NIBULON, a leader in the domestic agrarian market and one of the largest agricultural producers, investors and exporters, will celebrate its 30th anniversary on December 5, 2021. Established in 1991, when Ukraine declared independence, NIBULON, together with the country, continues to improve and to become stronger.Grain exports are one of the company’s main activities. NIBULON’s export activity was increased eighteen years ago, when the company put into operation its capacity to transship directly at NIBULON’s transshipment terminal in Mykolaiv. On August 17, 2003, the company loaded the first D.S. PIONEER vessel. The first export cargo of Ukrainian feed barley (22,550.895 tons), harvested in 2003, was delivered to Saudi Arabia that day. In a short period of time, NIBULON has managed not only to supply Ukrainian grain to the global markets, but also to guarantee the quality of its grain, enabling it to export to 75 countries, from Japan to Mexico. The company’s key to success is its transparency and openness in doing business. Since 2004, a “single office” principle, which includes 8 various supervisory services (customs, sanitary, quarantine, port services) operating at the export terminal in Mykolaiv, has been put into practice.Having been implementing its development strategy since 2008/09 MY, the company is Ukraine’s leader in grain exports. In the 2019/20 marketing year, the company exported more than 4.9 million tons of agricultural commodities. In less than 20 years, NIBULON has loaded 2,228 vessels. Thus, the domestic agrarians can sell their grain on global markets at competitive prices. Volodymyr Slavinskyy, NIBULON’s Deputy General Director on Trading, was interviewed about the company’s role in developing Ukraine’s grain market.– Mr Slavinskyy, Ukraine’s grain exports increase every year, but the country purchases more other products. What model of economic development is more acceptable in Ukraine: export orientation or import substitution?– Actually, it is important to keep a balance. Neither import substitution nor export orientation must be conducted by the state, as every forcible attempt to push the economy is inefficient. We should focus on the rational use of export advantages obtained by the country due to its geographic location, natural resources, population structure, etc. Concerning imports, the state should import socially important products and goods enabling the country to ensure food (technical, technological) security, as well as stimulate the production of goods inside the country to remain independent from outside factors in the given sectors. An attempt to create import substitution for the sake of substitution as such is an inefficient path of development.In terms of agriculture, we must increase our export potential. Due to its favourable geographic location and rich natural resources, it is essential for Ukraine to be engaged in agriculture, and it is the key to sustainable development. 70% of Ukraine’s land is agricultural, and many people are engaged in agriculture. Reasonable policies and strategies by the state in the agro-industrial sector are important. They must be rational and efficient, take into consideration the interests of all people and create a prerequisite for using this existing potential, expanding production volumes, including additional value.– Ukraine’s economy has changed drastically in recent years. Ukrainian grain has entered the global market in place of Ukrainian metal*. The agro-industrial sector funds the budget. Ukraine has started to sell self-grown commodities, rather than selling mineral resources which are depleting. – The agro-industrial complex has been a driving force behind the Ukraine’s economy development, especially through grain and oilseeds exports over the recent years. Ukraine is a leading world exporter of grain crops. Consequently, the stability of this sector is important not only for the domestic economy, but also for the global market.At the beginning, crop husbandry and agricultural commodity processing demonstrated poor results. The country was not aware of market conditions and had outdated machinery and technologies. The economic crisis also influenced the sector negatively. Nevertheless, Ukraine made a drastic move forward in the agro-industrial sector. Since 2000, it has considerably increased its volumes of agricultural commodity production, primarily in wheat and corn.Ukrainian agrarians learnt how to grow corn as it was not a traditional crop for our country. As demand emerged due to the work of grain traders, we quickly invested in new production technologies and entered the global markets of seeds, fertilizers, plant protection means, etc.There was a demand in the global market, and foreign companies were interested in buying Ukrainian grain. The domestic companies, like NIBULON, realized the needs and expectations of foreign players. Due to our constant and persistent work, we managed to attract financing, to partially generate financing due to our own efficient agricultural commodity production. We partially attracted funds from foreign sources and used them wisely. The company started to develop logistics, popularize grain growing, in particular corn and create incentive programs for agricultural commodity producer. These are mostly commodity loans secured on a future yield. Although these steps were quite risky for traders, they managed to stimulate and modernize Ukrainian agrarian production, as well to create investment in the agrarian sector. – At the end of the 1990s, poor Ukrainian agrarians, knowing nothing about the market requirements and conditions as well as having no experience, entered the global grain market where transnational companies operate, where leaders are determined and prices are set, where strict rules and requirements exist… How did this come to this? How did Ukrainians manage to become leaders in