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POINTERS 2014 MPOC
Palm Oil Internet Seminar
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Section 2: Global Palm Oil Market Focus:
Palm Oil Outlook - Focus on the Smaller CIS Countries - Belarus, Kazakhstan and Armenia
By: Ms. Mozgova Olga

Profile: Analyst specialized in food industry and agribusiness. Significant experience in preparing analytical materials and market researches of economic trends and legislation of Ukrainian and international markets of material and technical supply of agricultural and food sectors. Formed working contacts with Ukrainian and foreign participants of these markets. Centre of Marketing Researches "UkrAgroConsult" - head of projects, Analyst of markets of material and technical supply of agricultural sector, animal breeding, meat and dairy and other food markets. 2001-2014 - Coordinator and performer of the following projects: • 2008-2010 - Feasibility study and business plan of elevator construction, client - Victoria, Goldgrain, • 2010- Evaluation of prospects of building river elevators and terminals, client - Ukrrichflot, • 2001-2014 - Ukrainian dairy and meat markets (monthly and annual surveys), clients -USDA, Tetra Pak, ALTA, Lactalis, Elopack, APK Invest etc., • 2008-2014 - Ukrainian and Russian starch markets, clients - Toepfer, MHP, Unifex, • 2011 - Potential of non-energy use of agricultural wastes, client - "Biomasa", • 2004-2013 - Ukrainian market of plant protection products, clients - Kynetec, Syngenta, BASF, Bayer, Raiz, GreenExpress, Tridenta, Agrokhimcentre etc., • 2004-2014 - Ukrainian seed market, clients - Raiz, Solvey, Bayer, Syngenta, Praivat etc., • 2012-2014 - Russian sunflower oil and fats market - Troika Dialog, Efko etc., • 2012 -2016 - Ukrainian market of special fats and margarines - Maselko, Deloitte. etc., • 2015 – Legal regulation of markets of meat and meat products, milk and dairy product in Ukraine, CIS, EU and other countries, client - Deloiette • 2014 – Food security in Ukraine and ways to prove it, client – World Food Programme • 2015- The survey of prospects of commodity exchange market and commodity derivatives market,client USAID/FINREP-II • 2015 - Estimates of development level in Ukrainian grain market, developing the logistics scheme for the planned infrastructure projects in Ukraine, client Daewoo International Corp • 2016 – Mapping of Russia: Research on Vegoil and Industrial Fats market : client - MPOC • 2017 - Study on the Impact of Animal Welfare in Ukraine, client EC
VIEW PROFILE
Belarus, Kazakhstan, Armenia cannot be called major players in the global oilseed complex. Their domestic markets considerably depend on foreign vegoils – this has been so since a few years ago.

These countries are unlikely to become less dependent on imported vegoils in the near term.

Historically, the main vegoil used in the food industry in the CIS is sunflower oil, and the above countries are no exception. At the same time, this oil is actually not produced there, or it is produced from imported raw material.
Palm oil imports to Belarus, Kazakhstan, Moldova are on the rise in recent years.

Palm oil arrives in these countries both directly from producing countries and as re-exports from neighboring countries.

A mixed attitude to using palm oil is seen in Belarus, Kazakhstan, Armenia.
In the medium-term outlook, the key factors to influence the palm oil market in these countries will include government market regulation, development trends in the palm oil-consuming food sectors, foreign trade activity, and consumer preferences.


