food industry

As Kommersant has learned, the International Grain Company (IGC), owned by the world's largest grain trader Glencore, yesterday completed the acquisition of Peschanokopsky KHP LLC and will soon become the owner of two more elevators. This is the second large-scale transaction in the past month for a transnational trader to acquire grain storage and transshipment facilities in Russia. According to experts, this indicates the intention of large global companies to consolidate assets in the Russian grain market.

Information about the sale of the MZK to Peschanokopsky KHP LLC (50 thousand tons of one-time storage) was confirmed by the Stoilenskaya Niva agricultural holding, which until now was the owner of the KHP. According to a source in the holding, “yesterday the final papers on the deal were signed and from today MZK becomes the official owner of the company.” In addition, according to Kommersant's information, in the near future MZK will become the owner of two more elevators in the Krasnodar Territory and the Rostov Region - Dvoinyansky Elevator OJSC (140 thousand tons) and Gulkevichsky KHP OJSC (105 thousand tons). MZK is negotiating this deal with the management company Russian Oils.

The MZK itself refused to make any comments on these transactions. But as Vladimir Vanzhula, general director of Gulkevichsky KHP, said: “MZK specialists have already conducted an audit of the company, and the latest documents should be signed in the near future.” This information was confirmed to Kommersant by the CSO group close to the transactions. “We are taking away the Starominsky elevator from Russian Oils, and the remaining two, according to my information, are being bought by MZK,” said Sergei Zhitkov, general director of the OGO Products trading house.

In each of the elevators, MZK receives a controlling stake. Experts estimate the total amount of the transaction for the acquisition of three elevators at $9-12 million. With the purchase of these assets, MZK doubles its grain storage and transshipment capacity from 277 thousand to 592 thousand tons.

This is the second large-scale transaction in the last month for large transnational traders to acquire grain storage and transshipment capacities in Russia. At the beginning of September, the American concern Cargill announced the purchase of two elevators from the Rusagro group. Since both Cargill and MZK are negotiating the acquisition of several more elevators, market participants believe that next year they will be able to catch up with their global competitor - the French Louis Dreyfus, which owns 50% of the RusElCo joint venture in Russia, which includes a network of 11 elevators (1.7 million tons of simultaneous storage).

This year, the grain harvest in Russia amounted to more than 78 million tons, of which 10-12 million tons, estimated at $1.2 billion, were planned to be exported. The largest grain exporters are Yugtransitservice, International Grain Company, Aston, Yug Rusi, Agrico.

According to experts, this means the beginning of a large-scale consolidation of elevator assets in the hands of large transnational players. “Suffice it to say that this year 20% of export shipments came from foreigners, while last year it was 16%,” says Dmitry Rylko, director of the Institute for Agricultural Market Studies. “The Russian grain market is not yet sufficiently structured, and now we are seeing early stage of consolidation. According to my forecasts, in three years the top five companies will own half of the industry's major grain assets." According to him, these will mainly be large international traders who, unlike Russian companies, have sufficient resources to maintain networks of elevators. “Foreign companies have access to cheaper money and direct sales contracts on world markets, which gives them more room to maneuver,” says Aston CEO Vadim Vikulov.

According to Alexander Kudeli, Chairman of the Board of Directors of Roskhleboproduct, the process of industry consolidation will go even faster. “In the near future, 30% of elevators will be consolidated in the hands of five to ten owners,” he believes. At the same time, as noted by the head of the largest Russian grain market operator, Yugtransitservice, Kirill Podolsky, Russian companies will abandon the elevator business due to its low profitability. The general director of Agros, Dmitry Potapenko, agrees with him: “The profitability of elevators as a business is low. It rarely exceeds 10%, and with grain, in a favorable environment, you can earn significantly more.”

SVETLANA Kommersant-MENTYUKOVA

Russian elevators are being taken over by foreigners