Agriculture

The International Grain Council (IGC) has warned of an impending reduction, by 1%, of the total area in the world under wheat cultivation in the 2010/2011 season, as opposed to the current marketing year. The planted area will decrease from 223.5 mln ha to 222 mln ha in that period. The United States and Russia, the largest exporters of wheat in the world, will face the problem of declining grain production, the main reason for which should be the low prices for wheat this fall.

The Economic Court of Kyiv has instituted legal proceedings on the bankruptcy of the Ukrainian Food Company (UFC), which was once a major player on the Ukrainian sugar market that united 14 sugar mills and several agro firms. In 2008, UFC faced a shortage in its sugar beet supply and decided to exit the market. The Company managed to sell six mills to the Mriya agro holding and another one to the Ukrros Sugar Union.

Ukraine’s agricultural producers have completed harvesting of sugar beets, having collected at total of 10.3 mln tonnes from a territory of 324.2 thsd ha. The average yield amounted to 31.8 tonnes per ha. In the previous season, the sugar beet crop was 14.5 mln tonnes, and the average yield was 37.3 tonnes per ha. The Ministry of Agrarian Policy forecasts that sugar production in the current season will be at 1.37 mln tonnes

According to Ukraine’s Deputy Minister of Agrarian Policy, Ivan Demchak, the Ministry is currently considering the possibility of a duty-free import of 300 thsd tonnes of sugar to the Russian market. The Ministry of Agriculture of Russia did not object to importing Ukrainian sugar, but still plans on introducing some restrictions, since only beet sugar should be brought into the country, as opposed to processed raw sugar.

The Ministry of Agrarian Policy has proposed that the Cabinet of Ministers set a minimum price for sugar beet at 291.66 UAH/tonne a minimum for sugar at 4,250 UAH/tonne net VAT for the 2010/2011 marketing year (September 2010 - August 2011). In the current 2009/2010 MY, the Cabinet of Ministers set a minimum price for sugar beet at 214.9 UAH/tonne, while it is 3,125 UAH/tonne for sugar. Quota “A” of sugar supply for the domestic market should increase to 1892 tonnes, from 1850 tonnes in this season.

Ukrros [UROS UZ, U/R], a major Ukrainian sugar producer, has announced plans to sell two sugar mills located in the Kharkiv Region. This move is necessitated by the lack of sugar beet supply for the mills, which stood idle this fall. The Company doesn`t grow sugar beet in the Kharkiv Region, as the sugar beet yield is relatively low in that region. The combined daily capacity of the two mills constitutes some 8,000 tonnes of sugar, which is 26.7% of the Group`s total production capacities of 30,000 tonnes. In addition, the Company also announced that it will be re-launching its bioethanol project, which was previously delayed due to the crisis.

On December 10, information was released to the effect that Astarta [AST PW] will hold a secondary public offering (SPO) for up to 5% of its ordinary shares. The selling party is Aluxes Holding Ltd., the investment vehicle of Valeri Korotkov, who owns a 40.19% stake in the Company.

The management of the Dakor Agro Holding [DAKOR UZ] announced that it has detected a mathematical error in the previously announced conversion ratios of Dakorwest shares and LandWest/Kremney GDRs into shares of DAH. The recalculated ratio represents a 80/20 contribution of DakorWest/LandWest into the united holding. As a result, each share of DakorWest is convertible into 0.757188 shares of DAH (instead of the previously announced 0.811009) and each LandWest/Kremney GDR is convertible into 0.0804476 shares of DAH (instead of 0.063576).

The ‘Ukrros Sugar Union’ [UROS UZ], a major sugar producer in Ukraine, has announced that it intends to invest USD 7.5 mln (UAH 60 mln) towards upgrading production capacities at its seven plants in 2010. In particular, the Company plans to gear its factories towards using domestically-produced coal instead of gas.

The Land Bank of Bavaria (Germany) has expressed its intention to give the National Joint Stock Company ‘Ukragroleasing’ a major loan under a government guarantee. The credit will go towards the purchase of sugar beet harvesting machinery, which will subsequently be leased to farmers. The loan amounts to EUR 40 mln and the repayment is scheduled to take place over a period of 7-10 years. The machinery will be purchased from two separate German producers: Ropa and Holmer.