Grain Ukraine 2016: Impressions (Part 1)
Recently, Odessa hosted the most important grain-themed event of the summer — Grain Ukraine 2016. This was the first conference of its kind to be held in the country, and it was also one of the first to be organized according to the Davos format. The organizers of this event managed to attract leading experts from a vast range of fields such as agriculture, logistics, consulting and finance. Many foreign experts attended the conference, with some visiting Ukraine for the first time. Latifundist.com was present throughout the event; interviewing speakers, participants and attendees. To provide you with the best information, our team of journalists created a report that is broken down into different parts.
About The Conference
Between the 23rd and the 24th of June, the Victory Gardens centre in Odessa hosted the Grain Ukraine Conference. The warm and cosy atmosphere of Ukraine’s coastal pearl was not chosen by accident. Odessa is well known as a destination that greets visitors with open arms — and holding such a significant event there in the summer was definitely a smart move.
The Conference was attended by more than 30 international speakers and over 300 agricultural specialists. What made the event particularly interesting was the fact that the entire program revolved around a talk-show format, whereby members of the panel and the audience as a whole were free to interact with one another and pose questions.
Another aspect of the conference was the fact that it was conducted entirely in English — a positive sign of Ukraine’s development and readiness to attract foreign investment.
Trends and Logistics
The first part of the conference was dedicated to global trends concerning agriculture. Within this framework, the regional representative of the UN’s Food and Agriculture Organization (FAO), Mr Kairat Nazhimedov gave a speech about global production levels. He mentioned that the total production of grains in 2016 would grow to 2.5 million tons (+0.6% compared to 2015). According to him, the global production levels are unlikely to experience a significant increase in the short term. At the same time, the total volumes of rice are predicted to increase, experiencing positive growth in the coming years.
According to Mr Nazhimedov, the total output of grains in 2016/2017 will equal 2 546 million tons (marking a 1% increase compared to 2015). He also predicts that due to a decrease in demand for sorghum and barley, there will be a 2% decline in trade for these products.
Mr Nazhimedov says that Ukraine is well positioned to play a major role in the field of food security. The country is a major exporter of grains, and as such it has the potential to help decrease food shortages which are a major problem worldwide. According to FAO estimates, more than 800 million people worldwide lack sufficient nutrition or are affected by food shortages. Ukraine already has a well-developed export capacity — shipping food to more than 90 countries, from which it earns more than USD 6 billion. 95% of Ukrainian food exports consist of corn, wheat and barley.
Despite these advantages, Ukraine faces challenges when it comes to logistics.
Another speaker who drew particular attention to the issue of logistics was the moderator of the first session — Mr Serhiy Vovk, the director of the Center for Transport Strategies (CTS). According to him, transport operators should pay particular attention to alternative methods of logistics — especially river transport.
“I am confident that, after the adoption of new legislation this year, we will be seeing increasing use of rivers for transport purposes. Besides this, there is another important factor — railways. The latest initiative, which has already been undertaken by the ministry of infrastructure is the decreasing of railway tariffs. This has the potential to increase competitiveness amongst short-distance transport (100-150 km). Such news is particularly important because it will lower logistical costs and make the process of grain transport more efficient,” Mr Vovk announced.
Grain and Investments
The senior editor of Platts (grain division) from the UK also contributed to the discussion. In his presentation, Mr Andrey Agapi emphasized the possibility of lower grain quality in the EU, due to unfavourable weather conditions whose effect will be felt in the coming season. According to his estimates, the 2016/2017 period will be marked by a decrease in the quality of EU wheat. This is largely due to the unstable temperatures that have characterized this time period. This will mean that most grain will be purchased from Germany and countries of the Baltic. Already, Algeria has purchased 450-500 thousand tons of grain from the Baltic.
According to Mr Agapi, West European countries such as France will increase their export of fodder in the coming year — thus creating more competition for Ukrainian farmers. Strategic markets of focus will be countries such as Egypt which serve as reliable trade partners for Ukrainian exporters. According to him, Ukraine’s ability to expand its agricultural production in recent years has made it an important exporter of grain on the world stage.
Attendees of the conference were also given a detailed insight into the agricultural potential of Ukraine. Mr David Hightower, the founder and chief editor of the “Hightower Report” shared his view of the situation in the agricultural sector, and the bright future ahead.
One of the panel discussions was headed by Ms Ivana Dorichenko from Clyde&Co LLP. The main topic of this discussion was the competitive factor within the agriculture industry. Speakers from Argentina, Brazil and the US shared their insights as part of this topic.
The first presentation was made by Diego Lerini, the main shareholder of Argentinian company Molinos Rio de la Plata. He drew parallels between the development of agriculture in Argentina and Ukraine.
“These favorable conditions allowed the profit margins to increase and is the main driving force behind the growth of the Argentinian agriculture. This means that without a doubt, reforms are necessary. Ukraine should learn from the example and implement similar policies for the benefit of its own agrarian economy,” Diego Lerini noted.
The coordinator of Brazilian firm Agroconsult, Mr Francisco Kleber Viera was another panel member who talked about his country’s experience in boosting exports. According to him, whilst Brazil does not have the same soya as Argentina and Ukraine, it is one of the largest investors in research and development for this particular crop.
“Research helps us adapt seeds to changing climate conditions. This decreases risks and is a major factor for high yields. Ukraine undoubtedly needs to follow Brazil’s example, whilst simultaneously developing its infrastructure to facilitate faster transportation of goods.”
This view was echoed by Adel Yusupov, the representative of American trading Company “International Feed”. He stated that the soy market in the US is stable and that future indicators point to sustainable growth in this sector. According to Adel, corn production in America is also expected to grow — led by a push from the US. He mentioned that following the example of the US was a “fantastic” idea for Ukrainian producers. After all, Ukraine, like the US is able to fully satisfy domestic demand — leaving the majority of its produce ready for export to world markets.