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UDC 338.43(470.323)
INFRASTRUCTURE OF THE GRAIN MARKET IN AN OPEN ECONOMY: REALITIES AND PROSPECTS (A VIEW FROM THE REGION)
Petrushina O.V., Researcher
Kursk State Agricultural Academy named after Professor I.I. Ivanov, Kursk, Russia
E-mail: petao@yandex.ru
ABSTRACT
The article analyzes the problematic issues of modern infrastructure of the grain market. The base of grain elevators in Kursk region has been analyzed and the estimation results of the appropriateness of the construction of new line elevators are presented. The problems of the logistic maintenance of export operations in the grain market are examined, alternative interaction on rail transport - shipper routes has been proposed. The directions of improving the implementation of export operations in the part of the interlinkages export balances and domestic consumption next year have been substantiated by quotas on the importation of meat products and the volume of carry-over stocks on the basis of the concept of food security of the country. Measures to enhance the level of the processing organization of export operations are proposed. Modern problems and prospects of development of the exchange unit have been discussed. The necessity of improving the species diversity of exported grain has been substantiated. Promising lines of development of the infrastructure of export-oriented grain market have been discussed.
KEY WORDS
Grain; Market; Infrastructure; Export; Logistics; Exchange.
Modern infrastructure of the grain market can be represented as follows: Block 1 -farmers: grown, treated, dried and stored grain; Block 2 - cereal receiving enterprises: provide services for preparation, form large uniform consignments and shipped to consumers in the domestic and foreign markets; Block 3 - transport, logistics companies and other carriers: carry out the delivery of grain to the cereal receiving points (CRP) and consumers, providing freight forwarding services; Block 4- grain terminals near ports: transshipment of grain exported from cars and other vehicles on the ships.
The most important task of the development of grain market infrastructure for grain producers is to overcome the shortage of facilities for the storage of grain, which occurs: due to the lack of demand for significant volumes of produced grain, and, as a consequence, to the formation on the CRP of large residues of grain, which limits their opportunities for acceptance and storage of grain; due to lack of the granaries among majority of producers , acceptable and affordable technologies for storing grain in his farm, which leads to the seasonal peaks in grain supply and overload existing CRP.
In the course of the St. Petersburg International Economic Forum, CEO of UGC Sergei Levin said that Russia plans to create a network of at least 21 linear elevator with a total annual volume of grain handling 8 million tons. Estimated cost of the project - 24 billion rubles [1]. Our analysis shows that grain producers do not want to assume the burden of paid services for the storage of grain at the elevator and is very reluctant to do so.
Construction of granaries in agricultural enterprises can solve a number of problems: reduce transport costs during the harvest season; distribute delivering grain to the elevators more evenly over the season; eliminate the costs of farms for storage of grain in elevators that can reach 700 rubles per ton of grain per year.
An important objective for infrastructure development of the grain market is the creation the effective network of linear grain-export enterprises with the maximum capacity utilization of existing elevators.
In particular, the the production capacity for simultaneous storage of three CRP (including «JSC Shchigrovski KHP», «JSC Kshenskoe HPP»), the holding company
«Russian House» (the largest operator in the grain market of the Kursk region and Russia as a whole) is 330 thousand tons, and allow to receive and ship 2.5 million tons of grain to consumers annually, which corresponds to 8 turnovers of warehouse. However, in the short term, such turn can not be done for the following reasons: export of grain from farm to consumers by vehicles in neighboring regions and in the export direction, bypassing the elevators; grain handling through the elevators, which are closest to the grain producers.
Table 1 - The base of grain elevators in Kursk region
Indicator name 2008 2009 2010 2011 2012 2013
Number of elevators - all, pcs. 28 28 29 31 33 34
including
Country elevators 18 18 20 20 22 23
Process elevators 10 10 9 11 11 11
Capacity of elevators - all, ths. tons 1671,3 1671,3 1691,3 1903,3 1991,3 2013,3
including
Country elevators 885 885 955,8 955,8 1042,8 1064,8
Process elevators 786,3 786,3 735,5 947,5 948,5 948,5
Losses, ths. tons 27 25 25 44 51 52
Percentage, % 1,6 1,5 1,5 2,3 2,6 2,5
Currently, the maximum index for these CRP can be considered 3-3.5 turnover or total volume of transactions of 1 million tons, accounting for 30% of all commodity grain produced in the region.
In the Kursk region is no shortage of facilities for handling grain, and such a situation is typical for most grain-producing regions of the Russian Federation. Accordingly, when deciding on the significant investment in construction of new line elevators is necessary to evaluate the economic feasibility of such investments.
We have conducted a comparative calculation of the efficiency of building a new linear elevator capacity of 125 thousand tons with the economy of acting average enterprises («JSC Kshenskoe HPP»).
At the rate of investment credit of 4% and the term of the development of investment of 2 years, estimated cost of this project will be about 1 billion rubles without VAT. Investment component - 423.79 rubles on 1 tonne at 2.5 turnovers of warehouse and at 10-year period. As you can see from the calculations, the cost of services should be 377.36 rubles higher than the market price (calculated in 2013 prices).
Table 2 - Comparison of services of a new elevator and the current CRP at different payback horizons
Indicator name Payback time
5 years 7 years 10 years
Fixed costs 87,24 87,24 87,24
Variable costs 36,62 36,62 36,62
Depreciation 175,27 175,27 175,27
Total cost 299,10 299,10 299,10
Profit before tax 721,25 479,27 297,79
Necessary cost of services, excluding VAT 1020,35 778,37 596,88
The required cost of services linear elevator with VAT 1204,01 918,4 704,36
The real cost of the services «JSC Kshenskoe HPP» with 2.5 turnovers of warehouse 327,00
The difference in the cost of services 877,01 | 591,43 | 377,36
Export of grain in Russia requires a profound rethinking on the federal level. In the context of the prevailing world prices, today we sell not grain but the delivery of grain to ports. Over the past five years the cost of shipping one ton of grain from the station Kshen to the station Novorossiysk increased by 2 times.
