26 March 2019

Oleksiy Tsurkan: Lack of railway transport encourages expanding of grain storage facilities

INTERVIEW to the news

Why railway freight problems encourage silo business development? Why it’s not worth constructing private silo bins for small farmers? How to take the balance between work and private life? All these questions were answered by Oleksiy Tsurkan, Director General of Grain Elevators Division of Alebor Group of Companies.

What amount of grain was transshipped last year by all three grain-collecting stations? How the throughput capacity will increase in the current year?

— Onsite storage capacity across all three grain-collecting stations total 315 thousand tons. Last calendar year we transshipped about 800 thousand tons of grain in total, but as far as the marketing year has not finished yet, we’ll definitely have more.

What are your plans as for transshipment volumes increase?

— Generally we set a purpose to increase throughput capacity of our silos by 20%. We hope to reach 1 mln ton of transshipment volumes during the following marketing year and what’ll be next – let’s see.

Why does the company constantly increase its total storage capacities? Is it due to the increase of number of customers or there are other drivers?

— During recent years there is stable trend of silo facilities increase in Ukraine. It is stipulated by the fact that farmers learned to grow more both in terms of volumes and efficiency. If, for example, 10 years ago crop yield of corn was 5-7 hwt/ha, nowadays it is 7-10 hwt/ha in the same regions. If previously we harvested 50 mln tons of grain during a marketing year, nowadays we have 70-75 mln, and this dynamics is progressing. Thus, there demand for silo services will increase more and more. 

The next driver is, incredible as it may seem, lack of railway means of transport for grain carriage. It also encourages silo facilities development. During peak times, while facing the problem of lack of grain freight railcars, we should have enough of storage capacity not to stop working and at the same time satisfy the requirements of our counterparties.

You’ve been working for Alebor Group for more than 10 years already. What projects do you consider to be your best achievements during this period of time?

— I am very proud of the company development and performance. It grows and increases year by year and shows good results. We gain more and more customers each year, among which there are not only small farms, but also big players, such as Kernel, Epicenter, Uman Agro. It means that constant string growth takes place. For instance, last year we started construction and improvement works at all our three silo facilities simultaneously, and as a result, our capacities will soon  increase by 122 600 tons.  

Do you plan to build new grain-collecting station?

— Surely, however it will definitely not take place this year. First of all we plan to settle with credits, work hard, and the next year we’ll tackle the construction.

So, the demand in the companies providing grain storage and transportation services will only but increase, won’t it?

— Indeed. Big agriholdings constantly build new silo facilities, but it’s not fast pace, and they are not always able to cover the demand in grain storage, especially during active stage of the season, when every minute of new crops intake is of great value.

From the other hand, relatively small farms operating 2-3 thousand hectares of land consider it’s unreasonable to construct powerful grain silos. This is quite strong investment and it has sense only upon availability of railway track close at hand. And just to set up a silo bin for providing pure storage only is not always economically efficient. It’s more convenient to bring the crop to our silo facilities and store it there, as far as we can always sell or freight it –the range of our services is rather wide.

How intense is the competition within this sphere of services in Ukraine?

— The competition between peer companies is tough within the regions of our operation, but the demand is high as well. Thus, every customer choses the company to their mind.

ABOUT SILO TRANDS AND CONTRACTORS 

How would you characterize the present state of silo business in Ukraine? What are the main trends?

— In a nutshell, I would use the words “constant development”. Speaking about technicality, there are not a lot of changes, the only point is that the technologies have become more advanced and moved to a new level. However, the processes within silo operation remained unchanged – everything starts from the scales and laboratory and finishes with store handling and further shipment to railcars or trucks. In general, everything became more computer-controlled, new software always appear and more attention is paid to workplace safety and grain storage quality.

As for economical drivers and “silo-counterparty” interaction, we can say that everything has changed dramatically. How did it like previously? First, the silo took early grains, than it was offloaded, after that late crops were loaded and waited until the next season. Now the market imposes silo facilities to make turnovers – up to 3-6 storage turnovers during a season per each silo. At his very point it is very important to arrange the operation in such a way as to make everything run smoothly – not only in terms of technical operation, but also from the point of view of marketing: to work with counterparties, farmers, purchasing managers, exporters. Nowadays to run a silo facility means not just to have silo bins; you should know how to operate them duely.

You’ve emphasized that in terms of technicality silo facilities became more technological now. But it does not totally solve the problem, as far as some silo facilities are being destroyed in our country. How can you comment on this?

