Business news from Ukraine

Business news from Ukraine

“Dobrobut” will build rehabilitation center with support from U.S. International Finance Corporation

The Dobrobut medical network will build a rehabilitation center supported by the U.S. International Development Finance Corporation (DFC).
According to the network’s press release, a letter of intent with Dobrobut was signed by DFC head Scott Nathan at a meeting of Ukrainian business representatives with U.S. Ambassador Bridgette Brink at the American Chamber of Commerce.
“Dobrobut has become the first private medical company in Ukraine to receive financial support from DFC,” the nurse said, without specifying the amount of investment or timing of the project.
As reported, Vadim Shekman, chief operating officer of the Dobrobut medical network, told Interfax-Ukraine in 2021 about plans to build a crpu rehabilitation center.
“Dobrobut” is one of the largest private medical networks in Ukraine. In company portfolio there are 17 medical centers in Kiev and Kiev region, first-aid service, dentistry and drugstores. Medical centers of network provide services for children and adults on more than 75 directions. Annually Dobrobut`s specialists carry out more than 7 thousand operations. The network has more than 2,800 employees.
Since the beginning of the war thanks to the cooperation with the international charitable organizations Direct Relief International, Children of War Foundation, International Medical Corps and University of Miami Global Institute, and thanks to the work of Dobrobut Foundation network clinics that continued their work even during the war, a significant part of medical services for months were free of charge.

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A.G.R. Group to keep land logistics of grain through EU even after war end, opening of Ukrainian ports

The agricultural holding A.G.R. Group and the grain trading company MK Merchants S.A. of businessman Misak Khidiryan, with the start of a full-scale Russian invasion, reoriented the logistics of agricultural products from Ukrainian seaports to road and rail transportation across the border with the EU, as well as to the Ukrainian river ports of Reni and Izmail.
However, even after the end of the war, the de-occupation of the territory of Ukraine and the complete removal of the trade blockade from its seaports, the companies will continue to export part of the grain to the European direction, their owner Misak Khidiryan said in an interview with Interfax-Ukraine.
He also clarified that his holding is looking for opportunities to reduce the logistics shoulder and more convenient export of agricultural products to the EU, and therefore is interested in buying granaries and agricultural enterprises in western Ukraine. At the same time, Khidiryan stressed that at present, the logistics of agricultural products from Ukraine are hindered by the insufficient capacity of the European railway infrastructure and artificial delays in the operation of the maritime “grain corridor” by Russian inspectors.
“After all, the European railway is not capable of transporting the volumes of grain needed by Ukraine, and not only grain. In order to fully use the European infrastructure for export, it is necessary to open additional railway and road border crossings on the border with Ukraine, and, of course, build a European gauge in our country,” the owner of A.G.R. Group emphasized.
“We are also actively exporting along the grain corridor. Frankly, this is a risky option due to long queues, delays in grain truck inspections from the Russian side, and generally very slow operation. But, given the current situation with the cost of logistics during the war, I think grain corridor is a good opportunity,” he stated.
In addition, Khidiryan noted the dubious economic feasibility of exporting agricultural products to Asian and African countries through EU seaports, to which it is transported from Ukraine by road and rail. According to him, the cost of transshipment and reloading of products along this route reaches 50-60% of the total cost of grain, which makes this method of export unprofitable for farmers. Thus, the export of agricultural products to the EU can only be beneficial for export to end consumers in the EU.
In turn, CEO of A.G.R. Group Ihor Shestopalov noted that since the beginning of the war, his holding company has exported almost 55,000 tonnes of agricultural products, while the grain trader MK Merchants ships an average of 8-10 ships with agricultural products through the river ports of Izmail and Reni every month.
“Soybean, rapeseed, barley, wheat, corn, sunflower, buckwheat – we are considering all possible markets for products in the EU, Turkey, Egypt, and Nepal. Since the beginning of a full-scale invasion, we have exported almost 55,000 tonnes. Our partners from MK Merchants are transporting grain through river ports of Izmail and Reni, shipping an average of 8-10 vessels per month,” he said.
In the holding A.G.R. Group includes more than 20 companies. The main direction of its activity is the trade in agricultural products, the cultivation and storage of grain crops, as well as animal husbandry.
A.G.R. Group cultivates land in Poltava, Kyiv, Chernihiv, Mykolaiv and Sumy regions. All grown products are sold on foreign markets.
The holding’s president and head of its supervisory board is businessman Misak Khidiryan.

