Food Grain Corporation to supply 4 m t of grain under loan agreement with China Export-Import Bank in 2013
PJSC State Food and Grain Corporation of Ukraine, according to a loan agreement with the Export-Import Bank of China, plans this year to purchase and deliver four million tonnes of grain to China.
"Four million tonnes [of grain supplies to China] is the planned volume for the current calendar year. It also foresees the purchase of grain from the 2012 harvest," Deputy Board Chairman of the State Food and Grain Corporation of Ukraine Robert Brovdi said at a press conference at Interfax-Ukraine on Thursday.
He noted that the State Food and Grain Corporation has received the first tranche of a $1.5 billion loan from the Export-Import Bank of China, which would be used to make spot and forward grain purchases for further grain exports to China. Brovdi clarified that the operator from the Chinese side is the China National Machinery Complete Industry Engineering Corporation (CMCEC).
"The contract related to grain supply is designed for 15 years and, given the results of supplies in its first year, a plan of supplies for coming years will be determined, increasing the absolute volume of grain delivery over a calendar year to 6 million tonnes," said Brovdi.
According to him, the company plans this year to acquire two million tonnes of grain under forward terms, while the same volume is to be bought under direct contracts.
Brovdi said that the minimum lot on forward contracts is 500 tonnes. The implementation of the forward program will be implemented in two stages: the first one from March to May, the second one from September to October this year. The first stage foresees the allocation of the first tranche of UAH 700 per tonne under forward contracts regardless of the type of grain. In this case, an insurance fee of 3.5% of the sum is charged depending on the minimum intervention price. To participate in the next stage of the forward program, farmers are required to pass a check of the cultivated area by an insurance company.
The second phase foresees payment to farmers for the grain supplied, determined depending on the average weighted market price on the Agrarian Exchange on the day prior to the day of deliveries. Farmers should supply the grain by November 1, 2013.
According to Brovdi, the corporation intends to start spot grain purchases when the harvesting campaign starts.