“Soy is a highly profitable crop” – explains Yuriy Melnyk, the Chief Operating Officer of “Mironovskiy Hlebo Product”. Traders are ready to pay $360 per ton of soya the cost price of which is $135. Alex Lissitsa, CEO of agricultural holding “Industrialnaya Molochnaya Kompaniya” (IMC), says that earlier in the fields of IMC there were mostly corn, wheat and sunflower. Now there is also a place for profitable soy.
|Period||Soy export, thousands of tons|
“Soy is easier to grow than corn or wheat, – says Grigoriy Gavrilenko, the CEO of “Aratta”. – There is less risk, moreover, it profits very fast. In May, you invest in soybean, and within four months, it pays back.”
Yuri Lebedev, the Chief Agronomist of the “Rostock-Holding” agrees with Gavrilenko. “Our company considers soy as a cheaper alternative to corn”. As Yuriy Melnik from “MHP” forecasts, in the upcoming years the area of soy fields will be increased by 300 000-400 000 hectares.
Why is soy so profitable? Demand for it is much bigger than supply. Soybean is demanded both in Ukrainian and in the global market because of the amount of protein in it. It is an essential feed additive. In poultry and pig breeding soybean seedcake is a basis of feed supply. Unlike corn, there is no need to dry soybeans.
However, the export of soybeans brings the main income for the manufactures of this crop. Ukraine is among the top ten world’s largest sellers of soy – last year about 1.5 million tons of soybeans were exported, though 10 years ago, the volume of export barely reached 42,000 tons.
Ukraine has significantly increased its share of the global market over the past 10 years. It has entered the top 10 producers and exporters of soybeans. From January to November 2015, according to the State Fiscal Service, our farmers earned $734 million on the export of this crop.
Soybeans are in great demand not only in Asia, where it is traditionally one of the main products, but also in Europe. Now soy consumption in the EU is estimated at 7 million tons. By 2020 it will reach 10 million tons. The Europeans grow only about 5% of this amount, the rest has to be imported.
“There is a demand for soybeans, soy oil, and seedcake in the global market. The granular shell can be also sold”, – says Melnik. IMC sent almost everything of its 16 000 tons soy harvest on export. “Most of the harvest was sold to the EU”, – said Lissitsa.
Vladimir Bartzes, the owner of “Vinnitskaya Agro-Industrial Group” also sells soy to the EU. Most of its 20 000 tons harvest is exported to Poland. “The demand for Ukrainian soybeans in the EU will continue growing”, – predicts the co-founder and the president of the “Danube Soy» association – Matthias Kryon. Why? More than 90% of this crop in the world is genetically modified. However, gradually, more and more countries are refusing modified soybeans in favor of organic. For example, the European Union has already banned the use of GMO soybeans for food. In 2017, it introduces a ban on its use as animal feed.
In Ukraine, growing genetically modified soybean is prohibited by law. Kryon is sure that Ukrainian farmers who focus on the production of non-GMO soybeans may eventually become the major players on the European market. “We expect that 30-50% of the Ukrainian soybean production volume can reach the European market”, – said Kryon. Moreover, he adds that farmers will earn more because the price of “clean” soya is higher than the price of modified crop.
“We’re going to start supplying our products to France and Austria. We are already negotiating with companies from these countries,” – says Alex Oronov, the owner of Grain Alliance company. He bought equipment for cleaning and calibration of soybeans for $1 million in Japan. The quality of their soybeans is already appreciated in this country. The company has been exporting its products to Japan for three years.
The “Svarog West Group” corporation is one of the largest producers of soybeans. It also spends much money on research and selection of the best soybean varieties from around the world. With the latest cultivation technologies, the harvested amount of “pure” soy is higher than of genetically modified one. Over the past five years, “Svarog” was able to increase the crop yield by almost 5 times, up to 3.8 tons per hectare. This year the company will sell 150 000 tons of soybean to the EU.
However, the processing of soybeans in Ukraine is not developing so fast. Therefore, many large oil extracting agricultural holdings are analyzing the industry. For example, “Kernel” owned by Andrew Verevskiy is among them. “Now we are estimating which of our plants are technically able to process soybeans”, – says Evgeniy Osipov, the “Kernel” agricultural production director.
In 2015, “ViOil” company owned by Victor Ponomarchuk started soybean processing. “We have set the modern equipment for the production of soy oil and seedcake, – says Ponomarchuk. – We are going to sell seedcake in Ukraine and export it.”
Ninety companies are ready to process soybean in Ukraine. There is no shortage in production capacity. “As long as soybean is highly demanded in foreign markets, the processing burst should not be expected. The earnings of farmers are already high.”- says Timchenko.