September 2018

 

By Roger Gilbert

 

The Danube and Black Sea Region is expected to consolidate its position as the world"s second largest grain and oilseeds exporting region - after the USA - and is projected to move over 146 million tonnes of total exports by 2030, up 26 percent on current levels.

Grain and oilseed exports from the Danube-EU Black Sea Port will account for 30 million tonnes of that total, and the completion of the 200,000-tonne silo storage and handling facility by Ameropa"s Chimpex Port Facility in Constanta, Romania - completed a year ago - will play a significant role in realising that potential.

According to the Ameropa Group, which is the largest grain handling and exporting company in the Danube region, the outlook is for an additional 9.2 million tonnes from 4.8 million tonnes of wheat and 4.4 million tonnes of corn exports can be expected.

This optimistic scenario is also supported by Rabobank and will most likely come from production expansion in both Serbia and Hungary, provided the navigability of the Danube, which is currently limited throughout the year by either low water levels, floods or ice, can be improved, says Andreas Zivy, President and Chairman of the Swiss-based Ameropa Group which owns the new facilities at Chimpex.

This is an amazing turnaround because prior to 20 years ago, when the Black Sea region was a major importing region for cereals in communist times, he adds.

Dredging works on the Bulgarian Danube side have already begun, although Serbia, not being an EU member state, might delay progress.

 

Deep water

The deep-water port of Constanta is seen as the main hub and while best suited to capture the export potential from its hinterland, sourcing materials from Romania, Hungary, Serbia and Bulgaria and bring them into the harbour via the Danube-Constanta connection canal it is the imports from Asia that should not be overlooked. Constanta can handle Panamax vessels of up to 65,000 tonnes.

 

Romania grain production

Agriculture accounts for 4.6 percent of Romania"s GDP which is well above the EU average and it employs a staggering 23 percent of the country"s workforce, says Mr Constantin Vasile, the General Manager of Ameropa Grains in Romania.

Much of that is still subsistence-based farming with a significant proportion of land in small holdings in private hands. However, modern agriculture has been making rapid progress and while average crop yields are still roughly 40 percent below the EU for wheat and 50 percent for corn the gap is closing "and the potential in this country is massive," he explained.

Over the past decade the country has seen a rapid increase in its grain and oilseed exports by four million tonnes to 12 million tonnes annually and this is expected to reach 22 million tonnes over the next decade.

Romania is enjoying an increasing rise in grain and oilseed revenues that has risen from one billion Euros to three billion Euros over the past decade, says Mr Vasile.

 

Not just a grain trader

Unlike other traders, Ameropa is not just trading grains but has developed a network of grain silos across the country. There are some eight centres outside the dominant grain production area of Constanta county which has a similar number, all servicing the new facilities in Constanta Port operated by its subsidiary Chimpex.

Ameropa has two other subsidiaries in Romania beside Chimpex - Ameropa Grain and Azomures. Chimpex operates the company"s port terminal for the other two which are exporting grains and oilseeds and importing rock phosphate respectively. The production of Azomures" fertilisers including urea, ammonia nitrate and calcium ammonium nitrate as well as compound fertilisers such as NPK and liquid fertilisers. Romania is one of only a few EU countries self-sufficient in natural gas necessary for fertiliser production.

Mr Zivy was on hand when Milling and Grain visited the company"s new port storage and handling facilities in Constanta in mid-August.

He told visiting journalists that his company is playing its part, within the agricultural supply chain, of helping "to feed the world" and its growing population.

His assessment of the challenge ahead shows that in bio.Kcal/day terms, total food consumption will have risen from 6.7 bio.Kcal/day in 1960 to 19.3 in 2010 to an expected 30.3 in 2050 - or a 500 percent increase while urban populations will represent 70 percent of our population (up from 30 percent in 1960) resulting in arable lands represented per person falling from 0.37ha to less than 0.15ha.

"Grain production over this same period has trebled from 741 million tonnes to 2.1 billion tonnes, with average yields per ha rising from 1.4 tonnes to 3.5 tonnes.

"By 2050 we will have had to quintuple the volume of food that was needed in 1960 and at the same time conditions have become more difficult with urbanisation eating away at arable land and now water supply becoming a big subject, that might well turn out to be as big a subject as climate change."

And climate change is also a growing challenge for agriculture, he adds.

The agriculture supply chain succeeded in the task of tripling calorie producing by 2010 and today there are no food shortages in the world.

"Where they do occur, they are a political phenomenon and not a production or economic phenomena."

Mr Zivy quoted Amartya Sen saying: "No democracy with a free press has ever experienced a major famine."

 

Company activities

"Our company is divided into three main activities one being the Danube Grain Group that covers the four countries of Romania, Bulgaria Serbia and Hungary. And we have our international trading side which is focused on fertilisers and gains.