Modern railway tariffs are no longer competitive with road transport, but objectively it is clear that the only the railroad is able to effectively carry huge volumes of exported grain. Transportation of 1 ton of grain by motor transport not less than 200 rubles below the existing
rail fare, and taking into account the cost of handling grain through the line elevator, the gap reaches 500 rubles for 1 tonne grain.
Table 3 - The tariff formation of grain transportation by the road transport
Indicator name Units of measurement Volvo car
Carrying capacity of road train tonnes 44,00
Transportation distance Kshen - Novorossiysk km 1135,00
Operating ratio of run - 0,50
Operating costs for 1 trip, including: RUB 42047,97
Costs for fuel RUB 21324,38
Depreciation RUB 6164,38
Tire wear RUB 7990,40
Salary of driver with charges RUB 5181,82
The cost of maintenance and repair RUB 1386,99
Operating costs for 1 ton of grain (excluding VAT) RUB/tonne 955,64
Profit of autocarrier RUB 191,13
Total tariff for motor vehicles RUB 1146,77
Given these trends, in our region is under threat of destruction the entire logistics system of the transshipment of exported grain by rail to the ports, where there are huge queues of trucks.
Consignor routes can be an alternative form of the interaction on rail transport. Supply of grain by consignor routes is profitable for carriers, port terminals and consumers. Turnover time of vans is reduced. Grain delivery from a specified CRP to Novorossiysk takes three days instead of six; labor costs and the unloading of grain are significantly reduced.
Consignor routes are also beneficial to exporters, because 3 thousand tons of grain shipped by one batch. All this makes it easy to document turnover, accelerates enforcement of contracts. The cost of grain handling in the ports of the Russian Federation is 20-25 USD/ton, in Ukraine - 17-19 USD/ton, while in France 6-8 EUR/ton (or 7.10 USD/ton).
In our opinion, too high fees for transshipment are associated with low competition in this market. Increasing the supply of grain transshipment in ports as through the introduction of new port terminals, and by increasing the production capacity of the existing terminal, will significantly reduce the cost of services that will give the market an additional savings of up to 300 rubles for every ton of exported grain.
Export development - strategic objective to ensure the viability of agriculture and food security of the country and the region, so we believe that it is necessary to consider the problem is much broader and deeper. In connection with this we can suggest some ways of improving the implementation of export operations.
Forecasted export balances must be linked annually to predicted levels of domestic consumption for next year, the volumes of carryover stocks based on the concept of food security in the modern conditions. It seems appropriate to reflect the relationships of the grain market and grain products in the officially published and placed in the public domain, the actual and projected balance sheets of agricultural products that are potentially act as guide the implementation of agricultural markets regulation by the state local governments, as well as informative source for grain traders and producers.
In order to raise the level of the processing organization of export operations it is useful to introduce the licensing of exporting companies, as well as to develop and implement a monitoring system of export activity.
To improve the monitoring and control of export operations it is possible to implement the exchange unit.
According to all characteristics, crops more than other products of agricultural production are suitable for exchange trading and the use for trading in futures contracts, as they are products of mass consumption and the large-scale production, homogeneous, divisible and easily subject to standardization, have a large number of sellers (producers) and buyers, characterized by seasonal price fluctuations. In countries with a developed
market economy conclusion of contracts before the sowing or before the beginning of harvest is a fairly common practice.
In modern conditions, the organization of a full-fledged operation of the exchange, especially in terms of futures trading, is difficult for a number of objective and subjective reasons. The reasons were: the weak financial position of the bulk of grain producers and consumers; absence from the exchange of the reliable guarantees of transactions, the mechanisms of market infrastructure; inadequate pricing and taxation policy; creation of obstacles by executive authorities for free interregional movement of grain and products of its processing; high tariffs for the transportation of grain and other goods.
Objectively it is necessary to form new trading structures in the grain market - supply and marketing cooperatives for medium and small producers involved in the sale of large amounts of grain. Biggest obstacle on the way to a civilized market is a monopoly of large companies involved in the purchase of grain. However, this problem can be somewhat smoothed in the implementation of cluster policy in the region.
In addition, it is necessary to study and improve the species diversity of exported grain, as of today, the bulk of exports - low-grade grain consumed for fodder, which drastically reduces its price. Following the general concept of the study, it should be noted that the demand for the products of organic farming in the west has a strong tendency to grow by 1418% a year, while certain areas will always experience a lack of eco-friendly high quality grain products, because they do not have their own natural and climatic potential for growing them in the required quantities. In the European Union absent quotas for the import of durum wheat, what can increase not only the volume but also the profitability of exports.
Key position, according to our estimates, is a reorientation of exports for the products with high added value (flour, cereal products, food grain processing). To implement the proposed thesis there are objective grounds - the level of the use of annual production capacity for the production of flour is at the end of 2013 75.0%, cereals - 45.5%, bakery products - 62.5%. According to the Russian Grain Union (RGU), the developed sector of deep processing could absorb up to 8 million tons grain produced in the country. In 2013, from the entire range of the products of the deep processing of grain only proteins have been imported more than 696 million USD. In the presence of its own available raw materials and relatively inexpensive, in comparison with the supplier countries of the products of deep processing, electricity water and labor resources, the situation can be regarded as an alternative perspective of the development of the grain market.
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