market analyst at APK-Inform Agency, Andrew Kupchenko covered the general estimation of the situation development in the key market segments of raw materials for production of flour and groats in Ukraine. The expert estimated distribution of wheat and major cereal crops in Ukraine in 2015/16 MY, and highlighted the key issues of the market. So, A.Kupchenko estimated the volumes of flour milling quality wheat in the structure of the harvest-2015 at only 5 mln tonnes, as opposed to 6 mln tonnes last season, which also became quite low index in terms of the expected food consumption of the grain at 3.8 mln tonnes, and high demand of importers for high-quality wheat. The analyst estimated the general ratio of milling (1-…3-grades) and feed wheat production in the current season at 40: 60%, respectively. The presentation of A.Kupchenko stressed another extremely negative trend of the market - significant reduction of the production volumes of rye and buckwheat in Ukraine. In the current season, the domestic consumption of the reporting grains exceeds the production volumes, and only the carry-over stocks assist to cover the consumption requirements. Thus, in 2015 the production of rye will reach 356 thsd tonnes with the domestic consumption at 450 thsd tonnes. The harvest of buckwheat is estimated at 139 thsd tonnes with the volume of domestic consumption at 174 thsd tonnes, including food consumption - at 150 thsd tonnes. According to the expert, the harvest situation has serious impact at prices, and requires government intervention to stimulate the further growth of production volumes.
The Director of the Association "Millers of Ukraine”, Head of Business Projects Division of APK-Inform Agency, Rodion Rybchinskiy reported on the main trends in the market segment of grain by-products. The expert called reduction of the Ukrainian population, decreasing of its purchasing power, and the deficit of high-quality raw materials as the main trends in the grain processing segment. In particular, during 10 years only the flour production in Ukraine decreased by almost 20%, and in 2014 it reached the minimum level of 2.3 mln tonnes. At the same time, during 10 recent years reduction the bakery production decreased by 40%, and in 2014 it reached 1.4 mln tonnes only. Among the positive trends, R.Rybchinskiy noted the increased export volumes of flour from Ukraine, which in 2014/15 MY reached the record level of 257.5 thsd tonnes, and wheat bran - 514.7 thsd tonnes in the same period. The expert called strengthening of the Ukraine's position on the Asian market as the main driver for growing of flour exports. According to the speaker, further expansion of the export markets is the main factor determining the market segment development. It was noted that the government almost does not support the market sector.
Also, the General Director at Public Enterprise BilotserkivKhliboProduct, Ivan Shilov stressed the lack of state support as one of the key problems of the flour milling industry. In particular, to date the officials almost do not discuss any legislation acts governing the work of grain processing enterprises, with the market participants. Also, once again the expert stressed the excessive activity of the Antimonopoly Committee and other regulatory authorities, which complicates the work of the industry. And finally, I.Shilov noted the absence of any real programs for development of grain processing industry in Ukraine.
The Adviser to the chairman of Agrarian Fund PJSC, Sergei Sakirkin reported on the features of flour and groats exports from Ukraine. The expert noted the positive dynamics of Ukrainian flour exports, mainly due to expansion of the geography of its foreign deliveries. In 2014/15 MY the Middle East countries covered 26.3% of the general exports of Ukrainian flour, Asian countries - 41%, South-East Asia - 10.7%, and the CIS countries - 15.3%, said S.Sakirkin. Thus, according to official statistics, China (23.7%), Israel (16.1%) and Korea (14.4%) were the main buyers of Ukrainian flour, but in fact China re-exports its share of Ukrainian flour to the Democratic People's Republic of Korea. Therefore, if in 2014/15 MY China takes the leading position in the rating of Ukrainian flour importers, but in the rating of consumers North Korea reached the level of 38.1%. At the same time, the possibility of further increasing (or at least keeping on the same level) of the foreign supply volumes of Ukrainian flour to North Korea remains doubtful. There are actually two countries - Russia and China - which have special trade relations with North Korea. And if the country decides to focus on relations with Russia, Ukraine would actually lose its main market of flour, said the expert. According to the expert, previously Ukraine faced the same situation with the market of Georgia. Thus, in 2013/14 MY Ukraine exported 8.5 thsd tonnes of flour to Georgia (or 3.7% of the general exports), but in 2014/15 MY the exports totaled 2.7 thsd tonnes only (1% of the exports). Generally, the prospects for exports of Ukrainian flour are quite unstable, summed up the expert.
The event included a lot of interesting reports, covering the most urgent problems for grain producers, processors and traders, which also informed the participants with the latest developments in the field of logistics and maintenance support of flour and groats production.
We are confident that in the future the conference "Flour & Groats: raw materials, market, technologies" will become the traditional venue for cooperation between all segments of the industry, and contribute to developing of constructive dialogue between business representatives and the authorities for successful execution of all tasks, and development of the grain processing industry of Ukrainian agriculture.
APK-Inform Agency expresses its grateful acknowledgment to the partners and sponsors of the conference for their help in organizing and holding the event, as well as to all participants for their keen interest.
- Alexandrina Ovdienko, Head of the conference organizing committee