July 20, 2012


Ukraine may sign corn quarantine agreement with China by year end



Paving the way for exports of the grain to China, Ukraine expects to sign a corn quarantine agreement with Beijing by the end of the year, said UkrLandFarming (ULF), a major Ukrainian farm company.


China, the world's second largest corn consumer, relies on the US for 97% of its corn imports and has looked to diversify sources to strengthen food security with increased shipments coming in from Thailand and Laos this year.


"Ukraine is expecting the agreement to be signed by the end of the year and soon after that, we can start to load corn to China," Oleg Bakhmatyuk, chairman of the board of UkrLandFarming (ULF), told reporters in Beijing.


"Both sides are actively involved in the talks and an on-going drought in the US has given an opportunity to Ukraine corn and will advance the entry process," he said through an interpreter.


Some of the exports would be under a deal for Ukraine to supply two million to 2.5 million tonnes of corn to China every year to help pay off a US$3 billion loan from Beijing to finance agricultural projects.


Chinese companies, including top trading house COFCO and top animal feed producer New Hope Group are interested in buying corn from Ukraine, Bakhmatyuk said, adding that supply could reach 10-15 million tonnes to China each year at prices more than 20% lower than US.


Bakhmatyuk, in China as part of a delegation led by Ukraine's foreign minister, said the country also wants to increase other farm exports.


"China's demand for pork and chicken is growing rapidly as well as its demand for corn. There is a big potential market here as people's incomes are rising and food diets are improving during the country's urbanisation," said Bakhmatyuk.


He said the company is also looking for a Chinese partner to set up a joint venture to help market entry into China by listing on the Hong Kong Stock Exchange within the next two years.


In April, ULF signed a preliminary agreement with China construction firm CAMC Engineering Co. Ltd to build grain elevators, pork and poultry production facilities and a port on the Black Sea in Ukraine.

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