One of Ukraine's largest grain and sunflower seed traders says new factory will benefit from proximity to seaport
One of the nation’s largest grain and sunflower seed traders, Agroexport, said that it would open a new oil-extraction plant in Mykolayiv by early September 2003. The scheduled opening should be just in time for the plant to participate in this year’s sunseed harvest.
Agroexport began building the plant three years ago. It has invested $25 million in the facility, which will be able to process 300 tons of seeds daily. In two years, the capacity will be increased to 1,000 tons per day. In addition to sunflower seeds, the factory will be able to process soybeans and rapeseed.
Agroexport General Director Hennady Zhyltsov said that the company plans to invest $10 million to install the equipment necessary to refine, deodorize and bottle oil by 2006.
Zhyltsov said that the sunflower oil and oilcake produced by the factory would be exported.
Ukraine’s oil industry consists of 26 large factories and small oil‑presses capable of processing up to 3.5 million tons of sunflower seeds per year. Though the factories operate at only 40 percent of capacity, the domestic market for sunflower oil is saturated.
After the introduction of a duty on sunflower seeds in 1999, traders and extraction plants reduced exports significantly, focusing on the export of processed vegetable oil instead. The bulk of the sunflower seeds harvested in Ukraine are now processed domestically.
Annually, the nation produces almost 1 million tons of sunflower oil, 60 percent of which is exported.
“The tendency toward the increased export market is positive,” said Stepan Kapshuk, deputy director of Ukroliaprom, the Association of Sunflower Seed Oil Producers. “It shows that the export duty is working properly.”
“It is good when a country exports a finished commodity instead of raw materials,” he said. “It contributes to the creation of jobs and generates tax revenues.”
Agroexport Deputy General Director Pavel Linnik agreed that exporting oil and oilcake is a better deal for the company.
“It is more profitable to export sunflower oil than to export sunflower seeds,” he said. “We’ll stop exporting seeds completely after we begin to export oil.”
Ukroliaprom said that between October 2002 and March 2003, Ukraine produced 810,000 tons of sunflower oil. Of that, 510,000 tons was exported. Ukraine supplies sunflower oil to 36 countries.
The nation’s biggest exporters are Cargill, which supplies European countries with raw seed oil, and Suntrade, which exports bottled seed oil under the trademark Oleina (primarily to Russia).
Proagro Director Mykola Vernitsky said that the Agroexport’s factory has a good chance of generating profits due to its location in Mykolayiv.
“The factory is well‑positioned. There is no serious player on the fat and oil market in Mykolayiv region, which is one of the main producers of sunflower seeds,” he said.
Zhyltsov said that the factory will also benefit from its proximity to the Mykolayiv seaport.
“We will not have to spend money for transportation. Other factories don’t have such a luxury,” he said.
Linnik said that Agroexport owns more than ten elevators that will help the company save money for storing seeds.
Ukroliaprom predicts that Ukraine will produce 1.1 million tons of sunflower oil from the harvest this year and will export 600,000 tons of it.
Zhyltsov said that the Agroexport factory would export about 40,000 tons of sunflower oil in the 2003/2004 marketing season.
Agroexport exports grain and sunflower seeds to more than 20 countries. During the previous marketing season, the company exported 1 million tons of grain and sunflower seeds.
