May 18, 2010

Ukraine's plan for grain powerhouse generates scepticism

Analysts have raised doubts over Ukraine's drive to form a single state grain powerhouse by merging the country's main crop buyer and a silo operator with a reputation for losing grain.

Agriculture consultancy, UkrAgroConsult has poured doubts on an announcement by Viktor Slauta, Ukraine's Vice Prime Minister, that the country will imminently merge the Khlib Ukrainy grain logistics group with Agrofund, which undertakes intervention buying.

Even if the plans to create the unified operator, likely to be named Zerno Ukrainy or "Grain of Ukraine", do succeed, there are questions about the wisdom of the project.

"What is the future of an entity founded on the basis of two companies, one of which is 80% bankrupt and the other 'lost' over 300,000 tonnes of grain during the year?" UkrAgroConsult questioned.

The Zerno Ukrainy project was proposed last year by Yulia Tymohsenko, Ukraine's former prime minister, to provide an alternative grain buyer for farmers who are currently forced to sell to private traders at, allegedly, low prices.

Zerno Ukrainy would buy up to two million tonnes of grain domestically for selling on export markets. It is also aimed at providing cheaper storage for Agrofund, which pays relatively high rates to store its purchases, while giving Khlib Ukrainy easier access to capital.