During several recent years, participants of the Ukrainian export market face rather difficult conditions, including problems of state regulation on the one hand, and intense competition on the global markets on the other. At the same time, Ukraine has already managed to achieve high results on agricultural commodity exports, and taken the leading positions in the global rating of countries-exporters. The current interview with the General Director at NIBULON LLC, Hero of Ukraine, Oleksiy Vadaturskyy focuses on the last season results, main features and challenges for traders in the beginning of 2016/17 MY, and the most prospective markets.
- Oleksiy Ofanasievich, would You tell us a few words about the results of the company in 2015/16 MY? In particular, what grain export results did the company achieve?
NIBULON is the leader of agricultural market not only in Ukraine, but also in the whole Black Sea region. The company covers rather significant share in the Ukrainian exports of grains and oilseeds. NIBULON is the leader in grain exports, and keeps the position for several recent years. So, in 2015/16 MY our company reached the best export index for six recent years - 4.66 mln tonnes, up almost 14%, or 572 thsd tonnes compared with 2014/15 MY. The achieved result took the second position in the whole history of the company. Thus, NIBULON takes the first position in the rating of Ukrainian companies-exporters. Thus, last marketing season we raised 122 foreign voyage cargo vessels to fulfill the signed export contracts, with the average shipload lot at nearly 35 thsd tonnes.
- What impact did the main trends of the domestic market have to work of export-oriented companies?
Export-oriented companies are the link that connects the domestic market of Ukraine with the global market. Such companies have to adapt to constant internal and external changes, and take the defined risks. As for the domestic market features in 2015/16 MY, return to the principles of VAT refund on the export trading with grains and oilseeds became the main factor. Naturally, it caused the following growth of purchasing prices on the domestic market. But for export-oriented companies, such return turned into growing of the risks for trading activities (due to the risk of VAT non-reimbursement) and increasing of the working capital needs, because exporters almost always lend the government due to the time gap between the date of exports and VAT refunds.
- How do You estimate the start of the season-2016/17 in the grain sector? What are Your forecasts and expectations?
Beginning of the season 2016/17 can be called traditional for Ukraine. Thus, the export volumes and structure, where wheat and barley dominate, are formed by the seasonal features. Generally, I estimate the beginning of the marketing year as successful. Ukraine as the country-supplier of grains keeps its stable share of the international market in terms of intense competition in the Black Sea region. At the moment, it is too early to make any forecasts regarding the export volumes of all major crops, because the situation mainly depends on the volume of corn production, which weather risks can somewhat damage.
- What products and what countries does NIBULON usually export to? Has the geography of crop exports changed for several recent seasons?
During several recent seasons, corn and wheat are the major agricultural crops in the structure of crops export of NIBULON, which cover nearly 80% of the company's general exports. At the same time, during several recent years the share of wheat continues gradually increasing. So, in the season-2013/14 the ratio of corn and wheat exports totaled 52.1% and 27.7%, and in 2015/16 MY we shipped 43.2% of corn, against 38.5% of wheat. Generally, the company exports 7 agricultural crops: corn, wheat, barley, sorghum, rapeseed, soybeans, sunflower seed.
The exporting geography totals nearly 25-30 countries per annum, and more than 60 countries during the whole history of the company. NIBULON keeps the traditional destinations of shipments, namely the countries of Africa, the Middle East and Europe. Egypt is the largest importer of Ukrainian grains. Egypt is a strategic direction for the group of companies NIBULON, because every year the direction covers nearly 20% of our exports. NIBULON exports wheat and corn to Egypt. Last marketing year, Saudi Arabia became the second largest export destination for NIBULON - almost 11% of the general exports from the company. NIBULON exported barley only to the country. Every fourth vessel loaded at the transshipment terminal of NIBULON, was sent to Europe. European countries cover almost 1/3 of the company's exports. We shipped the largest volumes of grains to Spain - 5% of the general exports.
During several marketing years, we managed to open new markets, especially the countries of Asia and Oceania, where the positions of exporters from the Western Hemisphere are traditionally strong. In the season-2014/15, the group of companies NIBULON realized barley exports to China and wheat in Thailand for the first time. In 2015/16 MY, we restored the deliveries of wheat to Indonesia for the first time since 2009. And in the season-2016/17 we already supplied wheat to India (for the first time in the history NIBULON).
- What markets do You consider as prospective for Ukrainian agricultural products?
The countries of Southeast Asia form the most promising region for Ukrainian agricultural products. Rather high population density and relative economic stability are the basis for strong demand from the region. First of all, I mean Indonesia, the Philippines, Bangladesh and Thailand. Thus, in July the Indonesia's share in Ukrainian wheat exports totaled 28.5%, the Philippines - 23%, and Bangladesh - 11%. So, only these three countries received two-thirds of Ukrainian wheat shipped in the reporting month. Of course, during the whole season such export ratio will hardly remain at such level. Ukraine should work towards strengthening and development of trade relations with all countries of the region – it is the urgent task for representatives of Ukrainian businesses and senior government officials.
- Thank you for the substantive conversation, and finally I would like to know what plans the company will realize in the nearest future (investment projects, geography of exports, domestic market, etc.)?
To date, our company is realizing a real revolution in the logistics. NIBULON reorients its grain cargo shipment chains on inland waterways of Ukraine. We almost realized the complex investment project on revival of the rivers as main traffic arteries.
We started the project in 2009. We have built an extensive network of transshipment terminals and elevator systems, as well as modern cargo fleet. The next stage of the investment program is connected with restoration of the navigation on the river Southern Bug. It is a unique project because the company invests in several spheres of the economy: construction, shipbuilding, transportation and agriculture. In addition, the company restores navigable opportunities of the Southern Bug for our own money and technical facilities.
We see the long-term prospects for Ukraine in expansion of the export geography. Our country has great prospects for increasing of the harvest of agricultural products - 80-100 mln tonnes of grains per year. If to date the domestic consumption of the country requires 25 mln tonnes, then in the current year the exports will reach 39 mln tonnes. The index will increase to 60-70 mln tonnes. So, the company plans to continue its ambitious investment program and improve the grain logistics, which includes construction of new elevator capacities, cargo fleet, and dredging of inland waterways.
As for the export geography, our company plans to develop trade relations and open the markets of Southeast Asia and the Far East, thereby increasing the status of Ukraine as the significant agrarian country, which can consistently grow and deliver high-quality products to its end-users. Also, Cuba and Venezuela are the prospective directions for development of trade relations.
Interviewed by Anna Tanskaya, APK-Inform Agency
