Tuesday, March 22, 2016

Minister of Agrarian Policy of Ukraine: Rearrangement of PJSC “SFGCU” work is strategically important for the industry

“The PJSC “SFGCU” is the key stakeholder of the state sector of the economy on the grain market of Ukraine. Its activities ensure the state interests in the grain procurement system and carry out the export of grain in the framework of an intergovernmental project with the People’s Republic of China. However, as a result of activity of the Corporation’s former management, in 2013-2014, the PJSC “SFGCU” suffered about $310 million of losses, about $130 million of which were unrecovered currency earnings”, Oleksii Pavlenko, the Minister of Agrarian Policy and Food of Ukraine, informed.
The Minister stressed that the problems in PJSC “State Food and Grain Corporation of Ukraine” work had indeed occurred. Moreover, it is strategically important to solve these issues. Concurrently, according to OleksiiPavlenko, the Ministry has no legal instruments to intervene in the enterprise’s economy activities.

“Since the beginning of 2016, the PJSC “SFGCU” has been taking the appropriate measures under the Ukrainian and international law to recover the overdue accounts receivable from 2015. According to the PJSC “SFGCU”, today the indebtedness was paid in the sum of 82 million UAH”, Oleksii Pavlenko explained.
The net income of the PJSC “SFGCU” accounted for 12.4 billion UAH last year and it exceeded the 2014 figures by more than 1.7 times. The gross income increased by 92% and accounted for 2.1 billion UAH, according to the Corporation. But the company still remains unprofitable. The net financial result is the loss of 3029 million UAH. The main reason for such performance is the exchange rate loss due to the hryvnia devaluation in 2015.
“Today, the deepening of cooperation with the Chinese partners is central to the PJSC “SFGCU” activities. Currently, the company has begun negotiating further beneficial cooperation with the Chinese counterparts”, the Minister stressed.
For instance, the parties have already agreed upon:
- selection of a pricing mechanism. It should be negotiated based on the specific situation on the market at the moment the offer is made;
- matching of plans and terms for grain supplies.

“Currently, the parties discuss the issue whether the preference margin should be shifted from the absolute measure set at $5 per ton to a percentage ratio. The PJSC “SFGCU” has suggested setting the preferential margin at the rate of 1.25% of the price of each ton of grain supplied to China. However, the parties have not reached a consensus yet regarding the final value of preference margin”, the head of the Corporation reported. He added that at the moment the Corporation was passing the final stage of preparation for the full implementation of the forward program 2016.

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