From November 24 till 26 in Kyiv city there was held the second round of the 5th Ukrainian Grain Congress where topical issues of operation of the international and Ukrainian grain markets were analyzed, conditions of grain trade efficiency in the Black Sea region were determined, middle-term and long-term prospects of the grain sector development in Ukraine were discussed. Representatives of grain market entities, international financial organizations, in particular the World Bank, the European Bank for Reconstruction and Development, the International Finance Corporation, companies and public organizations participated in the congress.
The organizers are Ukrainian Grain Association and the information-analytical agency “APK-Inform”; partners are the European Bank for Reconstruction and Development, the United Nation’s Food and Agriculture Organization (FAO), the Grain and Feed Trade Association (GAFTA), USAID AgroInvest Project.
Within this Forum at NIBULON’s transshipment terminal of “Pereyaslavs’ka” branch there was held an on-site round table on grain logistics issues where problems of grain logistics and grain cargo certification were discussed.
The round table participants familiarized themselves with one of the best facilities of NIBULON – the river grain terminal in Chyrske village of Pereyaslav-Khmelnytskyy district of Kyiv region, where 10 thousand tons of grain are shipped on water transport daily. Grain storage capacity is more than 75 thousand tons; daily drying capacity is 3 thousand tons. The terminal is unique due to its equipment produced by well-known world manufacturers with individual approach to NIBULON; it corresponds to the best technological models.
Opening the round table, President of Ukrainian Grain Association Volodymyr Klymenko mentioned, “Ten years ago Ukraine produced 30 million tons of grain, at present – 60 million tons. I have always said if our corn and soybean yield was like in the USA and wheat and barley yield was like in France, we would have 120 million tons today. This is the key point to be followed. Systematic decisions of business and authority are required to achieve this. The Dnipro River theme is important not only in terms of ecology. For example, Ukraine’s last grain railcar was constructed in 1993, since then the railcar fleet had not been renewed. Condition of highways is awful… Monthly, applications of traders are performed by 65% on average; thus, a logical decision comes to mind: a considerable amount of cargo must be transported along the Dnipro River in order to release highways and railway. In the Soviet Union 60 million tons of cargoes were transported along the Dnipro River, and today – 4-5 million tons. It is wrong. In fact, NIBULON is the only company that started to work in this direction”.
Our successes were achieved not due to the government support, benefits or special laws”, stressed Hero of Ukraine, General Director of NIBULON Oleksiy Vadaturskyy. “On the contrary, the authorities bothered us, prevented from normal operation, development. We were always sure that our aim to “employ” the Dnipro River and other Ukrainian rivers was right.
We have developed our program and despite constant changes in the country situation we are persistently going towards our strategic aim and transporting products by river transport. Today our company transports 2.5 million tons of grain and oil crops on water arteries annually; the task is to transport 3 million tons and to bring this figure up to 5 million tons in perspective.
By example of the terminal in Pereyaslav-Khmelntskyy, Oleksiy Vadaturskyy has illustrated economic efficiency of river logistics. This facility is the northernmost point in the company’s production sector; distance to Ochakiv town (Mykolayiv region) is 850 km; a vessel sails 12 days in both directions. Analysis of transportation cost has shown that transportation by trucks costs 280 UAH/t and cargo carriage by vessels costs 147 UAH/t.
How did the idea appear? “I think it would be logical to build vessels at other shipyards”, explains NIBULON’s General Director, “but those shipyards bankrupted one by one. It was very expensive to place orders abroad, for example, in Romania. The most optimal variant is to buy a shipyard which will be repaid after construction of four vessels. Recently, President of Ukraine Petro Poroshenko has visited NIBULON; a solemn ceremony of the vessel’s launching has been held under his chairmanship; Holy Patriarch of Kyiv and All Rus’-Ukraine Filaret has consecrated the vessel. These events are important for us”.
Due to the slide show, the round table participants familiarized themselves with the river terminals constructed by the company along the Dnipro River banks: Vitove, Gradyzk, Kremenchuk… Oleksiy Vadaturskyy stressed that these facilities had been constructed with minimal damage to nature. All the terminals harmonize with the landscape.
Speaking about river logistics problems, Oleksiy Vadaturskyy noted navigation safety problem in the area of two reservoirs, namely the Dnipro Reservoir and the Dniprodzerzhynsk Reservoir, where river bottom has rocks. It is necessary to remove 20 thousand cubic meters of rocks in order to achieve safe navigation from Kyiv to Ochakiv – with the draught of 3.6 m and turning radius of 800 m for navigation safety on both directions. The company has developed an appropriate project but cannot get permission for dredging for four years. Though, the navigation safety cost is absolutely real – not more than USD 2.5 million. Everything depends on officials. The company could perform dredging at its own expense, if officials did not misuse money. But if the Ministry of Infrastructure misuses an enormous amount of money; thus, how the company can do good? NIBULON is ready for meeting the needs but at the same time we have the right for discounts when paying for vessel passage to the facility. Thus, expenses for dredging will be compensated. Works on the Dnipro River are planned to be performed within three months and on the Southern Bug River – within a year; compensation of expenses – within five years. For some obscure reasons, the Ministry does nothing in spite of the fact President and Prime Minister gave their orders.