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Sales of medicines last year amounted to 46 bln UAH

Sales of medicines in 2022 amounted to 46 billion UAH.
According to the company SMD, according to their study, in particular, in the retail segment in the category of pharmaceuticals market decline was 37% in volume and 28% in money terms.
At the same time in public procurement the fall in drug sales was 26% in volume and 21% in monetary terms.
“Despite the difficult situation, the state has even increased budgetary support and already one third of the entire drug market has state funding. Also the share of reimbursement has increased significantly due to the expansion of the program “Affordable Medicines” in such categories as diabetes (insulin), mental and behavioral disorders”, – the company said.
As reported, the Ukrainian pharmaceutical market in 2022 decreased by 42% in volume terms and by 23% in monetary terms, the cumulative sales in the pharmaceutical market in 2022 amounted to about 61 billion UAH in pharmacy entrance prices.

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Oil prices rise, Brent at $85.66 barrel

Oil prices are rising Wednesday ahead of the release of the results of the Federal Reserve (Fed) meeting as well as the results of the OPEC+ meeting.
The Fed is expected to raise its benchmark rate by 25 basis points (bps) on Wednesday, signaling a further slowdown in the rate hike.
Ministers of the OPEC+ monitoring committee (JMMC) will meet Feb. 1 to discuss the oil market situation. Most experts do not expect any new decisions following this meeting, notes Bloomberg.
The cost of April futures for Brent oil on London’s ICE Futures exchange by 7:15 a.m. on Wednesday is $85.66 per barrel, which is $0.2 (0.23%) higher than the price at the close of the previous session. Those contracts rose $0.96 (1.1%) to $85.46 a barrel at the close of trading on Tuesday.
The price of WTI futures for March increased by $0.32 (0.41%) to $79.19 per barrel at electronic trades of NYMEX. By closing of previous trades the cost of these contracts grew by $0.97 (1.3%) to $78.87 per barrel.
In January both Brent and WTI have fallen in price by about 1.7%. It was the third straight month of decline, despite increased investor optimism about demand prospects in China following the lifting of quarantine restrictions in the country.
“The oil market seems to have found a steady footing,” notes Yep Jun Rong, an analyst at IG Asia Pte in Singapore. – Nevertheless, any hawkish signals from the Fed on Wednesday could bring back downward pressure.”
The American Petroleum Institute (API) data released Tuesday night showed a 6.33 million barrel increase in U.S. oil inventories for the week ended Jan. 27.
The official report on U.S. energy stocks will be released at 5:30 p.m. Wednesday.

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A.G.R. Group will continue to export some grain through EU after war ends – interview

The first part of an interview with the owner of the agricultural holding A.G.R. Group, Misak Khidiryan, and Board Chairman of A.G.R. Group Ihor Shestopalov about the key challenges of the past year – Russia’s invasion and forced change of conditions and destinations of agricultural crops export.

By Oleksiy Kozachenko

What did you see at your agricultural cluster in Kyiv region after the “goodwill gesture” of the Russian troops?

Misak Khidiryan: Our Brovary cluster in Kyiv region was occupied in the spring. The Russian occupiers knocked out the gates with an armored personnel carrier, took the guards hostage and began to loot: they stole diesel fuel, equipment from warehouses, damaged expensive agricultural machinery. In addition, during missile and artillery attacks, the Rushists damaged storage silos, grain drying complex, and a grain storage facility with a capacity of 20,000 tonnes. The shelling also caused damage to the vehicles in the winter storage – John Deere tractors and trailed units. Up to the point that the occupiers broke the doors in self-propelled sprayers in order to get the radios. They couldn’t take it – they just destroyed the panels.

The holding spent more than UAH 5 million for partial repairs. The restoration of the cluster took one month and a half – we rushed to get back in line and returned to work as soon as the sowing and harvesting campaigns started.

Some manufacturers of agricultural machinery left the Ukrainian market when the war broke out. How did this fact affect the working capacity of your agricultural machinery park?

Ihor Shestopalov: The situation with spare parts is very difficult today. We have to wait for a part of the ordered items – we pay in advance and wait for the delivery. We try to solve the problems with the repairs of equipment on our own – something we process, something we weld, and then we continue to work. We repair equipment by our own efforts, we diagnose it with relevant software.

