Russia, Ukraine, Kazakhstan To Form Black Sea Grain Pool

Agriculture ministers from Russia, Ukraine and Kazakhstan are proposing to form a Black Sea grain pool, according to reports from the world grain forum in St.Petersburg.

"No time can be wasted. The market positions our countries have conquered in recent years, must be backed by serious investment in infrastructure, so a solid groundwork can be built to make grain from the Black Sea region competitive in the long-term perspective," Russian Agriculture Minister Yelena Skrynnik said.

Whilst the world's major exporters have seen their market share shrink in recent years, that of the Black Sea countries has grown substantially.

The United States' share in world trade contracted from 28% in 2008 to 20% in 2009, Canada's from 17% to 14% and Australia's from 16% to 13%, she said.

By contrast, the share of Russia, Ukraine and Kazakhstan has grown from 6% to 24% since 2000, she added, with Russia alone now accounting for 14% of world trade.

Landlocked Kazakhstan will be keen to join the party if it guarantees it access to the major Russian Black Sea ports of Novorossiysk and Tuapse.

A major new grain terminal at Russia’s Tuapse Commercial Seaport, one of the five largest ports in Russia, is due to open this month. The terminal is designed to handle 2 million tonnes of grain annually. Investment in its construction amounted to 1.7 billion rubles. The terminal will consist of a grain bunker with a capacity of 103,000 tonnes, a railroad station, and a berth for ships with carrying capacities of up to 50,000 tonnes.

Meanwhile, more than 3 MMT of grain was shipped from Novorossiysk in the first four months of 2009, a fourfold increase on the same period in 2008.

Back in the depths of winter however, over 35,000 undischarged railcars, including some loaded with grain, became grid-locked on the approaches to Novorossiysk and Vostochny Port, causing severe delays in loading vessels lined up at the quayside.

Skrynnik acknowledged that the region's infrastructure needs investment to meet the pool's aims, saying that:

"On our part, we are prepared to create an 'infrastructure corridor,' using the newly formed United Grain Company capacities in an effort to combine our countries' grain exporting efforts."

Adding that it "may take one, or several, years to implement."

It will be very interesting to see how all this pans out, the Black Sea getting itself organised could be a scary thought for European (and US export hopes) a few years down the line. Exactly where all the cash is going to come from they aren't saying. If they'd have floated this idea eighteen months ago with wheat at record highs and money being thrown around like confetti then I'm sure it wouldn't have been a problem, Sir Ken Goodwin would have happily funded the lot.