Rafael Goroyan, the owner and Chairman of the Supervisory Board of Prometheus Group, talks about the risks and prospects of the Ukrainian agricultural sector, exporters’ adaptation to war conditions and the support that the industry needs from the state.
Prometheus Group has more than 20 years of experience on the grain market of Ukraine and is rapidly developing. The year 2022 was a huge challenge for the export-oriented agribusiness, but the company is overcoming the challenges.
How has the full-scale Russian invasion affected agricultural exports and your company in particular?
The war practically wiped out exports. But we adapted and, while the ports were closed, we used road and rail. Thanks to these channels we exported almost 50,000 tons a month. After the opening of the grain corridor we resumed export through the Bosphorus, increased our monthly exports to 80,000-100,000 tons and plan to reach 150,000 tons.
Before the war we had an annual turnover of 1.5 million tons and this year we aimed to export 2 million tons. It is clear that we will not reach those figures, but we believe it is possible to export 1 million tons.
Did your business incur losses because of the war?
We had eight grain elevators under occupation. As of January four of them remained in the occupied part of Zaporizhzhya region. And the four that were liberated from the enemy, were significantly damaged by shelling, robbery and require significant repairs. One of them will have to be rebuilt from scratch.
Do agro-exporters feel any support from the state in such a difficult situation?
The agrarian sector remains one of the few industries that work and we feel great but multidirectional attention from the government. On the one hand, modern patriotically-minded government representatives are working to provide subsidies, cheap loans, etc.
On the other hand, there is the interest of corrupt officials because of whom VAT refunds are very difficult in Ukraine. In particular, the Prometheus Company has accumulated hundreds of millions of unrecovered VAT. We are struggling and publicly report this fact. Because if this practice continues, the export potential of the agricultural sector will be destroyed.
In other words, the forecasts for the harvest and agricultural export in the current conditions are disappointing?
This year our country harvested about 60mln tonnes of crops against 120mln tonnes last season. Next year we will probably gather 40 million tons and export will fall to 20 million tons. This is a consequence of the fact that now it is not profitable for the agro-producers to sow because of the traders’ work stoppage. The latter suffer from corruptive discount on the price and long downtime (up to a month or more) of ships in the Bosphorus, because every day of downtime costs $15,000.
Then the infrastructure business, which has been built up for 30 years (elevators, ports, logistics facilities), will suffer huge losses and these assets will fall in value.
Let me remind you that the export-oriented agro-sector in Ukraine was not built in a day. In 1990s, after the collapse of the USSR, the potential of the Ukrainian agriculture amounted to 15-20 million tons of grains, and export was almost non-existent. By investing into new technologies, seeds, agricultural machinery, construction of elevators, logistics capacities, we reached 120 million tons, and the country was ready for 140-160 million tons. It is important not to miss these 30 years of progress.
What can the government do to prevent the development of a negative scenario?
The participation of the state is super important. One of the directions of support should be the establishment of fast VAT refunds. In addition, farmers need to be provided with subsidies and affordable loans. Financial assistance should be available to small, medium and large agricultural producers.
It is also necessary to remove bureaucratic obstacles as much as possible. We must realize that not only our military potential is important for the future of Ukraine, but also its agricultural sector which has become a global brand in 30 years. If we leave the market, other countries will take our share. Winning the world market again will be harder and more expensive than holding on to our position now.
What can be the positive scenario of development with the support of the agricultural sector by the state?
To do this, the transnational companies which used to export grains from our country but had to leave because of corruption during VAT refunds should be returned to the market. Support for small and medium-sized farmers is necessary. If our partners see the fields planted and the government involved, we will not lose the international market.
But the impression is that the government doesn’t care about business. The country closes up to 10,000 companies a month, and the outflow of 10 million people is acutely felt. Because of personnel problems, in order to find and keep specialists, we already offer European salaries. Therefore, we should remind ourselves that business is a necessary rear. Without a capable economy and provision, the country will not be able to fight effectively.
How should this agricultural season be for your company?
This year will be a period of opportunity for us. If the state does not support small farmers, Prometheus will have to expand its land bank. In other words, we will increase our production in order to preserve our export potential.
The war is an unfavorable period for investments. However, despite this, how can we assess the prospect of capital investment in the Ukrainian agricultural sector?
In the midst of the coronavirus pandemic, huge amounts of money were injected into the global economy. As a consequence, the multiplier for some US companies has reached 100, while Ukrainian companies do not have more than 3. That means that our country, with a low multiplier, has a chance to reach high profits after victory.
For those who believe in Ukraine’s victory investments into Ukrainian business should already be very attractive. Because $30-50 billion a year or even more will be coming into Ukraine for post-war recovery, thanks to which Ukraine can become a leader in terms of profitability after victory.
Prometey Group of Companies during the full-scale Russian invasion of Ukraine has implemented a number of socially oriented projects to support civilians in Mykolaiv and the region, materially meet the needs of Ukrainian warriors, and for the safety and social security of its employees.
According to a press release of the holding on Wednesday, 8 million UAH were allocated for these purposes, during which dozens of humanitarian projects were implemented.
