Black Sea Grain Pool Challenge
31 October, 2013
Black Sea Grain Pool Challenge
Russia, Ukraine and Kazakhstan - all three major bulk wheat suppliers to Georgia - discuss an idea of uniting their corn resources under the single umbrella of a regional organization to get a leading position at the global grain export market. Some European experts fear that these three grain producers together may undermine price competition and influence global export through tariff regulation. Georgian analysts expect no serious risk of monopolization to the corn market in the region as they believe
that out of the suggested three allies the creation of this organization cuts much ice with Russian interests rather than with Ukraine and Kazakhstan and they will never agree to make it functional and give levers to Russia to dictate its terms and pricing policy on the corn market of the region.
On 17 October 2013, Ukrainian and Russian Prime Ministers declared that they achieved an agreement on setting up the Black Sea grain pool that will be completed in six months and be opened to other countries too to join [implying Kazakhstan]. Sector pundits, including the Ukrainian analysts and grain producers do not take the single pool idea seriously as far as it affects the economic interests of Ukraine and Kazakhstan alike.
The issue to create a Black Sea grain pool was initiated by Russia in 2009. The reason behind it is that there is a strong cross-country competition in the Black Sea basin and countries in the basin lose some USD 10-20 per ton of grain. However, the idea faced strong resistance from the allies. Ukrainian side believes Russia and Kazakhstan both need free access to Ukrainian Black Sea Ports. Ukrainian private sector also strongly opposed the idea that the possible establishment of the state monopoly on grain trade in the country would impose a state dictate on prices and scare off the large-scale companies involved in Ukrainian grain trading industry off. Ukrainian grain producers and analysts still remain hostile to the idea and believe this was just a tactical trick of Ukrainian PM.
Georgian analysts expect no serious price monopolization risk to the grain market if the projected pool emerges in the neighborhood. According to Levan Silagava, Head of Association of Georgian Wheat and Bread Producers, on the one hand if the putative pool is to have only monitoring function [as Ukrainian side trumpeted] rather than duplicate the powerful mechanism of the OPEC, the international oil producers amalgamation, by setting quotas and dictating demand and supply trends, neither Ukraine nor Kazakhstan will ever agree on this. “Russia, the major player among the supposed three allies, produces 90 million tons of grain against 50 and 20 million produced by Ukraine and Kazakhstan respectively and will be an apparent controller of quotas and prices thanks to its bigger production volumes. It needs Ukrainian ports because unlike them the Russian Black Sea port in Novorossiysk is not available in winter. With the access to Ukrainian ports, Russia could become more competitive to Ukraine. As to Kazakhstan, Russia always harvests crops in June whereas Kazakhstan does it in September. So, Russia will always use this privilege to block Kazakh export until it sells its own export completely. Kazakhstan which is closed by Russia geographically has already witnessed this and seeks other partners including Georgia to get an access to ports. Therefore, I believe they will never agree to have a single pool with Russia,” Silagava said.
On the other hand, economic analyst Soso Archvadze believes that even if the grain pool blueprints OPEC mechanism, it will be unable to dictate its policy to the global market as far as total capacity of all three allies that makes up less than 25% of the world market, is not sufficient for that. “To regulate global price policy, a producer must have at least one-third of the market,” he said.

Other Stories
Georgian citizens are granted the right to work in France
The French Embassy in Georgia made remarks on granting Georgian citizens the right to work in France
The New York Times: Bitcoin declines but Georgia still bet on it
The New York Times has recently published an article about reasons, challenges and causes of generating Bitcoin in the former Soviet country Georgia.
EU to allocate € 13 billion for Eastern Partnership countries, including Georgia
The European Union together with the World Bank plans to allocate investment worth € 13 billion for infrastructure projects in the Eastern Partnership countries.
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
Interview with the co-founder of Kiwi Vegan Café – the first vegan place in Tbilisi
Behind the Kiwi Vegan Café stands a group of activists who wants to raise Georgian’s awareness for animal rights and welfare.
Biblusi opens first shop for tourists - Georgian
The largest book shop in Georgia Biblusi opens the first shop specially designated to the needs and interests of tourists and named it Georgian.
Georgia improves by five ranks in the Prosperity Index
In the overall Prosperity Index rankings, Georgia has climbed by 5 positions from 85 to 80 when compared to last year. As such, Georgia is the best performing country in the CIS zone.
The future is bright for electric cars in Georgia
The numerous hybrid cars in the streets of Tbilisi cannot be overlooked. Entrepreneur Sulkhan Gvalia calls them “pagers”, referring to the predecessor of mobile phones.
Georgia’s fight against the big tiny enemy – Asian Parosana
It’s a tiny creature, but the harm it did to the Georgian agriculture sector was and still is immense.
New cable route: from Kobi to Gudauri in 15 minutes
On the 15th of December, cable transport is scheduled to be opened connecting Kobi and Gudauri.
Tourist boom in Gudauri – majority of hotels are booked by foreigners
Gudauri is among the most popular winter resorts in Georgia.
Medical tourism increases in Georgia
In the last 9 months, Georgia was visited by 19 500 foreigners for medical and recovery purposes.
Doing business in Georgia has become easier than in America
According to the Doing Business 2019 report published by the World Bank, Georgia ranked 6th among 190 countries in terms of simplicity of doing business. This was an improvement over two ranks compared to last year.
Problems that foreigners frequently face in Georgia
The importance of Georgia as a tourism hub is growing year after year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
GEL Exchange Rate
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
February 2019
Mon Tue Wed Thu Fri Sat Sun
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28