Ukraine is sprout­ing as grain ex­port ti­tan

Countryman - - NEWS - Cally Dupe

The head of a ma­jor Ukrainian global grain ex­porter has is­sued a warn­ing to Aus­tralian wheat pro­duc­ers — his coun­try’s grain will ex­pand its foot­print across global mar­kets in years to come.

Kon­stantin Litvin­sky, chief ex­ec­u­tive of­fi­cer of Ker­nel Hold­ing, ad­dressed an au­di­ence of 220 at the Grains In­dus­try of WA an­nual fo­rum last Wed­nes­day.

He said Ukrainian wheat ex­ports had gained mo­men­tum in nearby Mid­dle East­ern and North African mar­kets in the past 30 years and were now find­ing their way into Aus­tralia’s South-East Asian mar­kets, in­clud­ing In­done­sia, the Philip­pines and Viet­nam.

In 10 years, Ukraine’s slice of the world grain ex­port pie in­creased from 4.3 to 12 per cent, which Mr Litvin­sky said was driven by yield im­prove­ments.

The coun­try’s wheat, corn and bar­ley ex­ports have swelled from nine mil­lion tonnes in 2006-07 to 45 mil­lion tonnes in 2016-17.

Aus­tralia ex­ported 11 mil­lion of wheat, corn and bar­ley in 2006-07 and 33 mil­lion tonnes in 2016-17.

Mr Litvin­sky said Ukrainian wheat pro­duc­tion would con­tinue to rise on the back of agro­nomic mod­erni­sa­tion — which would im­prove yields — as well as the re­struc­ture of agri-hold­ings, in­vest­ment in lo­gis­tics and im­proved grain qual­ity.

How­ever, he said Ukraine faced sev­eral chal­lenges and posed min­i­mal threat to Aus­tralia’s canola and bar­ley ex­ports.

Also, a ma­jor road­block for Ukrainian wheat pro­duc­tion was its govern­ment’s “re­luc­tance to fix rail in­fra­struc­ture” or pro­vide in­cen­tives for pri­vate com­pa­nies to in­vest in rail.

Speak­ing at the con­fer­ence, CBH mar­ket­ing and trad­ing gen­eral man­ager Ja­son Craig said Asia’s de­mand for wheat was grow­ing.

“We have seen in the last cou­ple of years that Ukraine and Rus­sia are tak­ing some of our mar­ket share, but this is on a growth plat­form, if you re­mem­ber,” he said.

“Par­tic­u­larly places like In­done­sia, Viet­nam and the Philip­pines, they are grow­ing any­where be­tween three and five per cent.

“So yes, they are tak­ing some of our mar­ket share but it’s in a growth mar­ket.

“It’s how we use that growth as an op­por­tu­nity to in­crease our pro­duc­tiv­ity here in Western Aus­tralia and, of course, in Aus­tralia.

“We are un­der pres­sure here but it’s about in­vest­ing not only in the sup­ply chain but also in the pro­duc­tiv­ity and as a whole in­dus­try in­vest­ment, it can’t just be farm­ers in­vest­ing, it can’t be just the sup­ply chain in­vest­ing, it needs to be across in­dus­try.”

Aus­tralian Ex­port Grains In­no­va­tion Cen­tre doc­u­men­ta­tion has la­belled Ukraine a “mod­est threat” to Aus­tralian wheat ex­porters but lists po­ten­tial threat as large.

“Ukraine’s com­pet­i­tive­ness in the in­ter­na­tional wheat ex­port mar­ket is un­der­pinned by greater rates of yield ad­vance­ment and greater cost ef­fi­cien­cies in its grain sup­ply chains,” the AEGIC said.

“Ukraine is cur­rently less able, com­pared with Aus­tralia, to re­li­ably sat­isfy the wheat vol­ume and wheat qual­ity needs of end users in Asian mar­kets.

“Aus­tralia has time to pre­pare for and counter likely greater com­pe­ti­tion from Ukrainian wheat ex­ports.”

A group of WA grow­ers re­cently re­turned from a self-funded tour of Ukraine.

In­cluded in the tour was Tam­min grower Brad Jones, who hosted Mr Litvin­sky at his farm last Fri­day.

Ukraine’s cur­rent 62 mil­lion tonne an­nual grain crop is pro­jected to reach 102 mil­lion tonnes within a decade, and Rus­sia’s cur­rent an­nual 105 mil­lion tonne crop could grow to 138 mil­lion tonnes in the same pe­riod.

Aus­tralia’s grain crop was 49 mil­lion tonnes last year. Ukraine has 32 mil­lion hectares of highly pro­duc­tive soil with a favourable cli­mate.

Pic­ture: GIWA

Tam­min grain grower Brad Jones talks shop with Ukrainian agribusi­ness com­pany Ker­nel chief op­er­at­ing of­fi­cer Kon­stantin Litvin­sky at Mr Jones’ farm last week.

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