For example, in December 2022 Prometey allocated funds to the Mykolayiv Regional Military Administration for the purchase of generators for units of the AFU.
As noted, “Prometey” was established in Nikolaev, so the company provides feasible assistance primarily to this city and the Nikolaev region.
“We buy food, medical equipment. Our help is in person, without intermediaries. We ourselves, for example, carried food to the front line of our military. Today, generators are the thing of prime necessity, so we promptly responded to the needs of the military,” the grain trader quotes Raphael Goroyan, head of the holding’s nabs council.
Prometey Group provides services in storing, processing and logistics of crops. Before the Russian aggression the holding owned 34 elevators in the Mykolaiv, Kirovograd, Kiev, Khmelnytsky, Zaporizhzhya, Sumy, Odessa, Kherson and Dnipropetrovsk regions.
By the end of 2021, the group planned to receive $45 mln EBITDA, while in 2020 this figure reached $32.6 mln and in 2019 – $30.5 mln.
The state’s debt for value added tax (VAT) reimbursement to grain trader Prometey for part of last year and this year reaches hundreds of millions of hryvnias, with its reimbursement now being spotty and according to non-transparent criteria, Rafael Goroyan, owner of the grain trading holding Prometey, said.
“The state owes Prometey a big VAT refund for more than a year, since before the war. We are patiently waiting for the VAT refund, but our patience may come to an end. Now it is reimbursed in a pinpoint manner, according to unclear criteria, as in the times of Yanukovych (ex-President of Ukraine – IF), when the tax was “discounted,” suitcases were carried, etc. But Prometey Company has its own principles. We never gave any bribes for VAT refunds because it deprived us of competitiveness,” he told Interfax-Ukraine.
“They (tax authorities – IF) want to “negotiate” and we always quarrel – we do not want to “be friends and communicate” with anyone. We do not create an ‘intimate environment,’ so we have conflict all the time,” the head of Prometey stressed in an interview.
“Our principles are much more important than money. Thank God, Prometey is developing, employees’ salaries are being paid, but if we get dirty in the mud of corruption, we won’t be able to wash off,” he added.
According to him, an effective way of dealing with government agencies is to ask for help from the media and hold actions with the participation of Prometey employees and their families.
“If we had to say something loudly, we held large pickets near the tax inspection. When Poroshenko (ex-President of Ukraine Petro Poroshenko – IF) was in power, 3500 people from Prometey employees and their family members used to picket when Nasirov (former head of the State Fiscal Service of Ukraine Roman Nasirov – IF) was the chief tax collector. It was a whole revolution. In my opinion, a month after that he was kicked out and now he seems to be under investigation,” stressed the owner of the holding.
“When the average business gets angry en masse, everything ends badly. We shouldn’t see the situation when VAT is reimbursed to someone point by point, for some unknown good,” Goroyan concluded.
The grain trader stressed that the issue of actual VAT refund is not just a positive thing for the Ukrainian AIC companies but a necessary condition for their survival in the market.
As reported, the head of the specialized parliamentary committee of the Rada Daniil Getmantsev earlier said that the volume of VAT refund to business in November increased by 20% compared to October and amounted to 13.6 billion UAH, this year such volumes were achieved only in February.
VAT refunds were almost completely stopped after the full-scale invasion of Ukraine by the Russian Federation on February 24 this year. If it was 18.52 billion UAH in January and 12.07 billion UAH in February, in March – 0.82 billion UAH, and in April and May it was completely absent and resumed only in June, when 9.5 billion UAH were paid, in July it almost stopped again – 0.6 million UAH. However, in August the amount of payments was 9,4 billion UAH, in September – 1,6 billion UAH and in October – 10,9 billion UAH.
Prometey Group provides services in the storage, processing and logistics of crops. Before the Russian aggression the holding owned 33 elevators in the regions of Nikolaev, Kirovograd, Kiev, Khmelnytsky, Zaporozhye, Sumy, Odessa, Kherson and Dnepropetrovsk, during the war the holding purchased one more.
By the end of 2021, the group planned to receive $45 million EBITDA, while in 2020 this figure reached $32.6 million and in 2019 – $30.5 million.
Prometey Group of Companies has received $50-60 million of damage since the beginning of the full-scale Russian aggression in Ukraine, four elevators are still under occupation and four have been badly damaged.
“Prometey has suffered a lot in assets and goods, losses in goods are $40-45 million, the examination of losses is now underway. In addition, we lost $10-15 million in equity. Eight elevators of the company suffered a lot: four are still under occupation in Zaporozhye region and four suffered a lot,” said the owner of the holding Rafael Goroyan in his interview to Interfax-Ukraine.
According to him, for several days in a row the Russians purposefully shelled the group’s Voznesensk elevator (Voznesensk, Nikolayev region, capacity of 50,000 tons) with cruise missiles, although there were no military facilities, equipment, bases or warehouses at the agricultural enterprise. Russian missiles struck the grain elevator four times in one day, and another strike occurred a few days later when personnel were at the enterprise.
“Now the AFU has liberated Snigirevka. Our elevator is fully mined, the bomb squad is working now and we are waiting until we are allowed to start work,” the company owner said.
