You can take the headline as a joke, but the situation in the industry is such that processors are not laughing. This applies not only to millers, but also to all those associated with agricultural raw materials. Dairy and meat products are becoming more expensive; stores ask for 60 or more hryvnias for a bottle of sunflower oil. Consequently, bread and confectionery products are becoming more expensive. Many production facilities are shut down, and vice versa, small mills that have not been working lately are urgently started up and work in "black".

What happened in Ukraine, what a terrible catastrophe? As always, nothing new and no intrigues of enemies: our parliament decided to alleviate the plight of the agrarians and lowered their VAT to 14%. Well, the President pushed the law. But how! Reducing the tax burden on poor farmers! This is sacred. And no one thought that these poor fellows every year have a considerable profit, they often trade heavily for "black cash", do not honestly show either the yield or the gross collection, do not pay extra taxes. And when natural disasters deprive them of their harvest, they loudly demand state compensation!

I will secretly share my secret knowledge: everyone, absolutely all processors of agricultural products do not like the producers of this very product even more than the government, tax authorities and parliament combined.

This year, due to the global market situation, grain prices have risen sharply, and the earnings of farmers are simply going through the roof. So they also reduced the tax by 6% ... Despite the fact that the profitability of millers 3-5% is considered very good. The arithmetic is simple. Naturally, the prices for grain within the country are guided by the world prices, the prices of processed products follow. So much for the result.

It is clear that the law was lobbied very strongly. The power in Ukraine has never been so weak. And not because she is so venal, not at all ... or rather, not only for this reason. Everybody considers corruption to be the main stopper of improvement in our country. So, corruption together with amateurism and unprofessionalism is many times worse! And who is in our parliament? And in the Cabinet? And in the OP? And further down the list ...

Another, secret (!) Opinion: it was necessary to luster government officials. But with top specialists it is not so easy: you cannot be a high-class manager in various industries and not participate in the schemes. Such people were simply squeezed out. It was necessary to create conditions for them to work normally. It is impossible to grow a replacement for managers of this level in a year or two, and even without many years of experience in preliminary activities. But alas, many have been removed, and they are doing a great job for the benefit of private companies. And we have what we have ...

Could this have been allowed, for example, in Turkey, the world leader in flour exports? Of course not! Or in Russia? And there they acted very cleverly: with a sufficient harvest, they introduced an export duty on wheat. Taking into account world prices and realizing that the farmers themselves will not voluntarily share profits, this decision increased treasury receipts and reduced prices within the country. Without affecting export volumes at all. On the contrary, flour exports, for example, grew at the expense of those markets from which Ukraine left due to uncompetitive prices. Moreover, flour from Belarus, in fact, being a product made from Russian raw materials, is actively imported by Ukrainian consumers, as it is cheaper than the one produced in our country. From October 2020 to February 2021 11,218.7 tons were imported from there. For incomplete March, another 2,328 tons were imported from Belarus - more for the whole month. In addition, they imported a little from other countries. As they say, we survived!

Import of flour to Ukraine for 8 months 2020/21 MG, t

What do our production statistics show? Nothing comforting ... We have never produced so little (officially): 828 thousand tons of wheat flour were produced for 8 months of 2020/21 MY, and in aggregate with flour from other crops - only 864.6 thousand tons.

Wheat flour production in Ukraine, thousand tons

During the same period of bread and bakery products (officially!) Produced 494.6 thousand tons of pasta - 43.6 thousand tons.

Based on the production volumes and taking into account the official population of 42 million people, it can be calculated that 30 kg of flour is produced per capita per year, and 17.6 kg of bread. I'm not even talking about pasta.

Very true data, isn't it? Well, let our population be 35-38 million people. Even in this case, in the "shade" - about 50% of flour and bread. Where does this data come from? Well, for example, from Germany and Poland, where 70-72 kg of flour is produced per capita per year. There, obviously, they eat only bread, there is not enough money for other products, in contrast to rich Ukraine. Why not rich? The cost of premium wheat flour in small packaging in retail in Slovakia and Poland is lower than in Ukrainian retail chains. And many flour confectionery products as well.

But what about the export of flour, which not so long ago pleased with annual growth and the nearest border of 500 thousand tons per year? But in no way ... And even worse!

Export of flour from Ukraine, thousand tons

For 9 months - 96 thousand tons. Is this a lot or a little? If we compare it with 2010/11 MY, when 87.5 thousand tons were exported during the marketing year, this is probably a lot. And if we compare with 2017/18 MY, when in 9 months Ukraine exported 354 thousand tons, and for the entire MY - as much as 428 thousand tons - then, probably, nothing at all. The markets where we have been selling successfully for a long time have been successfully filled with flour from the Russian Federation, which is much more competitive, due to the correct and timely measures taken to protect their producers, and, by the way, domestic consumers as well.

But even with such a scanty export, there were some surprises.

As you know, for a long time, the State Food and Grain Corporation "shone" with export prices for flour, which were much lower than domestic prices. This has almost stopped since last August. And in February, the Corporation again exported flour at a price of $ 277 / ton on FAS terms. In terms of FCA terms of delivery, this is approximately $ 255 / t. Adding 20% ​​VAT, we will get about UAH 8.5 thousand per ton of flour. For reference, in February, the minimum price for even the first grade flour was 11.2 thousand UAH per ton. Do you think there would be buyers for the price of UAH 8.5 thousand / t? Surely they would have lined up!

But the GPZKU decided to feed the world ... And what, quite nobly, does not care about the huge annual losses and the fact that very soon Ukraine, that is, you and I, will have to fulfill government guarantees for the loan. In simple words: we will pay debts for the Corporation.

Average prices for premium flour, FCA, $ / ton

Enlil had an even lower price - $ 235 per ton. But everything is not so simple here. Rumors have been circulating in the market for a long time about, to put it mildly, the strange manner of Enlil's work with clients. In this case, the buyer was able to force the company to fulfill the contract concluded and paid back in August. Again, according to rumors in the market, few have succeeded.

Even in the face of a catastrophic drop in exports, some companies retained some of their buyers. Someone, for example, "Roma" - with exclusive compound mixtures, someone - thanks to long-standing partnerships. In any case, these are the same leaders of the past.

Consumers of Ukrainian flour for 8 months 2020/21 MY, tons /%

Flour was not shipped to all of the above countries in January-February, but the indicators of the previous months determine the upper ranks of buyers. We have not been shipping to North Korea for a long time, but this country is in the middle of the top buyers. By the way, most likely, we will no longer sell there at all, since the United States indicated to China that it is unacceptable to re-export from its territory. But shipments to Venezuela continue. And constantly exports to this country only "Pivdenmlin".

The main flour producers in Ukraine are still the same. Sometimes the position in the ranking changes, but the top ten itself practically does not change.

And this despite the fact that in the current realities it is the large enterprises that work officially, pay taxes and replenish the budget that suffer. In the official statistics, there are not many dozens of small and not very small mills operating either entirely on "black cash" or "gray", and producing up to a million tons of flour per month.

Despite the pandemic, cutbacks in production, the shortsightedness of our politicians and politicians of other countries who were "hurrying in advance" in time, there are some positive shifts in the market. During the last month, the export price for wheat fell by $ 30 per ton and continues to decline. The harvest is very good both in Ukraine and in the world. This means that we hope that there will not be such excesses as this season. And if our people's representatives do not "help" us again, then there is a possibility that the status quo will be restored. What Ukrainian millers really hope for.

Serhiy Sakirkin, Chairman of the Audit Commission of the Public Union "Union of Flour Mills of Ukraine"

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