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26.15 26.5
29.1 29.85
Politics 2019-06-20T04:02:45+03:00
Ukrainian news
Bunge company export of Ukrainian grain of will decrease by 20%

Bunge company export of Ukrainian grain of will decrease by 20%

Farmers demand direct contracts with exporters and refuse to work through intermediaries, writes the publication of the Apostrophe.

According to the Ukrainian Grain Association, the bankruptcy of the "Agroinvestgroup" holding company will adversely affect the Ukrainian agrarians and grain market structure. Multinational exporters are already cutting their investments in grain. Because of this, the share of large companies in the market will change. In particular, Bunge Ukraine may lose at least 20%.

According to the president of the Ukrainian Grain Association Mykola Gorbachev, after the "Agroinvestgroup" grain fraud, large export companies refuse to purchase grain from internal grain elevators upon warehouse receipts. Because of this, commodity producers will be forced to sell the grain at a lower price in the new marketing year.

"Before, after receiving a warehouse receipt, the buyersof the grain was sure that they became the owners of the grain in the elevator, but now, nobody can guarantee that there is any grain in the elevator. Many companies will stop purchasing grain upon warehouse receipts. It will harm the farmers directly. They will have to wait longer for the money from selling the goods, and spend more money on logistics, because instead of the the elevator located 10 km from them, the nearest place to sell the grain will now be the port located 200 km away. In case they do not have capacity to store the grain, they will have to sell it at a price that is lower than the current market price to replenish their working capital. As a result, it will lead to a decrease in foreign currency flow into the country, "said Mykola Gorbachev.

UGA President adds that because of the "Agroinvestgroup" fraud, Ukraine has lost investment attractiveness for large export companies that have since then limited their investment in the industry.

"The "Agroinvestgroup" fraud has changed the attitude of investors. International companies have already significantly limited their investments in grain for the next season. Some of them have even stopped their investment activity and are going to sell their assets to compensate the losses. In particular, linear elevators have been put on sale," added Gorbachev.

Agricultural experts also point out that after the bankruptcy of Agroinvestgroup, agricultural producers require direct contracts with exporters and refuse to work through intermediaries. As a result,  large companies will no longer have the possibility to buy raw materials through "fly-by-night" companies, process it through tolling for further export without paying taxes in Ukraine. In particular, the share of Bunge Ukraine in the sunflower seeds market may decrease by 20%, and because of that, the oil extraction plant in Mykolaiv will not have enough raw materials.

About 20 Ukrainian farmers, large agricultural producers and multinational companies, the state "Agrarian Fund", the State Savings bank of Ukraine "Oschadbank", and a number of foreign investment funds suffered from the bankruptcy of "Agroinvestgroup" holding company in February 2019.  According to the facts established by the enquiry, they lost more than 270 thousand tons of grain. Total losses amount to $200 million.

The head of the Ukrainian Bunge nominee company Dmitry Gorshunov is suspected of organizing the fraudulent scheme. In the summer of 2018, "Agroinvestgroup" elevators began to receive grain from the producers without charging them for storage. Bunge-Ukraine promised to redeem the grain. However, the director of the company Dmitry Gorshunov refused to conclude direct supply contracts and sent the farmers to Agroinvestgroup. Gorshunov personally vouched for the mediator, asserting that giving the grain to Agroinvestgroup is the same as selling it to the Bunge company. In fact, he deliberately forced farmers to give their products to Agroinvestgroup. Having received the grain, Gorshunov and Mykola and Vitaliy Kucherenkostarted selling it, and at the same time, they received loans from Oshchadbank, Tascombank, Diamantbank, Bank Vostok, and OTP Bank. The same warehouse receipts that confirmed the transfer of ownership were issued several times. By February 2019, most grain from the elevators of Agroinvestgroup had been taken to the temporarily occupied territory of the Donetsk and Luhansk regions and sold through dummy companiesregistered in those uncontrolled territories.

Dmitry Gorshunov's business partners, owners of "Agroinvestgroup" Mykola and Vitaliy Kucherenko, fled to Russia and are now on the international wanted persons list. Ukrainian farm producers are picketing the office of "Bunge-Ukraine" in Kyiv and demanding the arrest of Dmitry Gorshunov. Investigators are preparing to file charges against him under part 4 of Article 190 of the Criminal Code of Ukraine: fraud committed in respect of an especially gross amount, or by an organized group.


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