Bunge’s Footprint in Ukraine

18.01.2017 / 10:35

Bunge is an international integrated company which operates globally in agricultural and food product markets. In Ukraine it is one of the leading exporters of grain and sunflower oil.

The company entered the Ukrainian market in 2002 by acquiring an oil crush and bottling plant in Dniepro, Ukraine which produces one of the most popular household sunflower oil brands in Ukraine «Oleina».

Bunge further expanded its presence in grain and oil trading and acquired 5 grain elevators.

It introduced pre-financing programs to farmers also started program of supplying them crop protection and seeds.

фотоIn 2011 Bunge constructed a modern transshipment terminal that increased Ukraine’s grain export capacity by 3 million tons per year and now is one of the most efficient port grain terminals in Ukraine.

In June 2016 Bunge unveiled its $180 million state-of-the-art industrial and transshipping complex in Mykolaiv Sea Port, Ukraine (southern part of Ukraine). The Complex includes multi-seed crushing plant, oil and meal storage facilities. As of now it is one of the biggest in Ukraine and will increase export potential of the country by 1 million tons of oil and meal. The project changes the structure of current Ukraine’s exports — shifting from export of agricultural commodities to export of value-added agricultural products. The Complex is part of a $280 million investment into the development of Ukraine’s port infrastructure, making it one of the largest international investments in the Ukrainian agricultural sector as to date. It took Bunge Ukraine 11 years to strengthen its financial and agro market powers to be able to enter such ambitious investment project and to operate this state-of-the-art facility. 

The company plays an important social role in the country creating stable jobs and investing into skilled labor.

Dmitry Gorshunov, CEO Bunge Ukraine

Ukraine has 1/3 of world’s black soil and over 41 million hectares of arable land.

We see a lot of potential in development of business in Ukraine and further investment into Ukrainian agriculture industry and agriculture-related infrastructure.

Its surplus of grain production is significant (out of the 60 mio MT of grain production in 2015/2016 it exported over 38 mln mt). In 2016 Ukraine ranked as the world’s number one exporter of sunflower oil and a leading grain supplier to key global markets.

Strong grain export performance is strategic for Ukraine as it generates crucial foreign currency revenues at a time when other mainstays of Ukraine’s export economy have been rocked by falling global commodities prices and domestic unrest.

Having invested in to the sea port infrastructure in Ukraine, we plan to develop our business here, significantly contributing to the economy of Ukraine and enhancing its export potential.

Ukraine is undergoing major reform in a difficult political and economic environment but generally demonstrating a positive trend.

We believe that, in spite of the challenges Ukraine has been facing, the ­government of the country is committed to create the best economic regulation to establish long-term cooperation with foreign investors. As the global company, we are ready to advise and assist in the development of better regulation, and public-private partnership mechanisms, bringing our best practices to the table.

We would like the Government of Ukraine to focus on preparing for privatization of state-owned enterprises in agriculture and infrastructure (i.e. state stevedoring companies) which would bring positive structural change to the economy and would create additional investment opportunities.

Oleg Bigdan, Chief Legal Officer Bunge Ukraine

Bunge placed its confidence in Ukraine’s agricultural and infrastructural potential. That is why our company has significantly increased its footprint since its first investment in Ukraine in 2002. On June 2016 we opened one of the biggest multi-seed crushing plants in Ukraine in the port city of Mykolaiv so Ukraine’s agricultural sector received a significant boost with the unveiling of a major new industrial and transshipment complex.

The presence of Ukrainian President Petro Poroshenko at the official opening ceremony of the Facility and Acting Deputy Secretary of USDA Michael Scuse served to underline the national significance of the investment. The President of Ukraine saw our investment as a «vote of confidence», an example of investor’s faith in Ukraine’s future economic development.

This asset fits Bunge’s global strategy and enables us to connect the Ukrainian farmers to the global marketplace.

Bunge’s investment is a litmus test demonstrating that the investment climate in Ukraine generally improves and that despite some pitfalls a level playing field is being created for all and the country is aiming more and more openness and predictability in business and regulatory environment.

We support the efforts of the President of Ukraine and the Government of Ukraine in creating conditions for investors.

Thus, we appreciate that situation with VAT significantly improved during the last two years. However, the tax reform should be finally finished so that tax rules do not change every year.

We fully support infrastructural reforms of the Ministry of Infrastructure, including focus on restructuring the monopolistic state enterprise of the maritime industry and its local affiliates (named «USPA»). At the same time we are working together on removing business impediments. One of such hurdles is ineffective and excessive level of port fees which significantly undermines competitiveness of Ukrainian ports with the other Black Sea ports. Business community and key industry players have been working with the World Bank and IFC experts to develop a transparent and economically justified calculation for port fees and we urge the Ministry of Infrastructure not to allow this process been drown. And we have high hopes that in 2017 year the business will see new rates of port dues, developed on the basis of their economic feasibility and transparency, laying down the competitive foundation of the Ukrainian ports in the long-term perspective.

Olga Kopiika, Senior Legal and GR Counsel Bunge Ukraine

On the future the competitiveness of the Ukrainian grain market would increase. With further investment in the infrastructure, logistics cost for export from filed to vessel will improve the margins.

In order to retain Ukraine’s leading positions in the world markets of grain commodities and agricultural products, Ukraine needs to improve its logistics significantly. First of all this is railway infrastructure (improvement of its operation; construction of new locomotives, railway trucks) and inland waterways (adoption of the appropriate law; introduction of the economically justified river charge) that will boost the Ukrainian export capabilities. 

We expect that the reforms of the infrastructure industry will be well thought-out, balanced and planned in advance.

To plan our further investment into the infrastructure, we need to be sure we have mutual understanding and commitment with the government of Ukraine. The success of our company  encourages other investors to consider investment opportunities in Ukraine. At the same time we would like the government of Ukraine to hear the voice of the investors who demonstrated their decisiveness to invest in the economy of Ukraine in challenging times.

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