Before the war, we planned to buy tractors, trailed units, and sunflower reapers. Last year we used our own equipment and only leased Case IH combines to harvest sunflower crops.

Despite everything, we continue to work on precision farming technologies, and this is justified. Our Kinze and Väderstad seeders are set up to sow with a sowing rate depending on the crop and the set depth, which eliminates overseeding and sowing errors due to automatic section shutdown.

Our tractors and sprayers are equipped with the iTEC system to minimize operator work. We set up BoomTrac, an automatic height measuring system for the sprayer boom above the soil or plant. Our grain harvesters and tractors work with an RTK signal. Each combine operator has his own name card, without which he will not be able to unload the harvested products.

Did you provide the military with equipment in wartime?

Misak Khidiryan: Near the Brovary cluster, there was a lot of broken Russian equipment, which we pulled with our tractors for further transfer to the Armed Forces of Ukraine (AFU) – there were mostly broken tanks, but there were also intact ones. Part of the equipment of the invaders was dragged to our base, loaded onto trawls, and taken for repairs. It was such that one tank had to be pulled out of the fields by three powerful tractors. We also went to neighboring villages and pulled trophies of the Rushists from people’s gardens.

In spring, we passed six MAZ trucks with trailers, a fuel truck, Niva and Renault Duster cars, Toyota Hilux pickup trucks to the AFU and the Territorial Defense Forces, as well as supplied the Ukrainian defenders with fuel. By the way, they returned the fuel truck when the occupiers retreated from Kyiv region, and it was successfully used during the sowing campaign.

What did you do to mines and remains of munitions in Kyiv region?

Misak Khidiryan: We decided that the sowing campaign should take place under any conditions. We found a demining team that went to the fields every day with our agronomists and looked for anti-tank mines and unexploded ordnance. Meanwhile, a special commission was invited to document the facts of destruction and theft by Russian troops.

In fact, it took a month and a half to resume the operation of the cluster, of which about ten days were spent on demining the fields. We started to till the soil and apply fertilizers on April 10-11, and a week later we started sowing corn. We also received permission from the AFU and the Territorial Defense Forces to work during the curfew so that our machine operators could work around the clock. The forces agreed and even organized the escort of machine operators at night because at that moment sabotage and reconnaissance groups continued to operate in the region.

As for the employees, more than 90% returned to their jobs. When it was possible, we transferred our workers from the occupied territories to the main office and clusters. In particular, a mechanical engineer was hired from Mykolaiv cluster. Another three machine operators, who are internally displaced persons, were hired from Kherson and Mykolaiv regions.

The Russian aggression forced the agricultural sector to develop new logistic corridors. What have you managed to do during the past year?

Ihor Shestopalov: When the war broke out, A.G.R. Group and MK Merchants S.A. owned by Misak Khidiryan, reoriented logistics to the EU market from seaports to motor, rail transport and river ports of Reni and Izmail. However, even after the end of the war and de-occupation, we will continue to export part of our grain in this direction. Due to this fact, we are interested in grain storage facilities and agricultural enterprises in the west of Ukraine – this will help us to reduce the logistics leg and facilitate export to the EU.

Currently, we are investing in the restoration of assets damaged by the Russian troops – we have already repaired a dryer and a grain silo in Brovarsky cluster. We are studying how to restore the grain infrastructure in Mykolaiv cluster after its recent liberation by the AFU.

Logistics was abnormally expensive in 2022. How did you cope with that?

Misak Khidiryan: For Ukraine, the economic feasibility of exporting to Asian and African countries through EU seaports is questionable, since transshipment and reloading cost 50-60% of the cost of grain, which makes this method of export unprofitable for farmers. Directing exports to the EU can only be beneficial for exports to end consumers in the EU.

If we evaluate the work of the “grain” corridor, the UN data show that most of the grain exports from Ukraine over the past three months went to Spain, Turkey, Italy, China, and the Netherlands. It was the return of Ukraine to the world agricultural markets after the opening of the grain corridor that contributed to a decrease in world food prices, which eased the food problem for the poorest countries.

We are also actively exporting along the “grain” corridor. Frankly, this is a risky option due to long queues, delays in inspections of grain trucks by the Russian side, and generally very slow operation. But given the current situation with the cost of logistics during the war, I consider the grain corridor a good opportunity.

