GRAIN UKRAINE-2018: key messages of the conference Sept. 26, 2018
The III International Grain Conference GRAIN UKRAINE-2018 was held on September 7-8 in Odessa, Ukraine, and was attended by over 500 participants from 12 countries. The organizing committee managed to gather a star pool of speakers and moderators — 47 representatives of large agrarian businesses operating in Ukraine (Cargill, Kernel, Grain Corp, COFCO Agri Ukraine, AgroGeneration, Agroscope International, Bunge and others), as well as international experts and officials from relevant industry departments. The participants discussed risks and challenges of the current agricultural season, shared experience and established new relationships.
The conference was opened by Maxim Stepanov, Governor of the Odessa region, expressing his support to GRAIN UKRAINE: "I am very glad that this conference is held for the third time in Odessa. Our region deserves to be the place where such powerful players of agrarian business meet."
Founder of GRAIN UKRAINE Andrey Stavnitser, CEO and co-owner of TIS group of terminals, co-owner of MV Cargo, in his speech mentioned that Ukrainian exporters need to popularize the made in Ukraine brand. "Thus, our producers will obtain the margin, not foreign retailers. Export will increase, the inflow of foreign capital as well. The appearance of multinational corporations will raise the level of quality and make the rules of the game more transparent. In the future Ukraine will feed the world not only with bread, but also with meat, dairy products, fruits, and products with high added value," he said.
Mr. Stavnitser also announced that by the end of the year the new grain terminal MV Cargo, the largest investment project of Ukraine for the last four years, will be in full operation at the Yuzhny port.
Special attention in the GRAIN UKRAINE-2018 program was given to the expansion of new markets for the sale of Black Sea grain. According to the Ministry of Agriculture, the grains account for about 30% of all agricultural export and, according to forecasts, the gross harvest will exceed the level of 60 million tons. "We will collect less grain than last year, as we felt short in wheat, but there will be enough corn. So, the expected export will remain at the same level as last year," said Olga Trofimtseva, Deputy Minister of Agrarian Policy and Food for European integration.
As Vladimir Osadchuk, General Director of COFCO Agri Ukraine, noted during his speech, Ukraine this season can increase the export of corn to China. Thus, the country will be able to add another 3 million to the traditionally exported 15-16 million tons of corn, and reach 20 million tons. This season China will also gradually increase the import of meals from Ukraine, Russia and India. This is due to the redistribution of imports because of the trade war with the United States.
However, according to Vasile Varvaroi, general manager of the Danube/Ukraine region at Cargill, Ukraine loses the competition in the Black Sea region due to inefficient logistics. "Today Ukraine is capable of exporting 60 million tons of grain, and last year exports increased 4-fold. At the same time, 80% of grain is transported by railway. And now it lacks efficiency. Because of this, we lose the competition in the Black Sea region. The market needs private locomotives. There are also closed stations, and we need to work with Ukrzaliznytsya over their opening," said Cargill's top manager.
The topic of infrastructure challenges is one of the most discussed in the agricultural sector. Andrey Ryazantsev, director of economics and finance at Ukrzaliznytsia, said at the conference that without optimization of infrastructure it is impossible to solve the transportation problem: "If we don’t increase the rate 3-fold, the throughput will decrease dynamically. This will happen because of the reduced speed of the trains and the insufficient number of locomotives, because they are worn out by 80%. Private locomotives should operate, but before that, it is necessary to establish clear rules: who can transport, how many locomotives they can use, how to correlate these actions with the general system. In addition, we need to develop compensatory mechanism."
The investment climate in the Ukrainian agrarian market was discussed during the special panel by Christian Joerg, Director of the investment fund SALIC UK, Natalia Zhukova, head of the EBRD agribusiness department, Jason Pellmar, IFC regional manager in Belarus, Moldova and Ukraine, and Jean-Jacques Soulacroup, senior corporate banker for the Eastern Neighbouring region, EIB. According to Christian Joerg, despite numerous political challenges, infrastructure problems and lack of necessary land reform, Ukraine remains an important point of attraction for foreign investment.
