China Looks to Ukraine as US Corn Supplies Dry

Jul 20, 2012 06:27 AM EDT | By Sriranjini

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Ukrainian corn soon to replace american corn in China. (Photo : flickr.com)

China and Ukraine may soon be signing a treaty to help each other through the US corn export crunch.

As the export of corn from the U.S. is on the decline, China- the second biggest consumer of corn- is looking to new sources to provide it with corn.

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Talks about Ukraine supplying corn to China have been going on between top government officials from both the countries. Other food commodities might also be traded between the two.

Oleg Bakhmatyuk, chairman of the board of UkrLandFarming (ULF), the largest Ukrainian agro-industrial company, said he had been encouraged by talks between Minister of Agriculture Han Changfu and Ukrainian Foreign Minister Konstyantyn Hryshchenko.

"Chinese government officials have attached great importance to agricultural cooperation with Ukraine and we believe we will soon have market access for Ukrainian corn to enter China," said Bakhmatyuk, who was part of the official Ukraine delegation.

The ULF has also been speaking with some of China's top food companies like China Cereals and China Oil and Food Corporation about strengthening their commercial ties.

According to official data, China imported about 1.88 million tonnes of corn in the first five months of this year. And, likely, it the supply of corn from Ukraine to China could be about 20 percent cheaper than the price paid to the U.S.

Analysts agree that the two countries are highly complementary in the agricultural sector, and food imports from Ukraine could help reduce China's reliance on traditional suppliers such as the US.

"China can provide Ukraine with production materials such as seeds and agricultural machinery, while Ukraine can sell its products to China," said Huang Dejun, general manager of Beijing Orient Agribusiness Consultant Ltd, a consulting firm specializing in agribusiness consulting services.

Moreover, the Ukrainian corn is not genetically modified. This will probably make it more popular in the Chinese market.

Bakhmatyuk also aims to supply China with other farm produce like pork, chicken and sunflower seed oil.

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