OREANDA-NEWS. February 24, 2010. Participants of the workshop expressed the thesis “Sorghum as a strategic and lucrative crop” in Mykolayiv on the 18th of February, 2010. This meeting was a logical continuation of the business meeting of “SYNGENTA”, “REYLIN” and “NIBULON” in December 2009, where management of the companies decided to start cooperation in cultivation sorghum in Ukraine.

Representatives of local administrations and companies who specialize in the production of grain and oilseeds, seed production, logistical support of agricultural production, husbanding and trade of agricultural products were invited to the constructive conversation on the 18th of February. Among the participants there were: “SYNGENTA”, “REYLIN ENTERPRAYSYS, Inc.” ( USA), “REYLIN”, “BRIG”, “IRLEN”. Representatives of “NIBULON”, headed by Deputy General Director Andriy Vadaturskyy took part in the workshop.

“Today it is a unique situation when “SYNGENTA”, “REYLIN” and “NIBULON” united in a project on sorghum cultivation. This project invited producers from all over Ukraine, because the volumes that “NIBULON” mentioned are very large, they are 1 million tons of export, with subsequent increasing of 1 million tons annually. Thus in 5 years we have to reach 5 million tons of export. This is a high rate and a great work”- the country manager of “SYNGENTA” in Mykolayiv region I. O. Boyko said.

According to the chief executive of “REYLIN” V.T. Barbaruk: “Sorghum belongs to high-quality and high-yield seeds. In southern and southeastern regions, there is a lack of moisture and crop rotation it is difficult to form an economic crop, sorghum takes its rightful place. Potential yield of our hybrid – is up to 12 tons per hectare. Why is sorghum more attractive in comparison with barley? Firstly, sorghum is drought resistant culture. Secondly, it is much more plastic, that allows us to obtain high stable crop every year. Thirdly, the cost value of sorghum crop is lower. There are a lot of drivers for sorghum, because this culture is easier to care and it has longer term of growth. Today, the average yield of barley is about 2 tons per hectare. At the same time, the average yield for sorghum is 6 tons per hectare. That is why we believe that instead of corn and barley in southern Ukraine sorghum should be cultivated.

In his speech, deputy general director of “NIBULON” A.O. Vadaturskyy also drew attention to the advantages of sorghum cultivation in comparison with spring barley. In his view, the main obstacle of barley trade next year will be increased competition from exporting countries:

 “ Ukraine provides 50% of demand for barley in the world (about 6 million tons). At the same time, export capacities of our main competitors such as Australia reach 3-5 million tons, Europe - 2-4 million tons, Canada - 1-2 million tons, - said A. Vadaturskyy. It is expected that next year Europe will be our main competitor. There is a program to support agricultural producers in the EU today: the government buys barley from the population at a price of 105-107 Euros per ton. This program will be in effect until the 1st of May, 2010. Thus the state will go to the market this year with large carry-over. And despite the decline of barley production in European countries (from 62 to 56 million tons), Europe will be able to ship these residues (additional 5-6 million tons) for export at any time. Volume of domestic consumption of barley in Europe today is at the highest level, because it is cheap forage culture in comparison with wheat (170 USD per ton FOB)”.

The world largest importer Saudi Arabia, that consumes about 7,5 million tons per year (60-75% of  the world import) affects the cost for barley. In his opinion, this trend has a negative effect, because we, as Ukrainian producer, depend on one importer - a country which was spending substantial state subsidies for purchasing of barley for a long time.

“The point is, - continued Andriy Vadaturskyy - that 45-60% of import price for barley in Saudi Arabia were subsidized as a help to the local population. When the world prices were changed, the government increased subsidies. That was the first year, when the government of Saudi Arabia had a strict policy and increased subsidies. This year the subsidy is no more than 65 USD per ton. Relating to the price fluctuations for barley, in Ukraine the figure rose from 820 UAH per ton at the beginning of the year to maximum 1020-1040 UAH per ton. Price fluctuations in Saudi Arabia are insignificant (from 160-165 USD up to 180 USD at the end of the year) and are generally caused by changes in the cost of freight, transshipment, USD exchange rate. This trend shows that according to the average rate of culture storage of 15 UAH per month, storage of barley did not justify itself this year. Today there are no predictions about changes in subsidies for the next year. Of course, this is a big negative feature, but on the other hand, we understand what price for barley will be in the next crop. It is about 840-1080 UAH (with an exchange rate of 8 UAH / USD) per ton with delivery to Mykolayiv.

A.O. Vadaturskyy shared his vision of the situation on the corn market with farmers: “The largest producer of corn today is America, where 330 million tons with annual increase in volume are cultivated. For American farmer cultivating of corn is more attractive, because this culture can be traded on commodity markets (especially in Chicago). According to the latest data, U.S. farmers have already sold 50-60% of the corn yield in 2010 and 20-30% of the yield of 2011. At the beginning of this year, prices for corn were quite high, but this year disclosure of information about a record harvest of this crop has led to a rapid decline in its value. The maximum price in Ukraine this year reached 1500 UAH per ton delivered at dock. I think that next year on average the price for corn will be 140-155 USD under CPT. Thus, at a fixed rate and no natural disasters, the price for corn will fluctuate in the range of 1120-1240 UAH delivered at dock”.
“As for sorghum, this culture has a more favorable economics than spring barley. The price for sorghum on the world market has a rigid peg to the price for corn and bargains at a discount of 20USD. Thus, for a fixed rate, price for sorghum will be 960-1080 UAH per ton. Today we have brought Ukrainian sorghum on the world market and are ready to buy up to 1 million tons of the culture”- said Andriy Vadaturskyy.
“NIBULON” in the fruitful cooperation with Ukrainian farmers proves its sincere desire to support domestic agricultural producer, to protect his interests. Search for such innovative solutions as cultivation of sorghum, has to help Ukrainian agricultural sector to orientate itself quickly to global trade trends, to take its honorable place in the export of agricultural products.