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.

Print
Other Stories
Korter: Reliable housing property data in Georgia
It's not a simple job to find fresh homes. But when you use the estate choice service Korter, everything becomes distinct.
Rent a car in Tbilisi – Parent.ge
Are you thinking of booking the best vehicles for your next trip at a very reasonable price? If yes, then this is one of the best decisions you can ever make for yourself.
Pleasant Sunday for the whole family – Renewed Sunday’s brunch at The Biltmore Tbilisi Hotel
Summer, the season of endless fun and vacations, has ended and Tbilisi has become a usually crowded city.
GEL devalues, officials show optimism though
Devaluation of the national currency has sent shockwaves among citizens in Georgia. Officials think that the trend will return to its normal frame, though.
ProCredit Bank’s 20 years of challenges and successes in Georgia and what it means to be a responsible bank
“The bank’s 20-year long presence in Georgia was marked by many challenges and success stories.
Comments on alarming GEL devaluation
The National Bank of Georgia set a new exchange rate, according to which, dollar price became GEL 2.9507 on Tuesday.
Euronews and Silknet sign an MOU to launch “Euronews Georgia”
Euronews and Silknet, Georgia’s leading telecommunications company, are announcing the signing of an MOU in view of launching Euronews Georgia, a news channel and digital platform aimed at a Georgian-speaking audience.
Green Diamond starts to hand over flats to owners as second stage of construction finishes
Second stage of construction of Green Diamond living apartments by MAQRO Construction has finished and process of hand over of flats to owners has started.
Georgian wine tasting in the US came off excellently
Georgian wine tasting in the main cities of the US, New York, Chicago, and Boston went off excellently.
The most wanted fruits from Georgia
The fruit exportation has decreased in Georgia. According to Geostat (National Statistics Office of Georgia), this year, up until May Georgia exported 25 939 300 USD worth of fruit – 6 771 300 USD less than in 2018.
Investment Plan for Europe – Additional EUR 800 million for SMEs as EIF and ProCredit double support for innovative companies
The European Investment Fund (EIF) and ProCredit Group are providing an additional EUR 800 million to innovative small and medium-sized companies (SMEs),
Everything of comfortable life in one space – Second part of construction of one of the largest apartment complexes finished in Tbilisi
Apartment in ecologically clean environment, thousands of square meters of green yard, swimming pools, places for various sports activities, treks for walking and running, commercial spaces – all these available in one space is not a fantasy.
Batumi awarded Europe's Leading Emerging Tourism Destination 2019
World Travel Awards Europe Gala Ceremony 2019 took place on the 8th of June in Madeira, Portugal.
Coca Cola to open new factory in Georgia, will hire female drivers
Coca Cola is opening new factory in Georgia in December.
World's best party supply company now on the Georgian market
The largest party supply store in Georgia - MyDay is launching as the official distributor of AMSCAN from 2019.
Live as a marketing tool and an unprecedented live stream launched by Livetag
Sharing information has become smoother and more versatile in today’s technological world. Recently, live streaming, an online streaming media has become especially popular.
Theme and program of Caspian Energy Forum Tbilisi – 2019 changed
“The 8th International Caspian Energy Forum Tbilisi – 2019, scheduled for June 21, will focus on the development of the Azerbaijan-Georgia relations in the field of economy and energy”,
Misunderstanding over Poti deep sea ports
There was misunderstanding around deep sea ports in Georgia – in Poti.
High demand for dollars or the investment decline – Why Georgian Lari depreciates
$1 equals GEL 2,7470 in the official rate set by the National Bank of Georgia (NBG).
PSP Group confirms negotiations regarding purchasing of GEO Hospitals
PSP Group confirms negotiations regarding purchasing of GEO Hospitals.
New life to be given to Dashbashi Canyon
Georgia’s Agency of Protected Areas is planning to give new life to Dashbashi Canyon in Tsalka (southeastern Georgia).
Who is constructing “Khadori 3” Hydropower Plant in Pankisi Gorge?
Clashes broke out in Pankisi Gorge, Georgia’s northeastern region between special forces and residents
Business Positive – Successful radio program from Radio Positive
Starting point of radio program Business Positive is to meet interesting people, communicate with them and deliver information that is interesting for the audience.
A factory of electric vehicles to be built in Kutaisi
Prime Minister Mamuka Bakhtadze stated that a factory of electric vehicles will be built in Kutaisi at the presentation of the Aigroup business group.
Qvevri-shaped hotel complex to be built in Telavi
A Qvevri-shaped hotel complex is scheduled to be built in the village of Shalauri in Telavi, Kakheti (east part of Georgia).
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
16.02.2020
17.02.2020
USD
1
USD
2.8718
2.8718
EUR
1
EUR
3.1127
3.1127
GBP
1
GBP
3.7402
3.7402
RUB
100
RUB
4.5228
4.5228
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
USD
1
USD
2.8718
EUR
1
EUR
3.1127
GBP
1
GBP
3.7402
RUB
100
RUB
4.5228
February 2020
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 29