Standard product is not interesting on the export market – Agricom Group
From year to year the Ukrainian market of alternate grain crops and its by-products continues develops, gradually increasing the production volumes and expanding its sales geography at the global platforms. We kindly asked the Executive Director at Agricom Group, Petro Melnik, to tell us about the main features of the reporting market segment and its development prospects, taking into account the cases of his company. Agricom Group is a national leader in the reporting sphere, which specializes in development, production and distribution of food products from grain crops, which agro-industrial group includes both agricultural, processing and trading enterprises.
- Petro Petrovich, for many years the trading mark "Dobrodiya" is represented on the Ukrainian market, and takes rather leading positions in the production of high-quality foodstuffs. What line of products do You produce, to date? What type of products is the most popular among Ukrainians?
To date, in the product portfolio of the trading mark "Dobrodiya" includes more than 30 positions, but flakes from grain crops and various mixes are the main ones: oats, buckwheat, wheat, millet, rye, in various combinations, and with the addition of wheat bran, flaxseed, and other natural components. Also, we produce the lines for healthy food and various types of flour. As for the consumer preferences, and how it affects the sales volumes, oat flakes take the first position among all flake products, so it is the settled product in our culture of consumption.
- Taking into account the growing interest in the exports of alternate crops, and development of the trading direction in business activity of the Group, do You plan to increase the planted areas and expand the list of cultivated crops?
Specialists of Agricom Group constantly keep their eye on the ball of all changes on the market, and if it makes sense, we will change the structure of crops planted areas and start cultivating alternate crops. But in the reporting issue, we should pay a special attention to its price volatility. As for the harvest-2017, we have planned growing white beans on the territory of the Rivne cluster, but now we see that the prices for beans started lowering. Alternate crops always involve a certain risk of instability of the global and domestic prices. For example, previously we cultivated flaxseed, and our planted areas totaled nearly 10% of all such planted areas in Ukraine. A few years ago it was profitable, but to date the cost of one tonne of flaxseed decreased almost twice.
- You plan to launch a new plant for the production of oat flakes in Chernihiv oblast, with the investment volumes at nearly 10 mln USD. Would You tell us more detailed information about the company: what is its design capacity, and the planned production line.
The enterprise is located in Mikhaylo-Kotsyubinskoye village and its name is Avena (in Latin – oats). The production capacities total 1`200 tonnes per month. The products are flakes from grain crops, as well as mixes of cereals and muesli. We will continue producing exceptionally healthy products – the recipes allow adding only natural ingredients in the form of dried fruits, honey, sunflower seeds or flax seed, etc.
From a technical point of view, non-waste production cycle is an important feature of the enterprise. Wastes from raw material cleaning and treatment, in the form of husks and grains of the third category, will be used as energy source, and cover all technological requirements of the enterprise. In other words, Avena will minimize the use of non-renewable energy sources.
- The domestic food consumption in Ukraine can be characterized as relatively stable with the downward dynamics. How does Your group manage to develop and compete in such conditions?
Generally, the food market in Ukraine demonstrates a slight decreasing trend, but if we look at such category as flakes from grain crops and various cereal mixtures, there is observed a strong growth trend. Thus, if in 2016 the market volume totaled nearly 30`513 tonnes per year, then in 2017 (including forecast) – already 32`075 tonnes. Our company formed its development strategy which initially used the reporting potential in alternate crops.
The key factors which allow achieving success from year to year: awareness of our consumer, system investment in R&D, and high-qualitatively constructed communications with the end consumer and retail partners.
- In terms of expansion of the product range, how will develop the market of Your products, including exports? How do You estimate the competitiveness of Ukrainian groats products, flakes, etc. on the foreign market?
The export direction for high value-added products is a key one for us. First of all, we consider the expansion of the existing market in Europe, which is interesting in terms of potential, but at the same time its specifics is very complex. Development of the markets in Asia and Africa will become the next stage.
As for competitiveness of groats on the export markets, then the culture of consumption is the main factor. If the product is not traditional for a specific territory, then one can not expect for high selling volumes at once. Yes, there are some niches, but their share is very insignificant, like raw buckwheat groats, which demand is though stable, but negligible.
Flakes are more accustomed for the Europeans, but it is important to understand that a standard product is not interesting on the export market at all. You have to propose both usefull, and high-quality, and safe, and delicious, and somewhat unique product. Consumers in the developed countries are more demanding.
- In conclusion, would You share the Group's plans for 2018?
There are really many plans. As for crop production, Agricom Group plans to continue developing the information technologies, which will maximize the management control and the quality of products traceability throughout the production chain. As for the crop processing plant Avena, we plan to complete the procedure of receiving of the standard certificate FSSC 22000, and increase the capacities for production of different types of flour.
Interviewed by Anna Tanskaya, APK-Inform Agency
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