| Securing Plans for Agricultural Investment and Feed Grain Abroad in the Age of Eurasia (Year 1 of 2) | |||
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| Author | Choi, Jihyeon | ||
| Views | 75180 | Publication Date | 2017.02.18 |
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Background to the research In the international grain market, there always exist instability of supply, demand and price due to frequent weather phenomena such as El Nino. Therefore grain importers such as Korea need to explore ways to reduce the uncertainty in the food supply caused by the global food crisis. In Ukraine, investment from foreign companies is actively being carried out in the fields of grain production, distribution and exports. In situations where grains are being imported from Ukraine, suggestions are being raised to undertake facility investment for the reduction of logistics costs to transport goods from the producer to the outport and related facility for the improvement of investment and production. In addition, in Uzbekistan and Kazakhstan, rather than placing their goals on bringing in feed grains into their countries, by taking into consideration that the demand for meat and dairy products is increasing, they need to promote technical cooperation businesses through investment in the livestock industry and ODA business. Therefore the focus of this research is to review the issues at hand within the field of Government or private investments on feed grain and livestock and technical cooperation and to present investment cooperation by allocating the subjects of this research as Kazakhstan, Uzbekistan and Ukraine, the Eurasian countries which relatively have a well-based grain production or an increasing demand for livestock. Method of research This research was conducted by the use of various research methods such as literature research, statistical research, visits to relevant and local institutions and commissioned research. The data related to the general status of the feed grain and livestock industries in each country have been collected around FAO, World Bank and each country's National Statistical Office. Some restricted statistical data were collected by commissioning experts from each country. I visited local domestic companies and listened to their business plans, future plans, difficulties and searched for ways to enhance investment cooperation. During the two visits to Ukraine, I created a consensus with Ukraine's policy-maker and expert at the Korea-Ukraine Economic Cooperation Forum presentation on ways to promote investment cooperation. In addition, based on the relevant data collected, I analyzed each country's agriculture and regional investment environment and undertook SWOT analysis to reveal their strengths, weaknesses, opportunity and risk factors. Research results and implications The poultry farms, slaughtering and processing infrastructures in Kazakhstan and Uzbekistan are in vulnerable conditions. Therefore conditions to invest in the domestic poultry-related corporations are in place. Ukraine has quality and price competitiveness in all areas related to dairy farming based on feed grains but the facilities for processing after the breeding stage are weak and related technologies are at a low level so it appears that investment and technical cooperation in such fields are reasonable. The means of investment cooperation need to be sought by separating the investment cooperation businesses into Government ODA Business and private investment business. Uzbekistan and Ukraine have considered Foreign Direct Investment (FDI) and Private Export Business for private investments which are domestic companies investing with private investment money in relation to technical cooperation to push ahead with agrifood or RDA ODA business and seed supply etc. In addition, they have put forward short- and long-term businesses according to each country's business characteristics, market and conditions of agriculture. As an investment cooperation business with Kazakhstan, we proposed establishment of a feed factory, advancement into the field of poultry (native/Korean chicken) and establishment of a dairy processing factory. In order to reduce the risk of establishing a feed factory, a joint venture is desirable and in order to safely secure the original feed grain, contract cultivations are needed with the cooperating farms or farmhouses. In addition, for safe supply of mixed feed and to cut costs, breed improvement and business for the development of feed resources are required. In order to undertake this, we can consider setting up a feed grain examining office close to Almaty. For Korean native chicken business, it is advisable to advance it in the form of a PS farm (Chicken breeding farm), hatchery, CC farm (poultry farm), chicken processing plant or in affiliated corporate structures including a poultry meat processing factory. It is worth considering a plan of connecting the business of supplying the GP (pure breed farm) chicks produced in Kyrgyzstan with the Korean native chicken PS farm operated within Kazakhstan. Also, we need to review the ways to support private company investments in a form of a GSP (Golden Seed Project) business within the Ministry of Agriculture, Food and Rural Affairs. The local or domestic companies shall be in charge of the investments on establishment of PS farm and hatchery and domestic companies with the relevant technology which will advance to the