Oleksiy Vadaturskyy familiarized the participants with the dredging technology: an excavator with special nozzle can ruin rocks at a depth of 4 m. The machinery itself can be placed on pontoon basis.
Oleksiy Vadaturskyy noted, “In Ukraine there are 12 thousand grain railcars; railcars are enough to transport for export up to 50 million tons of grain crops. It is necessary to ensure efficient use of these railcars. NIBULON takes shipment routes from any part of Ukraine, unloads railcars in Mykolayiv city and sends them to other part of the country. It takes only three days, and “Ukrzaliznytsya” works in mode of 8-10 days. Thus, problem of shortages is quite exaggerated, if efficiency factor is involved in.
Oleksiy Vadaturskyy discussed another aspect of “railway problem”. The company submits an application for railcars to the single information center of “Ukrzaliznytsya”, and then forwarders and other private companies manage railcars. It is impossible to get railcars from the general railcar fleet; we must address ourselves to forwarders and pay 3-4 dollars in addition. Corruption component is in pure form. And if a manager applies to Prime Minister, the latter gives an appropriate order, and railcar delivery is reduced twice or stopped completely.
Co-reporter of the round table, director of “Hermes-Trading” Ltd. (“UkrAgroKom” group) Yuriy Skichko thanked Oleksiy Vadaturskyy for the things NIBULON does for Ukraine.
“Almost three years of complicated challenges made us understand that we require a strategy to develop river logistics. Where are our reserves? Our reserves consist in reduction of expenses, efficient operation on inland logistic waterways. One of the main reasons of insufficient river logistics development is unbalanced tariff policy. Unfortunately, preference is given to railway transport (400 million tons is the share of “Ukrzaliznytsya” out of 750 million tons transported); trucks transported much fewer and water transport only 1%. With its tariff policy, the country considerably hampers river logistics development. Another negative factor, according to General Director, is long-term destruction of river fleet. For comparison: if at the beginning of ‘90s there were more than 29 thousand units of fleet in Ukraine; today we have not more than 600 units; most of them have become out of date. Only a few can afford to build new vessels.
As to payment for lockage, Yuriy Skichko noted that if the whole Dnipro River was busy, we would not have any problems with inefficient financing of this infrastructure. We must support NIBULON’s initiative. Lockage of vessels under Ukraine’s flag as well as foreign-flag vessels must be competitive.
The participants of the round table were impressed by the results of NIBULON’s activity.
Senior Banker of the EBRD Representative Office in Ukraine Lyudmyla Lishchenyuk,
“We support Ukraine in many directions and agrarian sector is one of our largest priorities. NIBULON is one of the absolute leaders in the agrarian sector. Cooperation with NIBULON is important for us, because there are not so many companies that have strategy aimed at developing not only its business but also agrarian sector in whole. NIBULON thinks globally, can analyze both current processes and prospects of the sector. We help NIBULON not only to construct river fleet and elevators but also to involve international banks in financing the company.
Economist of the United Nation’s Food and Agriculture Organization (FAO) Dmytro Prykhodko,
“It is important to spread NIBULON’s experience in grain transportation among other grain market participants. Besides, NIBULON that established Ukrainian Grain Association can share experience in mending dialogue between business and authority, for example, with Egyptian partners, as it is topical in Egypt too. It is a priceless experience: the private company transparently dialogues with the authorities.
At the press-conference journalists asked Oleksiy Vadaturskyy a lot of questions; the most popular one was connected with the impact of national currency fall on the grain trader activity.
“National currency fall influenced grain market in the sense that grain is sold in the amount required to receive proceeds, to support business and to invest a little in the economy”, explained Oleksiy Vadaturskyy. “Our company faces nothing unusual. We have been working since 1991, went through several devaluations, and learnt not to give up, to improve and to be a leader.
President of Ukrainian Grain Association Volodymyr Klymenko noted that Ukraine remained a powerful player, a reliable partner on the world grain market. If several years ago nobody knew us in South – East Asia, now Ukraine is a solid player there; Ukrainian grain deliveries to Japan and South Korea are constantly increasing. By the way, NIBULON is the largest supplier of grain to Japan. In order to solve a lot of urgent issues, a serious state program is required.