The move marks the continued advance of international giants onto Ukraine’s promising agricultural market.
US-based agriculture giant Archer Daniels Midland Company (ADM) has consolidated full control over a Ukrainian sunflower seed processing facility. The move marks the continued advance of international giants onto Ukraine’s promising agricultural market.
The buyout of the Ilichivsk Oil Extraction Factory strengthens the grip of foreign agriculture players over the sunflower seed business in Ukraine, ranked as one of the world’s top three producers of this oil-bearing crop.
ADM and a company controlled by Swiss-registered agricultural trading company and port operator Risoil first entered a 50-50 joint venture in 2004 to develop the factory, which is located at the Ilichivsk Port near Odessa.
This month, however, ADM unveiled that it had bought out Risoil’s stake, taking a 100 percent interest in the facility at an undisclosed price.
“The facility complements our global asset base in an important origination location,” said Mark Zenuk, ADM vice president and managing director-Europe and Asia.
“We look forward to working with Ukrainian farmers to help meet the changing needs of our food customers due to evolving global demands,” he added.
ADM, headquartered in Decatur, Illinois, is one of the world’s largest producers of grain crops and the leading producer of various value-added food and feed ingredients. The group controls more than 240 processing plants worldwide and posted sales of $37 billion last year.
ADM has a strong position in Ukraine. It is a majority owner of grain trader Alfred C. Toepfer International, which operates an active and growing network of grain facilities, export elevators and transportation assets in Ukraine.
Ukraine, Russia and Argentina rank as the top three sunflower seed producing countries. Ukraine has harvested 3-5 million tons of sunflower seed annually in recent years.
Original plans envisioned that the newly built facility would process 170,000 tons of sunflower seed or soybean annually with capacity being increased in future years.
ADM is one of a handful of leading world agriculture players to have strengthened their positions in Ukraine through acquisitions and investments into harvesting, processing and export facilities.
Two other US-based agriculture conglomerates, Bunge and Cargill, have invested tens of millions of dollars into boosting their presence on the Ukrainian market within the last decade.
Together, the three control more than a third of Ukraine’s sunflower seed business.
Late last year, a leading Ukrainian sunflower seed producer and processor snapped up a domestic competitor, establishing one of the country’s largest oil seed businesses.
At the time, analysts said that Kernel Group’s acquisition of Eurotek would be felt by international agriculture giants with a presence in Ukraine. Still, the larger foreign players are gradually gobbling up more of the business.
Viktoria Oleynik, an analyst at APK-Inform agriculture consultancy, said ADM’s buyout of Risoil’s stake in the facility reaffirms the strengthening grip of “big, Western players” over Ukraine’s agriculture business in “contrast to the predominance of small companies several years ago.”
“We have a considerable number of international companies operating in Ukraine and they continue to strengthen their positions, while Ukrainian companies are still in the phase of growing up. [Smaller Ukrainian agriculture groups are] experiencing difficulties in competing with larger Western competitors,” she added.