locals shall be the subject of operation. For private sector investment including the dairy farmhouse, we need a way to operate it within a complex such as a milk collection site and dairy processing factory. We need to introduce a Cold Chain System into the process of collecting the raw ingredients from the farm and transporting it to the milk collection site and dairy processing factory and for the sale of dairy products, we need to establish a joint venture sales corporation with the local company and dealer. In addition, to improve the productivity of the dairy farm through animal improvement, we also need to advance a business of exporting domestic dairy cattle semen. In case of Uzbekistan, we proposed establishment of a feed grain factory, advancement of layer chicken business and dairy processing factory as investment cooperation business. For reduction of livestock husbandry costs and improvement of production in Uzbekistan, we need to advance the domestic feed grain companies into the locals and review domestic production of corn and wheat which are the main ingredients of feed grains within Uzbekistan. In addition, to safely secure the feed grain, we need contractual cultivation of feed grains such as corn, wheat and soybean with cooperating farms with the cooperation from the Government. Tashkent is an ideal location for the establishment of the feed grain factory as an area of high density animal husbandry farming. It is appropriate for investment in layer chicken PS farm, hatchery and CC farm to be in a form of a full investment from a company which wants to invest or a joint investment with a local investor. It is advisable for a Korean company with the related technology to be the subject of operation. The establishment of a GP Center and egg processing company shall be advanced as an ODA business and shall support the construction and its operation and provide the required technology. The establishment of the layer chicken PS farm and CC farm shall be advanced as a short-term project and the establishment of the GP Center and egg processing factory shall be advanced as a med-long term project as it requires adjustment of conditions. The location of the facilities related to the layer chicken shall be in the proximity of Tashkent and Samarkand where there are a lot of chicken breeding sorghum. The location of the hatchery shall also be in the proximity of Tashkent where an animal husbandry complex is in place. For the development of feed resources, we should expand the Uzbekistan KOPIA feed grain examining offices outside Tashkent into other regions and imported feed seeds other than those from Korea should be implemented into the experiments. Samarkand, Fergana and Andijan should be reviewed as ideal locations for the additional feed grain development businesses. As an ODA business, we need to establish a dairy processing factory or technical corporation and consulting support. We should advance relevant technology and consulting support business in relation to cattle shed sanitation management at the dairy farm and need to review areas near Tashkent with high density milk cow breeding as a location for the trial dairy factory as a priority. As an investment cooperation business with Ukraine, we can consider a grain exports terminal, construction of inland silos, dairy factory and affiliated businesses. We should construct an export terminal at the grain export port near Ukraine's Black Sea and secure grain silos at the point where breadbasket Ukraine connects to the waterway in order to improve the cost and quality competitiveness by reducing the logistical costs and improving the quality of grain. As its location, it is most appropriate in the northern area near the port of Odessa such as Illichevsk and Nicolaev and its scale is to be reviewed at 200~300 tons taking into consideration the domestic quantity of supply and its expected investment amounts to be 150~200 million dollars. We should enter into a joint venture with the dairy factories which hold the main dairy manufacturing lines such as the market milk manufacturing line, butter manufacturing line, cheese manufacturing line and consider construction and operation. The companies which hope to expand their business should enter into a joint venture with the dairy factories and it is appropriate for the Ukraine company to be in charge of the management and sale of the dairy factories and for the Korean investment company to be in charge of the imported dairy products in Korea and quality control and technical support. It appears necessary to modernize the related facilities such as maintenance and management of the aged facilities, dredging existing main water ways and realigning the sprinklers. We need to provide support from experts on the related facilities, electric charges, operation costs such as running of the sprinklers and facilities for irrigation water and the finances should be transferred through the World Bank, EBRD and EDCF (Economic Development Cooperation Fund) of Export-Import Bank of Korea. We can consider providing technical consulting support through ODA for the establishment of the cold chain system within the dairy industry and establishment of the Traceability System within the hog farming industry. Researchers: Choi Jihyeon, Huh Duk, Choi Jongwoo, Lee Dongso and Seo Gangcheol Research Period: 2016. 1. ～ 2016. 12. E-mail address: jihchoi@krei.re.kr |
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