world production? – The world market is a dynamic structure developing constantly. New opportunities appear. Taking a 20-year retrospective, global food consumption has increased significantly as the world population has grown. This enabled Ukraine to take a leadership position on the food market amid competition. The demand for grain was increased globally, and our country, due to its natural and climatic conditions as well as its experience in crop husbandry, could produce and offer lower prime cost of products cultivated, i.e. competitive prices on the global market. Due to the activity of international traders and domestic companies, such as NIBULON, Ukrainian grain is in demand. Considerable funds started to be invested in domestic agriculture; the sector was modernized (new agricultural machinery, modern technologies, experienced specialists); the volumes of grain cultivation and processing were increased; marketing was improved, thereby enabling us to enter new global markets.As time passed, we have managed to ensure high quality of grain and logistics, i.e. to timely prepare and deliver grain to consumers on a FOB basis (port of destination), and, finally, to deliver grain on a CIF basis (destination point). The grain meets international quality standards. Today, the port logistics sector in Ukraine is well-developed and modern. It can not only transship the agricultural commodities it produces, but also has a potential to increase its volumes.– Corn has ranked first in Ukraine’s grain export structure over recent years. A breakthrough was achieved during the 2010/2011 – 2013/2015 marketing years when Ukraine increased corn exports four times within 3 years, from 5 to 20 million tons. Few people know that NIBULON itself brought Ukrainian corn to the global market, motivating domestic agrarians to grow corn…– Corn, as a multipurpose valuable food crop, takes third place in the world by crop areas (after wheat and rice) and first place by production volumes. World production exceeds 1.1. billion tons annually. Corn, as an export-oriented crop, is strategically important for the development of agricultural production in our country. In 2019, Ukraine took 6th place in the world corn production and 9th in corn seeds with 4.9 million ha, according to the Ukrainian Grain Association. The leading role in bringing Ukrainian corn to the world market was played by NIBULON. The company’s main activity is the production and sales of hybrid corn seeds and sunflower of foreign selection. As I have mentioned earlier, Ukrainian agrarians increased production at the end of the 1990s. Thousands of people wanted to be engaged in export activity, but few succeeded.Certainly, it took time to enter the main global markets. NIBULON has been playing an important role in opening the corn market in Egypt since 1994. Many meetings and negotiations were held; NIBULON participated in creating technical and phytosanitary quality standards for Ukrainian corn with Egypt. Joint training of Ukrainian and Egyptian specialists, state inspection authorities and private companies were repeatedly held. The first period made it possible to increase production four times within 3 years. Ukraine cultivated 4 million tons of corn per year until 2003. Thus, it could not compete on corn quality with the USA, Argentina or Brazil. Having implemented modern technologies and learnt from the Egyptian experience, the company developed this market. Today the company is competitive with the USA, Argentina, and Brazil. The company has managed to bring Ukrainian corn to the global market, thereby helping many agricultural producers. An export breakthrough of 2010-2013 (see picture 1) was achieved by the expansion of corn production by increasing sowing areas, using modern technologies, machinery, seeds and yields, thereby improving production to the standards required by the available sales market, especially Egypt. This enabled the company to widen the export geography of Ukrainian grain. Picture 1. Corn production and exports in Ukraine (according to the U.S. Department of Agriculture), thousand tons Why corn? This crop had the largest growth potential in Ukraine, due to the favourable weather conditions and the expansion of sowing areas, new sorts, as well as improved production technologies. Domestic agrarians used to grow wheat, barley, and sunflower. NIBULON also cultivated these crops, but the company mostly succeeded in growing corn – from 3.5 million tons cultivated in 2001 to 35.5 million tons cultivated in 2019. The company can boost these volumes by increasing crop yields from the current 6.8 dt/ha to 10.5 dt/ha, the U.S. level.Why Egypt? Corn is a main component of mixed feed used for poultry farming. In the middle of the 1990s, Egypt developed, through foreign investment, improved its mixed feed industry in order to increase its own chicken meat production as an available meet type. Food demand was also increased in Ukraine, as its population grew and tourism industry was developed, etc. It was a chance for Ukraine taking into account its favourable geographic location. It takes 7-10 days for a vessel to reach Egypt, i.e. Ukrainians can ensure constant grain delivery to this country within a short period of time. At the same time potential buyers worried about the Ukrainian corn quality. Considering that domestic elevators and grain dryers were outdated, it was impossible to bring grain to basic quality standards required by importers regarding humidity, broken grains number, as well as level of impurities. Thus, Ukrainian corn was considered to be of low-quality.We had to ensure high quality. Thus, NIBULON started to invest in developing its own elevator network equipped with the up-to-date equipment produced by the leading European and the U.S. producers – separators, grain dryers, grain elevators and laboratories equipped to carry out physical and