"We bring food from where it is grown to where it is needed. There are a number of functions that need to be fulfilled to do this and we are active along the complete supply chain - from the farm gate through cleaning and drying and transporting to feed factories or to the port for export. We also have to bring grains through importing facilities to the purchaser.

"Financing is an essential part of this agriculture production, especially for farmers where there is just one production cycle per year," he adds.

Ameropa Grains is among the top three Romanian grain and oilseed exporters and with its unique silos and warehouse network throughout the grain growing regions of the country, it purchases approximately three million tonnes of grain - wheat, corn and oilseeds - from its 2650 "originating partners."

In return it provides fertilisers, seeds, soil analysis, plant protection chemicals, credit facilities and growing and marketing advice throughout the year. To ensure quality is maintained the company offers storage after harvest coupled with cleaning, drying, weighing and proper storage.

 

Ameropa markets grains within the EU and to countries in Africa and Asia

"We are not a global player. We are a regional player. The Chinese company of COFCO International is now also in the grain handling and storage business.

Mr Zivy says that Russian, the Ukraine, Romania, Serbia and Hungary are particularly suited to growing wheat from a huge agricultural land mass that has developed over the past 20 years and has more to offer.

Mr Vasile of Ameropa Grains says that while the main producers and exporters are Russia and the Ukraine, the Danube region accounts for one-third of the Black Sea region exports - 35 million tonnes compared to Russia"s 44 million tonnes, and Ukraine"s 40 million.

In the three neighbouring countries to Romania, Ameropa Group members including MG Product in Hungary contributing 400,000 tonnes of grains annually while Konzul of Serbia provides some 370,000 tonnes of grains and Ameropa in Bulgaria contributes a further 400,000 tonnes of grains.

This compliments the 2.8 million tonnes of Romanian grains sold with all of that exported passing through the new and expanded facilities developed by Chimpex, the port operator with 600,000 tonnes of storage capacity, he adds.

In 2017 the facility handled over 4.5 million tonnes of grains. Ameropa Group trading in the Danube region accounted to 6.3 million tonnes of grains in 2017.

 

The port and its operations

The Port of Constanta covers a total are of almost 3926ha with 1313ha being land and the rest sea. It has 18 specialist terminals and 156 berths with 140 operational and some 300km of railway tracks.

The Port is a "free zone" and has over 1000 companies operating in it and handling some 58.5 million tonnes of materials. It"s record tonnage was in 1989 at 62 .3 million tonnes.

Today it is the cereal hub for Central and Easter Europe handling 20.4 million tonnes in 2016 and falling back to 18 million tonnes in 2017.

It is the second largest port on the Black Sea after Novorossiysk in Russia which handles some 87 million tonnes of traffic and is the most reliable.

Mr Mihai Panait, Director General of Chimpex calculates that with the same amount of fuel it takes to move 20 tonnes of grains 100km by road, it is possible to move 1500 tonnes over 300km by rail and 10,000 tonnes 370km by barge.

"It would be a big advantage for Constanta Port if the Danube were included in the commercial flow of goods and cargo mainly from Asia to Western Europe," he says.

The Danube is a 'green-way" of transportation. If the Danube would be reliable in terms of the water levels with proper maintenance and dredging, that would be a significant help for the Port of Constanta.

Chimpex has been operating in the port since 1971 and is the main port operator for grains as well as solid chemical products. It joined the Ameropa Group in 2012.

Its operating area is 360,000 square meters with 10 operational births and a total quay length of 2.26km, with a depth of 13.5 metres.

In addition, it has 10 railway tracks and access to road transport and can move up to 33,000 tonnes of cereals per day. It has a turnover of 29 million Euros per year and employs 285 staff working four shifts and seven days per week.

Its services include cargo handling, storage, weighing, barge management, railcar manoeuvring, bagging and cargo conditioning, etc.

The new grain terminal itself - which was completed in June 2017 - has 20 10,000-tonne silos totalling some 200,000 tonnes of capacity coupled with bulk grain warehouses of a further 280,000 tonnes.

Fertilisers, phosphate, meals, vegetable oils and open storage facilities make up a further 200,000-plus tonnes of storage capacity on the site.

Mr Panait says grains account for 70 percent of Chimpex"s handling operations. Trucks are still very much a staple feature for incoming grains at the port with almost 75,000 truck arrivals a year compared to 38,000 railway wagons delivered. Barges account for 750 arrivals and vessels 265 arrivals.

Chimpex takes its quality assurance and grain handling seriously and while maintaining several ISO standards for quality, environment, health and safety and HACCP, it complies with QHSE audits and food safety requirements. It"s shrinkage over a year of full operation is minimal at 0.01 percent!

 

Investment

Chimpex has seen investments in its business increase over the past five years to over 50 million Euros.