In the end, the European railway is unable to transport the volumes of grain needed by Ukraine, and not only grain. In order to make full use of the European infrastructure for export, we need to open additional railway and road checkpoints on the border with Ukraine, and, of course, build a European gauge in our country.

What about your road and railway transportation?

Ihor Shestopalov: Throughout the year, we accelerated and facilitated our own business processes, applied to the relevant official structural units of the EU and Ukraine to increase the speed of cargo delivery, and actively used vehicles. Probably, it is necessary to gather representatives of ministries, agribusinesses, exporters, and relevant associations, put together a complete picture of the obstacles to logistics in the EU, and jointly find ways to solve these problems.

Consider that the cost of transporting grain by rail increased several times over the year. Before the war, delivering grain to the port cost $6-7 per tonne, and now it costs $10-12 per tonne. The rate of Ukrzaliznytsia for a grain carrier is UAH 4,500 per day for export transportation and UAH 2,500 per day for domestic transportation. With this tariff, the wagon component in the cost of transportation is $50 and $19 per tonne of grain per day. Add the services of a transshipment terminal – $15-30 per tonne, although before the war it cost $9-10 per tonne. The transportation of his cargo across Ukraine will cost an agrarian $80-120 per tonne, and for our farms – about $90-95 per tonne from the elevator to the port. The cost of logistics has increased several times.

As for trucking, we, like most farms, faced a shortage of grain carriers. A.G.R. Group passed more than a dozen own vehicles to the AFU. As for the rest, we have the opportunity to control the location of our vehicles and build a schedule for their work so that the export does not stop for a day.

Could you please clarify what, where and in what amount you export?

Ihor Shestopalov: Soybean, rapeseed, barley, wheat, corn, sunflower, buckwheat – we are considering all possible markets for products in the EU, Turkey, Egypt, and Nepal. Since the beginning of the full-scale invasion, we have exported almost 55,000 tonnes. Our partners from MK Merchants transport grain through the river ports of Izmail and Reni and ship an average of eight to ten vessels per month.

What will you sow this year? Are you planning to switch to oilseeds?

Misak Khidiryan: Next year we plan to abandon the cultivation of corn – we will sow soybeans and sunflowers. Growing corn is now problematic – prices for drying and processing are high, and the purchase prices are low. In 2023, we planned to grow wheat and rapeseed, we expected to sow winter wheat in September, immediately after sunflower harvesting. But the weather did not allow us to go out into the field, and in October it was too late to sow wheat, so we had to abandon it.

Did you manage to buy commodities and materials?

Ihor Shestopalov: We had to abandon anhydrous ammonia, the production of which is 99% associated with the aggressor country. In the spring we plan to use carbamide in the fields. As for nitrogen and phosphorus-potassium fertilizers, some of them have already been purchased.

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Grain harvest in Ukraine in 2023 will be about 49.5 million tons – forecast

Grain harvest in Ukraine in 2023, according to the forecast of the Ministry of Economy, will be about 49.5 million tons, which is better than the estimate of the National Bank of Ukraine (NBU) of 46 million tons, First Deputy Minister Denis Kudin told Interfax-Ukraine
“Ukraine will definitely have enough food, the problem with the rest of the world: we have become a weighty player on the world stage, so if the logistics of agricultural products from Ukraine is important to us because it is the inflow of foreign exchange earnings, it is important to the world because it is food security for it,” he said on the sidelines of the business forum on the rapid recovery of Ukraine in Luxembourg, organized by the Ukrainian-Luxembourg Business Club.
The First Deputy Minister noted that in the current situation the Ministry of Economy sees no need to resort to any bans or quotas on the export of agricultural products, but at the same time will maintain the licensing of its individual types.
“Through licensing we receive information on the exported volume, and if we see that the balance does not add up, that our domestic consumption is at risk of being unsustainable, then we reserve the right to limit the export,” he explained.
In general, as Kudin pointed out, the balance of payments forecast of the Ministry of Economy for 2023 is much more positive than that of the NBU.
According to the Ministry of Agrarian Policy, Ukrainian farmers harvested 52.6 million tons of grain and leguminous crops by January 27, 2023. During the week, the total area of harvested crops increased by 1 percentage point (p.p.) – up to 96% of previously planned areas, including corn which had to be harvested from 10% of areas (+3 p.p. during the week). By January 27, a total of 25.2 million tons of corn had been harvested.

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