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Questions & Answers (6) :
Fatah
1 month ago
You mentioned that the state in smaller CIS countries has impact on businesses. Can you elaborate further on the role of government in business in these countried.
Olga Mozgova:
Dear Fatain, The governments of these countries are making significant efforts to develop their own raw materials base and to load the enterprises with oilseeds produced domestically. Thus, they are striving to substituting for an import of raw materials for the fat and oil industry. In addition, for example, in Belarus, the State owns the bulk of the shares in oil and fat companies. . This forms the policy of the activities of companies, including the purchase and use of raw materials. In case of import purchases are usually given preference to major well-known companies. This is the mentality of the state ..Best regards!
1 month ago
Ceanry Ayub
1 month ago
Dear Ms Olga, with the reduction of trans-isomers of fatty acids from total fats, i.e. from 20 % to 2 % (via Technical regulation 024/2011), where do you think "small" exporter of palm oil (and its co-products) will fit in the playing field (in the smaller CIS)?
Olga Mozgova:
Dear Ceanry Ayub, In our opinion, for the "small" exporters, the markets of Russia and Ukraine are more preferable. The markets of small CIS countries are less capacious and have a higher level of competition. In addition, in these countries, the state has a greater impact on business. This complicates business conditions.Best regards!
1 month ago
Nur Fairuz
1 month ago
Thank you for your answer. The canola seed price in Belarus is very competitive. But are they selling the canola oil cheaply. In the CIS countries arrangement e,g. Belarus and Armenia, do they take leads from Russia and Ukraine to formulate their policy. For example, will they follow Ukraine proposed ban on palm oil use in the country food production. How is the political arrangement in CIS countries.
Olga Mozgova:
Dear Ms. Nur Fairuz, Many thanks for your question! At the present time, domestic rapeseed prices in Belarus are at USD 350-360/MT EXW, i.e. they will come to USD 465-475/MT after the export duty is charged. Adding transport and other costs, we will get a price noticeably higher than USD 500/MT. In Ukraine, actual rapeseed price is now at USD 455/MT FOB for September delivery. Actual offers of rape oil on DAT basis for shipment to the EU approximate EUR 550-570/MT. The bill “On Amending Some Laws of Ukraine Regarding the Prohibition of the Use of Palm Oil in Food Production” was adopted in first reading this spring. However, it had not undergone a full review by scientific, medical and financial experts, and is rather populist. Most likely, it will not be voted into law in its current form. Statements about banning palm oil are also heard in the CIS countries, including Belarus, Kazakhstan, and Armenia. The main reason is complaints about an increasing volume of counterfeit dairy foods made using palm oil products. The statements about banning palm oil in the CIS countries are also rather populist. New Technical regulations of the Customs Union 024/2011 establishing content of trans-isomers came into force from January 1, 2018 (Not more than 2% of trans-isomers of fatty acids from the total fat content in the product). Amending this document is not discussed now. Best regards!
1 month ago
Nur Fairuz
2 months ago
Canola oil used for biodiesel production in Belarus must be sold at steep discount over market price. Does it not attract traders from the surrounding countries to venture into Belarus to source for canola oil since it cheap? How is imported oil shipped to Belarus and Armenia? Which port of discharge do they use? There is also LCs problem in the 3 countries, Kazakhstan, Belarus and Armenia as LC’s of banks in these countries are not accepted in many countries especially the major palm oil producers countries. How does the importers over these area of the market handle the payment issue?
Olga Mozgova:
Dear Ms. Nur Fairuz, Many thanks for your question! The Decree of the President of Belarus No. 272 of May 21, 2010 imposed customs duty on export of Belarusian rapeseed, or colza, crushed or non-crushed (code 1205 under the Customs Union Unified Foreign Economic Activity Goods Nomenclature) outside the Eurasian Economic Community at a rate of EUR 100 for 1000 kg. This makes rapeseed prices uncompetitive for export sales. The measure is aimed at protecting domestic crushers so that domestic rapeseed-processing capacities can operate. Belarus ships abroad significant volumes of rape oil. For instance, its exports totaled some 62.2 KMT in 2017 and 55.4 KMT in the first five months of 2018. As before, the top suppliers of palm oil to Belarus include Indonesia and Russia. Russia re-exports part of the oil imported via the ports on the Black (Novorossiysk), Azov (Taman’) and Baltic (Kaliningrad, S-Petersburg) Seas. The palm oil shipments to Armenia are extremely small. The product is supplied mostly as re-exports from Ukraine via the ports on the Black Sea (Yuzhnyi, Odessa, Chornomorsk). In addition, minor occasional cargoes come from the Baltic States, Italy. Palm oil is supplied in heated flexi bag, boxes with polyethylene liner, steel barrels in containers, either by rail or by truck. Taking into account that significant part of the palm oil comes to Belarus and Armenia as re-export from Russia and Ukraine, i.e. it is exported by companies of the latter two countries, no serious problems arise with payments. The banking systems in these countries seamlessly conduct payments with Belarus and Armenia. Accounts with exporters from other countries are settled mostly via representative offices of foreign banks having high enough rankings and located in Kazakhstan, Belarus and Armenia.Best regards!
2 months ago
Amirah binti Ahmad
2 months ago
Dear Ms. Mozgova Olga, Do you see growing potential of export of palm oil for biodiesel industry in Belarus instead dependency on canola oil? Thank you!
Olga Mozgova:
Dear Ms. Amirah binti Ahmad, Thank you very much for your question! For Belarus, very important is the use of own biological renewable sources for fuel production in order to reduce the nation’s dependence on exporting countries. Therefore it uses rape oil of own production for making biodiesel. According to BelNefteKhim Concern, biodiesel now accounts for some one-third of total diesel fuel sales in Belarus. Biodiesel fuel is consumed mostly by agricultural machinery. In addition, the quality of the finished product depends on the feedstock. Palm oil has the highest calorific capacity, but fuel made from it freezes rapidly at low temperatures. Biodiesel on the basis of rape oil, on the contrary, has a lower calorific capacity, but it is more frost-resistant. The frost resistance factor is of primary importance for Belarusian consumers. Therefore, we believe that palm oil will not be considered as a raw material for biodiesel production in Belarus in the medium term. It will continue to be used mainly in the food and soap industries. Best regards!
2 months ago
Amirah binti Ahmad:
Dear Ms. Mozgova Olga, Thanks for the reply. Best wishes,
1 month ago
Amirah binti Ahmad
2 months ago
Dear Ms. Mozgova Olga, The trans fatty acids is set at 2% max for the oils and fats. Is partially hydrogenated oils/fats are accepted as long as the total trans fatty acids are below 2%? Thank you!
Olga Mozgova:
Dear Ms. Amirah binti Ahmad, Many thanks for your question! Yes, It is allowed to use partially hydrogenated oils/fats with total trans-fatty acids below 2% in fat-and-oil products of all types. Best regards!
2 months ago
Amirah binti Ahmad:
Dear Ms. Mozgova Olga, Thank you for the confirmation!
1 month ago
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