The main investment has been in a state-of-the-art grain terminal, new operational equipment, the construction of new warehouses and revamped existing ones.

And currently progress is being made towards an extension of its shipside rails to handle two vessels at the same time.

The two rows of 10 10,000-tonne silos were installed by the Swedish company Tornum with all the conveyors and grain handling equipment, including bucket elevators and dust handling equipment, supplied and installed by Buhler of Switzerland. The dock-side loaders are from Neuero.

Operating rates for vessels are two loaders at 800 tonnes per hour, barges, rail cars and trucks can be unloaded at up to 400 tonnes per hour each.

The new silos had much of their construction work undertaken underground.

Some 778 piles were drilled, most to a depth exceeding 22 metres into bedrock, with 30 piles for each 10,000-tonne silo.

There were 40,000 cubic meters of concrete poured and 1.2 million kg of steel structure erected using a combined workforce of 290 men and 760,000 man-hours without an accident.

The construction took place while grain and other cargos were transhipped around it and during a record handling year for exports.

Milling and Grain visited during a two-week window between the winter wheat harvest and the expected arrival of spring wheat to a relatively quiet intake and out loading.

"An early harvest due to good weather for the winter wheat has given us this window," adds Mr Panait.

 

Built on Grain

If we are proud of our 130-year history reporting the development of the milling industry, imagine how proud Romanians must be of their association with the grain trade and the shipment of wheat and corn.

Romania can trace its dedicated grain facilities at Consanta Port back to the mid-19th Century when Padishah Medgid decided to construct the Port of Kustenge (as Constanta was then called), mainly for the export of grains from the Dobrogea area. The construction work carried out by the English company Danube and Black Sea Railway and Kustendge Harbour Company Limited.

However, from the beginning of the 13th Century, once Genoese traders had entered the port - which was then called Tomis - a commercial exchange point, there were quay-side granaries, had already been established.

Times turned against Tomis after the Ottoman conquest, however its strategic position for the cereal trade had been established and it was this trade that brought it back to international attention in the middle of the 19th Century.

After the Independence War of 1877-1878 and the reintegration of the region into the Romanian state, Constanta began to develop and by the beginning of the 20th Century the basis for a Port City was established.

Today, the commercial Port of Constanta is spread over 3900ha and is the biggest port on the Black Sea while the city itself occupies less than half that area.

Despite all the names changes and the coming and going of outside traders and invaders, the city has a diverse ethnic make-up from Turks, Greeks, Romani, Magyars, Armenians, Tatars, Germans, Bulgarians and Ukrainians and a diverse religious landscape of mostly Orthodoxy, which represents 80 percent of the population, alongside Christians, Muslims, Roman Catholics, Greek Catholics and Reformed Catholics.

 

Romania"s Grain

• Is the fourth largest grain producer in the EU after France, Germany and the UK, with a total production of over 22 million tonnes

• It is the third largest exporter in the EU

• It is in the top 16 producers worldwide for sunflower, corn, wheat, barley and rape

• Improved technical efficiencies could see yields improve by 35 to 80 percent

• The average yield for wheat and corn in 2018 is about 4 mts/ha

• In 2008 it produced 17.5mmt, in 2018 it is expected to produce 24.8mmt (exporting 13mmt) (latest update)

• Major 10 export destinations are: Spain, Egypt, The Netherlands, Jordan, Italy, Belgium, Turkey, Saudi Arabia, Iran and Portugal

• It is ISCC, GMP+ and HACCP certified

• All grains planted and harvested in Romania are non-GMO

• Certified goods are stored separately maintaining traceability

 

Community involvement

What is the company"s unique selling point when it cannot offer the cheapest fertilisers or the highest prices for grain? We list entrepreneurship, integrity and family values which we offer to our farmer partners, says Mr Constantin Vasile, the General Manager of Ameropa Grains in Romania.

"Our values make the biggest differences. We cannot compete on price alone. We are a long-term partner, we provide solutions to problems and are flexible in what we provide, such as paying quicker than others and providing specialists to farmers from crop protection through to marketing their products.

"We do not advise when to sell but just tell farmers about market situations as they develop. We consider ourselves a family company taking our partners as part of our family," says Mr Vasile.

Ameropa Grain and Chimpex undertake projects within the communities we serve as well, he says.

"We partner with high schools and universities in Constanta and offer internships at the Chimpex Terminal. We provide free English courses and summer camps for employees" children. We also support local orphanages."

Receiving grain by railcar means a more consistent flow of incoming materials. Railcars are becoming an increasingly important means of transporting grains to port in Romania

Invited European and international journalists visiting Ameropa"s new silo and grain handling terminal at Chimpex in Port Constanta, Romania on the Black Sea

The original grain stores at Constanta - three 30,000 tonne storage silos build over 100 years ago and still being used by grain traders within the port

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