— It’s simple negligence and reluctance to choose the contractor carefully. And it’s even not about a desire to save costs which is a normal willingness of every competent top-manager. But if one saves money on engaging skillful project designers and constructing solid foundations – the latter are finally being destroyed, as far as they are not able to sustain the weight of a silo bin and its stuff. Some businessmen just don’t know the matter properly, they want to save costs and purchase silo bins which are not geared to cope with our climate and weather conditions, heavy winds and snowfalls. Therefore, it makes no surprise that sometimes the silo bin simply folds like a house of cards. There should be reasonable and well-weighed approach to the selection of contractors, entering into negotiations. It’s possible to arrange competitive tender for supplies and get 15-20% of discount provided for a big order.

How did you select contractors for your grain silo facilities construction?

— For 10 years we have been cooperating with KMZ Industries Company. The history of our cooperation started quite offbeat – then-director of the enterprise got to know that we were starting to work in Khrystynivka and offered us to buy out a grain dryer being leased by the enterprise but not being paid for. So, we purchased a very efficient dryer at a very attractive price. 

We had three cone-shaped silo bins with storage capacity of 500 tons each then. KMZ Industries suggested us buying two more silo bins with storage capacity of 4000 tons each. We agreed and it turned out to be successful cooperation. As a result, we have the main part of our silo facilities equipment of KMZ Industries production. 

So, as far as I understand, you are not going to change the partners?

— It’s quite normal to seek for the better. Bit as soon as we tried to establish cooperation with peer companies, we realized that KMZ Industries are at all accounts better in terms of price and quality, they are more flexible in payments settling and pace of construction works. 

Our two first silo bins of 2010 production year are still operating, nothing happened to them. Despite of making 5-6 turnovers per year they are in perfect condition. We are aimed at “dry port” concept application. It means we take a lot and ship a lot of grain. That’s why we have very strict requirements as for grain drying and taking – everything should be ultra-safe and run like clockwork.

Some businessmen complain of significant lack of railway transport to carry grain from the silos. How urgent is this very problem for you during the current season?

— The overall situation at railway is very bad; most of grain railcars are in terrible condition and under repair. That makes constant bottleneck for logistics. Grain volumes just do not manage to leave the elevator and contracts are not performed. Just so you understand, the most of silo facilities are loaded to the maximum and it’s precisely because of transport problem.

Aren’t you going to purchase private grain railcars?

— We are investigating this issue now – we’re thinking it out, making appropriate calculations. Whether we’ll buy them this season – I’m not ready to discuss it for the time being.

ABOUT PERSONAL BUSINESS APPROACHES 

In what conditions and environment it is the most comfortable to work for you and why?

— You know, I am an early bird by nature and I work the most efficiently in the morning – I can take on the world. But work imposes its rules and conditions, so I’m almost 24/7 on the run. Sometimes I even think I’m living with my cellphone in a hand. However, I like such a pace.

So, the balance between work and private life is not reached?

— Unfortunately it’s true. I’m just learning to do it. I try to combine them, but working time still prevails – it takes about 85%. 

In case of failures how do you force yourself to work on?

— What failures are you speaking about? Ok, there may be some difficulties, but not complete failures: the point is that some tasks just need some more time to be fulfilled. If anything should be done it will be done – you should foster your efforts, engage other people if you are not able to do it alone. God be thanked I have people in my team now who can always help and backstop. When I started working there were only two colleagues with me, now the number of employees exceeds 300.

By the way, how do you manage to engage people for you team? Do you motivate them to work towards a result?

— Many of my present colleagues have “grown up” at this very enterprise. A notable example: there is a guy who came to us as a freight handler to load the railcars, then he became a mechanic, and then – senior mechanic. And as of today he is Deputy Director of Operations of Voronovytske Grain-Collecting Station and he performs perfectly.

What are your plans for the development of your division within the company and your personal development?

— Everything is simple and complicated at the same time. There should be more focusing, more attention to the details and processes to be done. There are a lot of issues which require special attention, there are errors made by employees – and if there are some, I took them personally as well.

What hinders you the most preventing from feeling comfortable at work? What problems do you face the most often and why? 

— Nothing hinders. My work is the best one.

By the way, do you plan to work for your company for 10 years more or longer? How will the company look like in future as for you?

— I’ll answer without hesitations – yes, I do! And I think the company will look like not worse as it is now, at the least. As for the plans and projects – we have plenty of them, and all of them are ambitious, so, I will have enough of work for the years to be done.

Iryrna Hlotova, Agravery.com

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