Special features of the work in perspective regions for Ukraine were discussed during the panel discussion by Oleg Levchenko, General Director of Grain Corp Ukraine LLC, Hazem Saker, senior trader of Promising International Trading Co. DMCC (UAE) and Roman Rusakov, Black Sea trader Olam International. Mr. Saker drew the attention of the audience to the African market, in particular to the Eastern coast of Africa and the countries such as Sudan, Ethiopia, Tanzania, Kenya, Eritrea, whose population will double in the next 20 years. It is through the access to these markets that Ukraine could expand its grain exports.
Another agrarian panel was devoted to operational efficiency. One of its speakers was Evgeniy Osipov, CEO of Kernel, a rare guest even at industry events. For GRAIN UKRAINE, he made an exception and announced that the company intends to grow by 50-100% in the coming years in every direction, and this will largely be due to digitalization. "During our work we have accumulated a large amount of data, with the help of which we are planning now to improve the efficiency of the land bank management through automation. To do this, we launched the Open Agribusiness platform, where we share our results and technologies with other partner companies. We launched a monitoring portal based on the Cropio system. And Already uploaded information about 75 thousand hectares of our land to this system, in turn, our partners showed 200 thousand hectares in the system," — said Evgeniy Osipov.
And Sergei Bulavin, vice president of AgroGeneration, agrees with the importance of introducing innovations to improve operational efficiency. "Recently more and more Ukrainian agribusinesses have expressed their opinion about the decrease in margins and EBITDA per hectare due to the increase of land lease costs, payroll, prices for plant protection products, fertilizers and logistics. But there is a solution. This is the introduction of innovation, constant adaptation and search for efficiency, not only in terms of technologies. The organization of labor, innovations in agri companies’ management, introduction of a clear KPIs system, the Lean approach or the Lean Six Sigma approach, can also positively influence the operational work of the agri companies and keep their overall performance indicator high," the speaker said in his report.
This issue was discussed in detail by the participants of the innovation panel with the support of Agrohub. According to the moderator of the discussion, Kirill Krivolap, partner of Agrohub, digital business transformation, cheapening of technologies and continuous population growth significantly increase the demand for innovations among agricultural producers. Ksenia Prozhogina, director of HR and communications department of agroindustrial holding Myronivsky Hliboproduct (MHP), told about the effectiveness of innovations in the scale of a large holding: "We faced two serious problems. The first one — less young talents come to work to the company, and the second one — the larger the structure is, the slower it changes. Both problems were solved with the help of a corporate accelerator, which we launched together with Radar Tech and Agrohub. Based on its results, we now have 5 innovative solutions that have already been launched in the corporation."
One of the most anticipated panels was dedicated to the prospects of using futures and options for the Black Sea grain. Jeffrey Kuijpers, Executive Director of Agricultural Commodities and Alternative Investments EMEA at CME Group, Alexander Bobylov, Senior Pricing Specialist of the Department of Agriculture, ЕМЕА S&P Global Platts, Matt Ammermann, Commodity Risk Management Consultant and Vice-President Eastern Europe/Black Sea of INTL FCStone Financial Inc., and Alexander Solovey, CEO of Spike Trade Group, which is a pioneer of using these tools in Ukraine. Mr. Solovey noted during the discussion that hedging risks has become a real trend over the past few years in Ukraine. "A number of trading companies speak of the need to learn how to deal with risks," added Alexander Solovey.
Speeches of all speakers, as well as the live streaming from discussion panels can be found on the Facebook page of the GRAIN UKRAINE conference.
GRAIN UKRAINE is the key international platform for dialogue between the largest representatives of the agricultural market, the leaders of Ukrainian agri food companies, agri traders, commercial and investment banks, and technological trendsetters in the agricultural sphere. Since its foundation the GRAIN UKRAINE conference has become one of the most anticipated grain events of the Black Sea region.
The slogan of the conference in 2018 is "Agro titans meet here". The organizer of the event is the TIS group of terminals, the co-organizer is IdeasFirst company.