Goroyan said Prometey has 34 granaries in total.
In addition, Russian occupation covered 2 thousand hectares of agricultural land, or 10% of the land bank of the grain trader. The humanitarian situation in the liberated territories was terrible, the territory was mined, and at this time it is impossible to carry out agricultural work on it. Russian invaders have also stolen and destroyed Prometey’ irrigation infrastructure in the Nikolaev region.
“Irrigation was stolen and destroyed by the aggressor country Russia. In Snegirevka before the war there were about a thousand or a thousand and a half hectares under irrigation, now they are gone. But there is no certainty of tomorrow to restore. Now it is not quite right for a businessman to invest in expensive foreign equipment without confidence in tomorrow,” stated the businessman.
The Prometey Group provides services for the storage, processing and logistics of crops. Before the Russian aggression the holding owned 34 elevators in the regions of Nikolaev, Kirovograd, Kiev, Khmelnytsky, Zaporizhzhya, Sumy, Odessa, Kherson and Dnepropetrovsk.
By the end of 2021, the group planned to receive $45 mln EBITDA, while in 2020 this figure reached $32.6 mln and in 2019 – $30.5 mln.
GC “Prometey” (Nikolaev) did not receive a refund of value added tax (VAT) in January 2022, in total, the grain trading group was not paid fiscal compensation in the amount of UAH 112 million, the company said in a press release on Monday.
At the same time, she points out that the State Tax Service (STS) is conducting a selective VAT refund, and accuses it of delaying its return by conducting lengthy business audits.
“As reported by the tax authorities themselves, and according to business representatives, in parallel (with the lack of VAT refunds – IF), thorough checks were launched. Informally, the purpose of these audits is to delay refunds, since some enterprises did not receive payments for January and do not have information when this process is de facto launched,” the group of companies said.
The corresponding transition of the economy to manual mode leaves the transition to the “shadow” as the only option for companies to continue their activities, the grain trader emphasizes.
“It is not clear that the business is already receiving refunds, the losses of which are not comparable with the “war” costs of agro-exporters – a strategic direction for the Ukrainian economy. In particular, members of the Ukrainian Association of Furniture Manufacturers claim to receive compensation payments. on the brink of profitability, are still waiting in line to receive refunds,” the press release says.
The grain trader stressed that for Ukrainian agro-industrial companies the issue of the actual VAT refund is not just a positive event, but a necessary condition for survival in the market.
According to the company, due to the unstable situation in Nikolaev, all data on VAT refund payments to the exporter are in the jurisdiction of the tax Volyn region, which does not show any interest in resolving the issue of its reimbursement to Prometheus.
“The company is one of the few that has not closed that part of its business that is located in the Nikolaev region and is in close proximity to the front line. At the same time, more and more taxpayers in Nikolaev have already stopped or closed. Perhaps this is the reason, because behind the scenes, applicants for compensation are divided into categories, and front-line companies are clearly not favorites for fiscal authorities,” the grain trader stated.
“Of course, now the country’s priority is financing defense and security, but selective non-reimbursement of VAT is the transition of the economy to manual mode, and does the authorities leave with this practice only one alternative to agribusiness – transition to the shadow?”, – he added in a press release. .
GC “Prometheus” provides services for the storage, processing and logistics of grain and leguminous crops on the basis of 29 elevators in Mykolaiv, Kirovograd, Kyiv, Khmelnytsky, Zaporozhye, Sumy, Odessa, Kherson and Dnepropetrovsk regions.
At the end of 2021, the group of companies planned to receive $45 million in EBITDA, while in 2020 this figure reached $32.6 million, and in 2019 – $30.5 million.
Prometey Group has bought 5 new DAF grain trucks with Wielton semi-trailers, thanks to which its truck fleet has expanded to 45 units, follows from a press release from the grain trader on Friday.
It is specified that the next delivery of 10 tractors with semi-trailers will take place in the first ten days of October. In total, by the end of the year, the group of companies plans to increase the fleet of grain carriers to 100 units.
“An appropriate strategy for the development of transport logistics will become a competitive advantage and will reduce the group’s logistics costs. In addition, in connection with the war, the issue of mobility of any company is more than relevant. The Grain Corridor partially reoriented logistics routes leading to the western border of Ukraine to the south , but it cannot be said that this change will lead to a significant reduction in the need for trucks,” the grain trader specified in a press release.
As reported, in June Prometey announced its intention to expand its fleet of cargo grain carriers to 100 units by the end of 2022. Also in June, the grain trader signed an agreement with the state-owned Ukrgasbank to receive UAH 450 million in financing for a sowing campaign and trading activities in agricultural products.
In August, the group of companies received the first batch of 19 new MAN TGX tractors coupled with Wielton semi-trailers.
GC “Prometey” provides services for the storage, processing and logistics of grain and leguminous crops on the basis of 29 elevators in Mykolaiv, Kirovograd, Kyiv, Khmelnytsky, Zaporozhye, Sumy, Odessa, Kherson and Dnepropetrovsk regions.
At the end of 2021, the group of companies planned to receive $45 million in EBITDA, while in 2020 this figure reached $32.6 million, and in 2019 – $30.5 million.