chemical as well as molecular and genetic tests of grain, leguminous, and oil crops. These complexes for grain shipment and storage met the best world standards and enabled the company to ensure the high quality of Ukrainian grain. By implementing modern technologies, NIBULON also increased its own agriculture in Ukraine. The company comprises 50 production branches cultivating more than 80 thousand ha of land in 12 regions. By its own example, NIBULON stimulates other companies to invest in agriculture and to grow their own high-quality products. Our cooperation with the leading financial institutions, such as the EBRD, IFC, EIB and a number of first-class European banks, gave the green light to foreign companies to open their representative offices in Ukraine, to be engaged in agriculture and exports, to develop their own infrastructure and logistics in the country. Picture 2. NIBULON’s export structure in 2019-20 MY I would like to stress that NIBULON always guaranteed its grain quality not only at the port of shipment in Ukraine, but also at the debarkation port. NIBULON’s specialists went to Egypt and many other countries to participate in unloading and carrying out laboratory tests to measure grain quality. We managed to prove that our Ukrainian company could offer high-quality grain from Ukrainian farmers and get a world price. We prefer to work directly with agricultural producers (not intermediaries) on a parity basis. Consequently, we have managed to pay our agrarians a correct price for their commodities. Thus, we expanded our client base, purchase volumes and stimulate other companies to act the same way as we did. This stimulated others to invest in the development, to increase farming areas and to use modern technologies to produce high-quality grain. As a result, the volumes of Ukrainian corn production increased during the last decade.Corn took second place by volumes with a 34,63% share in NIBULON’s grain export structure last year. Egypt remains one of the largest sales market of Ukrainian corn, but it is just the beginning. We are constantly searching for new markets to sell domestic agricultural commodities. The Indonesian market for Ukrainian wheat is one of our main achievements. – Ukrainian wheat entered the Indonesian market due to NIBULON, did not it? It is known that this country rose from 4th to 1st place among importers of domestic wheat over the past four seasons. Indonesia has very high requirements for phytosanitary standards of grain quality…– Over 3-5 years, NIBULON actively and constantly promotes Ukrainian grain on the Asian market. These countries, such as China, Indonesia, Malaysia, Bangladesh, Thailand, are extremely perspective sales markets with dynamic rates of development. For example, our company is one of the largest suppliers of Ukrainian corn and barley to China. NIBULON was the first to ship food wheat to Indonesia in 2016, having made changes to the Interstate Protocol for Quarantine Requirements to supply wheat, by having signed interstate agreements specifying the Ukrainian wheat export procedure to Indonesia. Without a doubt, it is a significant achievement for Ukrainian exporters. Indonesia is the world’s second largest wheat importer (according to USDA, it imported 11.5 million tons in 2019/20 MY) after Egypt (imports of about 12.5 million tons in 2019/20 MY). Indonesia has become the key and largest importer of Ukrainian wheat over recent years. In 2018/19 MY, Ukraine exported 2.54 million tons of wheat to Indonesia, which is equivalent to 16,6% of the total crop exports, having surpassed Egypt (12,6% of the total exports). Inturn, Ukrainian wheat share comprised 22,7% of total Indonesian wheat imports.Picture 3. NIBULON’s export geography in 2019-20 MY In addition, this market has prospects for development due to two main factors, namely stable population growth in Indonesia, numbering about 270 million people, and stable rates of economic growth (an annual GDP increase comprises 5%). Consequently, there is a prerequisite for increasing the volumes of food consumption and changing the consumption structure, thereby resulting in a demand for bakery, meet, confectionary, etc. and an increased demand for food and fodder grain. Thus, Ukrainian exporters will be able to both increase the volumes of wheat delivery to Indonesia and to open Indonesia as a sales market for corn and products processed from oilseeds.– Thus, traders promoted a demand for grain by creating a proposition. Traders are blamed for making Ukraine a raw material supplier because of grain exports. Instead of it, traders should better arrange processing and export ready-made products…– Unfortunately, foreign partners have a cautious attitude towards our country. Ukraine is a Country Risk (according to the International Country Risk Guide) by three components, such as political, economic, and financial risks. These risks remain high for Ukraine. By operating transparently and openly, NIBULON has proved that it is possible to work with Ukrainians and to achieve high results. Our market is prospective.The company’s activities have contributed to the revival of related Ukrainian industries, namely elevator equipment, the construction of railcars, agricultural machinery, seed production, which offer a wide range of high-quality products. Grain exports really have a multiplier effect, thereby contributing to the activation of various fields of activities, the attraction of both internal and external investment, the increase in population employment, as well as people’s income and state budget funding. Thus, grain exports turned the domestic agro-industrial complex into a high-tech industrial production and have political, social, and economic advantages, rather than an income from selling the ready-made products.At present Ukraine’s competitive market has been created, enabling domestic companies to develop and