6 February 2019

Oleksiy Tsurkan: Without newly added capacities grain elevators of Alebor Group would have flunked this season

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Oleksiy Tsurkan: Without newly added capacities grain elevators of Alebor Group would have flunked this season

This year a lot of companies increased their silo capacities. Alebor Group took the leadership in this battle march. The Group has increased total storage capacities across its three grain-collecting stations by 112 thousand tons. How reasonable and justified such an increase was and what intermediate results the Group showed at the beginning of new calendar year, as well as what are the plans for the new season – we asked Olekiy Tsurkan, Director General of Grain Elevators of Alebor Group.

Elevatoris.com: The calendar year has come to its end and grain elevators summarized their intermediate results. Do you have any figures of the total amount of grain had been already taken by your silos in 2018?

— Oleksiy Tsurkan: Indeed, we made intermediate results summary. About 800 thousand tons of grain was transshipped by three grain-collecting stations of Alebor Group in general. This is not bad figure, considering that our marketing year has not finished yet, and we have a lot of grain in stock at farms to be delivered to our silos.

As of today we had taken 170 thousand tons of grain at Chesne Grain-Collecting Station, 280 thousand of grain by Khrystynivske Grain-Collecting Station and 310 thousand tons of grain – by Voronovytske Grain-Collecting Station.

We can state that all the purposes and plans set by Alebor Group before the beginning of the season are almost achieved and we basically reached the projected figures. So, the year is proceeding quite successfully for us.

Elevatorist.com: Has the last year’s capacities increase at all three grain elevators contributed this?

— Oleksiy Tsurkan: Definitely it has. The need for onsite storage capacities increase was stipulated by bottlenecks in logistic chain of grain transportation to sea port, that is, it was a lack of rolling stock. If there are not enough of railcars to transport the grain from the silo, we are to stock it, and we need additional storage capacities therefore.

This season has verified the correctness of our decisions towards silo facilities’ enlargement. During the highest season with the utmost deficit of railcars – in October, November and December, – we didn’t stop taking grain at our silos. Of course, there were some moments when we did “a low pass” facing the lack of storage area and coming next to full stop, but luckily, the train of cars came at this very moment, and we shipped the required 3.5 thousand tons of grain and could have a sigh of relief.

Elevatorist.com: You mean, if silo capacities had not been increased, your grain elevators would not have been able to take such volumes of grain?

— Oleksiy Tsurkan: Yes, indeed, and we would not have obtained such good performance results. We would have filled our silos and waited for railcars. There would not have been any space available to take more grain. It would have been an overflow.

I’d like to add that our facilities’ enlargement was stipulated by one more reason. By the present moment we have a good business reputation at grain markets of Cherkasy, Vinnytsya and Odessa regions. We are known as honest, trustworthy, active and fast in performance partners. Such powerful companies as Kernel, Epicenter K, Uman Agro, Agrovit want to cooperate with us. And if we had not increased our capacities, we would not have been able to satisfy all the demands of our large customers to the full extent.

Elevatorist.com: And what about new customers? Did there appear any due to your capacities increase?

— Oleksiy Tsurkan: Yes, we became closer to large customers, for example, we started cooperation with Ukrainian Agrarian Holding. Also some new farms have appeared among our clients.

The capacities increase and 10 years of experience of operation within market environment gave us a possibility to perform better and develop more efficient cooperation with a customer base gained 2-3-4 years ago. We haven’t lost our customers, but significantly facilitated our service delivery.

Elevatorist.com: Suffering the deficit of railcars, did you use trucks to carry grain to the port?

— Oleksiy Tsurkan: No, we didn’t. You know, that Alebor Group of Companies has its private truck fleet. We use trucks to carry grain from the fields to silos, but we never use them to transport grain to the port. Facing such collapse situations when there were no railcars available, we thought of using trucks and made correspondent calculations, but it turned out to be economically unprofitable for us.

Quite possibly, that for some grain elevators with the carriage leg being not so big as ours, it may be cost-effectively, but it is not for our scale definitely.

Elevatorist.com: Aren’t you going to increase silo capacities next year?

— Oleksiy Tsurkan: We are at crossroads now: either to purchase railcars, or increase the capacities. There is a possibility to add more silo on-site storage capacities at our silo facilities: 40 thousand tons at Khrystynivske Grain-Collecting Station, 60 thousand tons at Voronovytske Grain-Collecting Station and 20 thousand tons at  Chesne Grain-Collecting Station. But we have decided not to start any construction this year as far as it’s very costly. We’ll use the existing facilities at their maximum operational levels and we’ll try to make storage turnovers.

Elevatorist.com: Nowadays the issue of energy efficiency of silo facilities  is very urgent. Do you work on its improvement at your grain elevators?

— Oleksiy Tsurkan: Yes, we do think a lot and work in this direction. In order to decrease electrical energy costs together with directors of grain elevators we discuss every single operation and operational model one or a few days ahead. I communicate with purchase managers, heads of departments and have a distinct vision of the amount of grain to be taken during the nearest days.

After that we outline tentative framework estimating where and how the grain will be taken and shipped. Thus we have an idea of the routes to be applied, conveyors and norias to be used, etc. Moreover, we have a separate meter for each operation installed. That means, we consider the amount of electrical energy consumption at every stage: at automated intake point, operational tower, shipment to the railcars, and so on. At the end of month each director of grain elevator reports on the amount and cost of electrical energy consumed. We carefully analyze at which stage there was a mistake made and where it would have been possible to reduce the costs.

Also there is compensatory unit installed in the silos. Our energy engineers maintain their efficient functioning.

Elevatorist.com: And what about natural gas consumption?

— Oleksiy Tsurkan: Last year natural gas consumption at three grain elevators totaled 1.8 cubic meters pre 1 ton-%. It’s much. But there were some objective reasons and circumstances beyond our control.

The first reason is the energy content of natural gas. It was very low last year – “at a minimum” – according to the expertise analysis provided by special laboratory. Such energy content, surely, has a great effect on consumption increase.

The second reason is peculiarities of the season. Due to weather conditions we took corn “in flows”. When the weather was normal we took 3-4 thousand tons per day

Then it became raining or snowing and we took just 1 thousand tons. The same concerns moisture content. Last year we took corn with moisture content no more than 15% and it was enough to dry it only by active venting. But during rainy seasons the corn arrived with 40% of moisture content and we had to turn on the dryer. And, as we know, such breaks in operational cycles of dryers have negative impact on gas consumption rates. The dryer should work on-stream. If you warm it up and then turn off, the consumption will surely be higher.

Elevatoris.com: Don’t you think of shifting to alternative fuel?

— Oleksiy Tsurkan: We calculated the margin. It’s not appropriate for our scope of operational volumes. If we had dried at most 500-600 tons per 24 hours, it would have made sense. But we work with thousand tons of grain, and it is natural gas only.

Elevatorist.com: Has the Group Management Team set objectives for the next season or it’s rather early to speak about it now?

— Oleksiy Tsurkan: In terms of procurement supplies we plan to have less than previous year. The minimum growth gain will be no less than 20%. We should wait until seedlings sprout in order to have an idea about crop yields. We take into consideration the projections including those made by Latifundist.com during their Agriexpetitions, in order to develop our planning. For the time being, as I’ve mentioned, we’ll continue to take last season’s crop.

Elevatorist.com: Oleksiy, thank you very much for the interesting information provided. We wish you to finish the marketing year successfully.

Interviewer: Inna Vorobyova, Elevatorist.com

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