Change of focus for Cargill in Eastern Europe

Cargill is investing in a new deepwater grain terminal on the Black Sea at the same time as it is to pull out of agricultural inputs supply activities in a number of Eastern European countries. 

 

Cargill and Ukraine-based MV Cargo have signed a share purchase agreement committing the two companies to constructing a $100 million grain terminal at the Ukrainian port of Yuzhni on the Black Sea. The two companies signed a memorandum of co-operation with Ukraine’s Sea Ports Authority in August last year, after which the Authority dredged the water area around the future grain terminal to a depth of 16 metres. This means the new facility will be able to handle ships with a deadweight of up to 100,000 tonnes. Construction of the new facility has started, and is expected to be complete by spring 2018.  

“Through this investment, Ukraine’s port infrastructure will be expanded and will provide greater efficiencies to connect Ukraine’s surplus agricultural crops with the parts of the world demanding more food,” says Andreas Rickmers, head of Cargill’s European grains and oilseeds business. “This new port will benefit Ukrainian farmers, the overall economy and global food security. It will add to our footprint of port facilities in the Black Sea region and confirms our intention to keep investing in Ukraine’s agricultural sector.” 

For MV Cargo, Andrey Stavnitser says: “This project is of key importance for Ukraine to sustain its leading position among grain exporting countries, as this deep-water state-of-the-art terminal will allow us to process vessels of high tonnage, delivering Ukrainian grain to markets all over the world.” 

After a comprehensive review of its grain and oilseeds businesses in Central and Eastern Europe, Cargill says it is to ceases providing crop inputs to farmers in Hungary, Romania, Russia, Slovakia, Ukraine, Bulgaria and Poland from the end of May this year. However, it will continue to originate, merchandise and trade grains and oilseeds in these countries markets, and intends to strengthen its activities and market share of these activities. 

“While Cargill’s crop inputs business has had some successes in Eastern Europe, the company has been unable to realize many of the expected synergies between origination and crop inputs,” explains a company statement. “This change will allow the company to continue focusing on being the trusted partner to both farmer and non-farmer suppliers in the region and to grow its business by increasing the volumes of grain and oilseeds.”

Posted on March 14, 2016 and filed under Commodities, Company News, Grain Trading.