foreign and trade companies to enter the market. Proper methods of doing business are used. The companies work on the principles of healthy competition, try to provide clients with services on affordable terms, to work honestly and transparently without the state interference. This contributed to the market development where competitiveness, reliability and stability prevail, as well as sustainability and prospects. In comparison, healthy competition is absent in the metallurgical or chemical industries which have remained leaders in exports and economy development for a long time. This market is monopolized by several high-capacity industrial and financial groups which compete with each other. Railway transportation is monopolized by Ukrzaliznytsia. The very market itself encourages the state to create favourable conditions for the participants. Fortunately, the state does not initiate any radical changes concerning types of products to be produced and export destinations. –What is NIBULON’s development strategy? What export issues does it concern?– The company has a constant long-term reasonable development plan taking into account the current reality, conditions and needs of the market.We have also short-term strategies lasted for one or three years concerning operational work, production figures, such as the export volumes by crops, the volumes transported by the company’s fleet, the production of own products, etc. The investment plans are created based on the strategies. Since 2009, the company has been implementing its long-term investment project to revive the Dnipro and the Southern Buh as navigable transport arteries and to develop a network of elevators and a fleet. The company has managed to create a well-developed elevator infrastructure, firstly on rivers, to build its own fleet to ensure an efficient logistic chain and non-stop grain shipment for export. Since NIBULON commenced its operation, the company has invested more than USD 2.3 billion in the country’s economy. The total storage capacity comprises 2.25 million tons of grain simultaneously, and NIBULON’s fleet comprises 85 vessels.While implementing this project, the company has modernized the facilities it built earlier, increased the elevator capacity, built tugs and non-self-propelled vessels for efficient operation. We have made certain changes having analyzed the situation on the market. We started to build pusher tugs to ensure grain transportation along the Dnipro from Kyiv to Mykolaiv regions as part of tow and tug trains. The company now builds berthing tugs to pilot and moor foreign-going vessels.Picture 4. NIBULON’s group export dynamics, tons It was necessary to increase grain shipment efficiency. Thus, the company ordered the construction of the St. Mykolai floating crane in Romania. Having seen its efficiency, we built the unique NIBULON MAX 140-m self-propelled floating vessel at NIBULON’s own shipbuilding and repair yard in 2019. NIBULON MAX operations positively influence the structure of the company’s cargo transportation and navigation development, as the floating vessel improves considerably the entire fleet operation. During its first year of operation and despite the coronavirus crisis, the vessel has achieved high results in the agricultural commodity shipment for export – 2.5 million tons. By comparison, the company had used its three floating cranes simultaneously to handle the same volume of cargoes before it started operation. Consequently, as part of the long-term strategy to implement its investment program, the company has adapted to market requirements, optimized financial capabilities and increased production capacity. Today the strategy is to expand export volumes by using NIBULON’s own infrastructure, transport, and production capacities efficiently, promoting Ukrainian products worldwide – the presence on key markets, the search for potentially interesting new markets. The world is developing. If a demand for food products was increased in the countries of Asian region during the past 10 years, today a demand for food products is increased in the countries of Central and South Africa, which are called Sub-Saharan Africa (the countries located lower the Sahara Desert). The population is growing and its economic situation is improving, thereby changing consumption preferences in developing countries. People eat more protein products, mostly meat. Thus, the demand for mixed food is increased; people eat high-quality bread and products from food grain. Thus, we will focus on the efficient operation on the domestic and global markets during the next years, rather than investing in infrastructure facilities.By building vessels efficiently, NIBULON’s shipyard has achieved a highly professional and technological level. The shipyard is ready to build modern vessels, cargo vessels and tugs as well as patrol boats for third parties. The shipyard has already received orders from third parties to build various floating facilities.Thus, NIBULON is developing in all directions. The company’s strategy is to increase operation efficiency, to use production facilities to increase sales of both grain and shipbuilding products.* The balance of payments in 2000 was positive (USD 616.5 million). According to the State Statistics, grain crops comprised 0,8% of the export structure and whereas products of the metallurgical sector comprised about 45% . In 10 years grain exports comprised 4,8% (USD 2,467,060.7 thousand), non-precious metals and their comprised 33,7%. During the first six months of 2020, grain crops comprised 19,7%, non-precious metals – 19,8%. Ukraine has developed into an agricultural country where the domestic agro-industrial sector provides 45% of the state currency budget funding.http://www.agroprofi.com.ua/statti/1939-volodymyr-slavinskyy-eksport-peretvoryv-vitchyznyanyy-apk-na-vysokotekhnolohichne-industrialne-vyrobnytstvo