Recently the constantly growing number of Ukrainian farms decides to build their own mini-elevators or grain silos. The problem of grown harvest storage became especially acute because of complicated access to grain storage at commercial elevators and high tariffs for their services on the back of large grain harvest in 2008.
The market participants are sure that “outside” grain storage can result in substantial losses. Furthermore, in their opinion, both private and state elevators underestimate the grain grade when accepting it and, as a result, higher prices are paid for processing – it is no coincidence that Antimonopoly Committee of Ukraine announces that such lawsuits being filed nearly every week. On the other hands, products storage at farms, according to some estimates, is much cheaper. Besides, when grain prices are not stable it is better to keep the goods at hand.
To build its own mini-elevator or a grain silo, a farm should be large enough; small producers can not afford this. But joining efforts of neighboring farms for cooperative elevator construction can be a way out. Such an approach is used in many developed countries. In the experts’ opinion, after the economic crisis is over, one should expect a rise of demand for construction of small elevators (3-5 thousand tons) by individual farms.
A small silo can cost several millions for a farm, but these expenses can be paid back already in two or three years. Today, producers are very much interested in having their own silos but problems can emerge concerning the practical implementation of such projects – agrarians do not have enough current capital, and banks have made credit terms much tougher. At the same time, large investors do not face similar problems, but potential investors are interested in either old or cheap elevators, situated in less attractive locations, which are still quite suitable for harvest storage, or, which happens now more often, they invest in construction of new modern steel elevators.
You can get further information on the market of elevator services in Ukraine from the new research by ProAgro Information Company – “Ukraine: System of Grain Storage and Elevator Industry”.
