18:10 09.05.2023

Representatives of vegetable oil and fat industry demand fair access to grain corridor

5 min read
Representatives of vegetable oil and fat industry demand fair access to grain corridor

The Ukroliyaprom association of fat and vegetable oil industry participants considers the current situation with access to the grain corridor unfair and unsettled and proposes that the problem with quotas and the queue of agricultural products for export by sea is solved by a government decree that would assign quotas to each sector of the agribusiness and form a transparent queue, understandable to all exporters.

"Logistics issues have come to the fore in the work of the industry. The inability to ship manufactured products leads to the need to stop plants. This should not happen even in the difficult conditions of the war ongoing in the country," Director General of the Ukroliyaprom Association Stepan Kapshuk said at a press conference at Interfax-Ukraine on Tuesday.

He said that the oil and fat industry occupies 30% of the Ukrainian agribusiness, 70% of the production of value-added goods, and brings 15% of foreign exchange earnings from the country's total exports.

According to him, India and China have traditionally been buyers of Ukrainian oil. "Because of the confusion in developing the so-called quotas for the export of agricultural products, Ukraine is losing its position in India," Kapshuk said.

The head of Ukroliyaprom said that the industry association would demand giving priority quotas to plants located in ports to export oil and fat products. The situation can be solved by providing the industry with 15 tankers per month, which will export the products accumulated in the ports, he said.

The Allseeds group, one of the largest producers of sunflower oil and meal in Ukraine, cannot resume exports from the Pivdenny port for a week due to this problem, Allseeds group executive director Yevhen Okhrimenko said at the press conference.

"The oil and fat industry and its customers faced the fact that when exporting, preference is given to wheat and maize, that is the export of raw materials, and not the export of value-added products. Different types of oils mean added value. It shows a more significant economic effect on the state budget. It is FX earnings, which is significantly higher than from the sale of grain," he said.

According to Okhrimenko, at present, the enterprise has fully loaded port warehouses, which store the products of both the Allseeds group and the customers who rent these facilities. "The accumulated goods have a shelf life that is significantly shorter than that of the goods of the grain group. They must be promptly exported," he said.

Head of the legal service of Allseeds Black Sea LLC Vasyl Fastovets said that the company sent inquiries to various departments, but all their answers came down to the phrase "the issue is being considered." In particular, Odesa Regional State Administration reported that the issue of organizing a queue of agricultural products that should be exported by sea is handled by the coordination logistics office, which operates under the Ministry of Agrarian Policy and Food.

According to him, the Ministry of Infrastructure recommended looking for an answer to the problem in the rules for the operation of ports, which are regulated by a decree of the Ukrainian Sea Ports Authority (USPA). When studying all the provisions on the operation of the Pivdenny port on the USPA website, one would not find there the concept of "quota." At the meetings of the logistics office, the Ministry of Agrarian Policy discusses the basic principle of quota distribution, and "the issue will be further studied," he added.

"Nobody knows and does not understand the very principle of generating the quotas. This proves that there are no rules for organizing a queue of ships, it is only being considered. In fact, the quotas are already working," Fastovets said.

He said it is impossible to work wihtout regulation or with manual regulation according to non-transparent rules.

According to Allseeds representatives, the monthly need of their company, taking into account the accumulated cargo for export within the framework of the Black Sea Grain Initiative, is five vessels per month for transporting vegetable oil and at least three vessels per month for transporting meal.

Ukroliyaprom and representatives of Allseeds appealed to the government to intervene in the situation and ensure the equality of all port operators when using port infrastructure and exporting by sea.

"Now, 400 employees are unemployed. There is another enterprise nearby, where 170 employees are idle. Since April 5, they have not been able to export even 10,000 tonnes of oil to the UK. It is a general trend that requires urgent intervention," Kapshuk said.

The Allseeds group is one of the five largest Ukrainian producers and exporters of vegetable oils and meal. It owns an oilseed processing plant with a daily capacity of 2,200 tonnes of sunflower seeds (or 1,500 tonnes of rapeseed or 1,000 tonnes of soybeans), located in the Pivdenny port (Odesa region).

Allseeds also provides transshipment services for vegetable oils and oilseed meals at its terminals in the Pivdenny port. The capacity for simultaneous storage of vegetable oils is more than 100,000 tonnes, and that for meal is 30,000 tonnes.