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INTERVIEW-Ukraine trader HIB aims to double grain exports

Published 04/27/2011, 08:45 AM
Updated 04/27/2011, 08:48 AM

* Trader HIB says grain quotas system is fair

* HIB promises several billion dollars investment

* Private ownership remains mystery

By Pavel Polityuk

KIEV, April 27 (Reuters) - A mysterious newcomer to Ukraine's lucrative grain market, Hlib Investbud (HIB), said on Wednesday it planned to export at least 1.5 million tonnes of grain this season and could double that amount in 2011/2012.

HIB emerged last summer from the restructuring of Ukraine's main grain company, which was fully state-owned. It is now owned 49 percent by the state and 51 percent by private investors who have never been identified.

The company has moved into the lucrative export market as well as making grain purchases for a state-run intervention fund that is responsible for ensuring domestic food price stability.

Last year, a severe drought threw the Black Sea grain market into turmoil. Russia banned all grain exports, and Ukraine -- previously the world's largest barley exporter and one of the top five for wheat and maize -- in October imposed export quotas.

HIB, which had not exported before the quotas, won more than 20 percent of the total quota volume of 4.2 million tonnes.

This prompted exporters and traders to accuse the government of favouritism for a firm that is only partly state-owned.

HIB General Director Robert Brovdi said in an interview the procedure for allocating the quotas was fair and transparent.

"More that 50 companies received quotas. All who had an interest, who possessed volumes of grain, all of them received quotas," Brovdi said.

"The problem is that they (traders) assumed they would export more, similar to the amounts that they had done in previous periods."

FUTURE EXPORTS

Ukraine harvested 39 million tonnes of grain in 2010, and its exports are forecast at 11 million tonnes in the July-June 2010/11 season. Brovdi said HIB could account for up to 15 percent of that volume.

"We are talking about the export of 1.5 million tonnes of grain this season, and we want to approach 2 million," Brovdi said.

He said a higher grain harvest this year could allow HIB to increase exports to about 3 million tonnes in 2011/12 and that the company had already bought grain on a forward basis for future exports.

Ukraine expects the harvest this year to amount to at least 43 million tonnes, and analysts say exports could jump to 22-23 million in 2011/12.

"We are seeking to double exports next season. Our programme of forward purchases, preparation for spot deals, a wide geography of silos and a significant amount of investment money allow us to form a plan for several million tonnes of exports," Brovdi said.

Ukraine's billion-dollar grain sector is, with steel and chemicals, one of its biggest export earners, but it remains a murky area of the economy.

The cash-strapped Kiev government, with its eye on the huge export potential, continuously seeks to tighten its control over the sector while seeking to hold down local bread prices and prevent any local unrest.

Traders and the European Bank for Reconstruction and Development (EBRD) have expressed concerns about a draft law that would establish a state-run grain export monopoly, which could damage the confidence of foreign investors who have already poured millions of dollars to build Ukrainian grain infrastructure.

Foreign-owned exporters, traders and other interested parties have criticised HIB for keeping its full ownership secret.

Andre Kuusvek, the EBRD director in Ukraine, said in late March at an Internet conference, "We also are concerned about the lack of transparency in the structure of share-holders of the company HIB."

Brovdi said the private owners of 51 percent would invest 'several billion dollars' in the Ukrainian agricultural sector under the current two-year investment programme.

But he declined to name them.

"As it stands today, it is not in my competence (to reveal the names), according to an nondisclosure agreement," he said.

"This is a commercial investment project ... We are in permanent dialogue with potential investors in a bid to increase investments," Brovdi said. (Writing by Richard Balmforth; Editing by Jane Baird)

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