Bloomberg News

UkrLandFarming Seeks to Supply Corn as China Diversifies Sources

May 10, 2012

Oleg Bakhmatyuk, chairman and owner of Ukrlandfarming Plc. Photographer: Nelson Ching/Bloomberg

Oleg Bakhmatyuk, chairman and owner of Ukrlandfarming Plc. Photographer: Nelson Ching/Bloomberg

Ukrlandfarming Plc, Ukraine’s largest grain producer, wants to export corn to China as the country seeks to diversify its supply away from the U.S. to strengthen food security, Chairman and owner Oleg Bakhmatyuk said.

Ukrlandfarming may harvest 1.6 million metric tons of corn this year, he said in an interview on May 8. China may displace Japan by 2014 as the largest corn importer, the U.S. Grains Council said last month.

Corn imports by China may advance 35 percent as a rapid increase in meat demand boosts consumption of grains to feed chickens and pigs, the United Nations said May 3. Argentina and Laos have been approved to ship corn to China, the Beijing-based quarantine bureau said April 28. Ukraine has increased production more than threefold in the past five years and is the world’s second-biggest exporter, according the U.S. Department of Agriculture.

“There is a lot of potential for China to co-operate with Ukraine,” Li Qiang, chairman of Shanghai JC Intelligence Co., said by phone from Hubei province. “It fits China’s overall strategy to increase corn-supply sources.”

The company, also known as ULF, has contracts to sell corn to China, although it needs to clear “sluggish bureaucracy” before shipments can start, Bakhmatyuk said. Exporters need a phytosanitary certification before commercial shipments can start, according to the website of General Administration of Quality Supervision, Inspection and Quarantine.

Hong Kong Listing

ULF is also seeking a Chinese partner to help it secure an initial listing in Hong Kong, said Bakhmatyuk.

“We believe this will be a story that will appeal to both Chinese and international investors,” he said. The listing will “probably” be next year, he said. Bakhmatyuk is also chairman and controlling shareholder Avangardco Investments Public Ltd. (AVGR), the second-biggest egg producer in the world behind Cal-Maine Foods Inc., according to industry website Worldpoultry.net.

Ukrainian corn would cost about $320 per ton for sale from Chinese ports, he said at a press briefing before the interview. The spot price of U.S. corn after tax on May 8 cost the equivalent of $404 at Chinese ports, while China’s domestic corn was $402, according to Shanghai JC Intelligence.

“There has been good feedback from the Chinese side,” Bakhmatyuk said, referring to an approval of sales. Li Yuanping, Beijing-based spokesman at quarantine agency, didn’t return a call to his office.

Ukraine will become one of the biggest producers of corn, rivaling Brazil, with annual output rising to 60 million to 70 million tons in five to seven years, compared with 23 million to 25 million tons this year, according to Bakhmatyuk. The country can “easily” provide 10 million to 15 million tons to China a year, satisfying half of its import needs, he said.

ULF last month signed an agreement with China CAMC Engineering Co., a state-owned infrastructure builder, which will build a grain port, warehouses and meat-production centers in the eastern European country, and the Export-Import Bank of China will provide $4.1 billion in loans, according to an exchange filing by the Chinese company.

To contact Bloomberg News staff for this story: William Bi in Beijing at wbi@bloomberg.net

To contact the editor responsible for this story: Jarrett Banks at jbanks15@bloomberg.net


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