The State Food and Grain Corporation of Ukraine’s Deputy Board Chairman Roman Nasyrov discusses how the corporation intends to buy grain cars and its plans at seaports in a short interview with the Center for Transport Strategies portal.
At the beginning of the year, Roman Nasyrov was still the head of the Kiev office of Renaissance Capital. Now, as the deputy board chairman of the State Food and Grain Corporation of Ukraine, he is resolving the rather difficult task of bringing the company’s logistics in line with its ambitious export plans.
Nasyrov is forecasting that the gross grain harvest in Ukraine will increase to 70 million tons within 5 years, of which 40 million tons will be exported. It will be difficult to sustain such a doubling of the load on the infrastructure of the country. "We see the need for 7,000 grain cars in five years in order to solve the problem. The corporation will purchase between 2,000 and 3,000," he said.
Nasyrov said that the nominal transshipment capacities are sufficient, but in practice, corn, for example, should be transported by supersized vessels to achieve an economic advantage. However, most ports are not deep enough for that. "Dredging can be performed if the approach railway approach to a port is developed simultaneously. If this combines process is performed, then there will also be private investment in construction of terminals," he said.
Lately, a lot of attention is being paid to the corporation in connection with the corporation’s entry onto the Chinese market for corn sales, as well as because it has obtained loans for infrastructure development. Nasyrov discusses how the corporation intends to buy grain cars and its plans at seaports in a short interview with the Center for Transport Strategies portal.
On what terms is the corporation ready to buy 2,000 grain cars and for what period?
We are currently considering our options regarding where to buy grain cars and which we can buy. To date, we have funding for only non-Ukrainian grain cars, i.e. for Chinese grain cars. Nevertheless, we are considering purchasing Ukrainian grain cars and combined options. This is a very complex process that takes up to three years in reality. It is a complex technical production that must be certified to ensure that the equipment can travel in Ukraine and maybe in Russia. However, we plan to close this issue within a year or two.
Will new grain cars be purchased under the agreement with China?
We are considering purchasing grain cars as an alternative to the existing agreements for purchase of Chinese grain cars and other possibilities.
Will you buy ready-made Chinese grain cars or will the cars be assembled in Ukraine?
As soon as we find the right product and the right purchase format, we will be able to say what type of grain cars they will be. Whether they will be partially assembled here or assembled somewhere abroad from Ukrainian parts is a complicated question, but it is important for us to acquire innovative cars that should have a long Mean Distance before Failure.
Should private grain traders follow your example and conduct their own search for funding for their fleets of grain cars instead of relying on the power of Ukrzaliznytsia?
Everyone draws his own conclusions from the situation that currently exists on the market regarding grain cars. Several factors must be taken into account here: how economically advantageous it is because it is an additional investment for a long period, which must be recouped. In our case, the physical volume that we can do is very important. The margin in this business is only about 8%, and that a smaller percentage of return than the trading business itself generates.
Are there grain traders in Ukraine for whom it may be wise to buy a fleet of grain cars?
There are not only traders, but also grain producers.
What are your plans for increasing the grain transshipment capacity at ports?
We will expand the existing capacity at ports, and we are considering construction of new ones.
And where in Ukraine can they be built?
At the Southern, Odessa, and Ilyichevsky...
That is where we are considering.
Will the shallowness of Ukrainian ports be an obstacle to implementation of the agreements with China for supply of grain?
Absolutely not. It does not affect the long-term prospects of Ukraine on the grain market.
Does this mean that the existing port capacities are enough?
The existing capacities are sufficient. Then the question arises - to what extent will our products be competitive in the world market because of the increased cost of logistics if we transport grain in small batches?
For the export of which crops did you obtain the appropriate phytosanitary protocols from China?
The phytosanitary protocol was signed for corn, and the documentation for soybeans and barley is currently being prepared.
Does this mean that corporation will supply soybeans and barley to the Chinese market?
Yes, it is being planned, and there will probably be supplies. However, it is necessary to pass the stage of obtaining the relevant certification of our products for supply to China first.
What will be the actual delivery of grain to China by the end of the year?
That is a commercial secret. I will only say that all the agreements have been signed and that the planned 4 million tons of corn will be delivered on time by the end of the marketing year. The first contracts have been signed, and the process is moving forward. Shipments are taking place according to schedule.