The Interview of the InfoMarket agency

"Dnieper-Danube-Black Sea" agro-logistics forum is organized by "APK-Inform" analytical news agency (the market leader in information services to agricultural sector of the CIS countries). It was held this year for the first time in Chisinau. The general sponsor and host of the forum was the group of companies Trans Oil. The president of Trans Oil, Vaja Jhashi gave an exclusive interview to InfoMarket agency.

InfoMarket: Moldova has this type of conference for the first time. What do you expect from the forum?

Vaja JHASHI: We want Moldova to appear on the global map, meaning the grain and oilseeds market, as a country with an important role within the Black Sea region. Regional and world’s markets of grain and oil seeds, have a lot of discussions about Ukraine, Russia, Romania ... but few people talk about Moldova from this perspective. I would like our country to be recognized as a significant player in this market. I do not mean just our company, I’m talking about all market participants. I wish that all our companies have worked promoting the common interests of the country as a producer and exporter.

InfoMarket: The Trans-Oil group is still the largest player at the market of Moldova.

Vaja JHASHI: There are not many people know Moldova as a manufacturer of grain and sunflower oil at foreign markets, unlike Ukrainian or Romanian manufacturers. Therefore, we strive for recognition of the entire Moldovan agricultural business promoting ourselves. This is an international conference which means more vendors and consumers will know about Moldova as a major exporter of its products to the world’s markets. Information about the forums is immediately transmitted to all interested countries. We are confident now that more businessmen not only from Turkey but also from Egypt, Libya and other countries will appeal to Moldovan exporters, not only Trans-Oil but other companies from Moldova.

InfoMarket: What is Trans-Oil’s share of grain export among Moldovan companies?

Vaja JHASHI: Today, it is difficult to say, because there was a lot of small companies working in this field. Oilseeds market share is somewhere 75%, while cereals not more than 50%. Many small companies sell their grain to Romania this year, it was exported about 25-35% of the total harvest. Those deliveries are made avoiding our company, they export their products independently. Probably, it is more convenient for them, although, we offer a higher price in the domestic market.

InfoMarket: According to the recent information, it was gathered a good harvest of grain and especially sunflower seeds this year...

Vaja JHASHI: I think it will be collected a record harvest of sunflower seeds this year, taking into consideration the history of Post-Soviet Moldova. It is sown more than in previous years. We expect about 800 tons of the harvest, across the country and the Transnistrian territory. We will send 350 tons of seeds for processing: It is 200 thousand tons - Floarea Soarelui (Balti), 100 thousand tons - Trans Oil Refinery (Ceadir Lunga), another 50 tonnes will be given for the processing by small companies... 450-500 thousand tons is for export. Therefore, the pressure on logistics has sharply increased this year.

 We have the ability to recycle excess of Moldovan sunflower seeds to Romania. There is a factory of Floarea Soarelui International SRL in Romania, which eventually will be a part of Trans Oil Group. We can process up to 150 thousand tons of seeds per year at the factory in Romania. It is less than makes our plant in Balti but it is more than makes our plant in Ceadir-Lunga. Floarea Soarelui International SRL is located near the port of Constanta, so it is better to take the excess of sunflower seeds into Romania rather than Turkey, also it can be sold at the local market or exported.

InfoMarket: Where do you export sunflower and cereals besides Turkey?

Vaja JHASHI: Traditionally, Turkey buys 90% of all exported sunflower seeds but we ship the grain to Europe, unlike Ukraine which has a certain quota, and Russia, their the goods subject to duties and taxes, we have free trade agreement with the European Union. Therefore, we ship 90% of cereals to European markets.

InfoMarket: What about the southern countries?

Vaja JHASHI: We ship our corn in Libya, Lebanon and Turkey. We cannot compete with the Ukrane selling our corn at the European market because they ship big ships and export significantly higher amounts of corn. We ship our corn to the places big ships cannot pull in.

InfoMarket: What are the relationships between Trans Oil group and the manufacturers?

Vaja JHASHI: We have very good relationships with manufacturers. They are usually dissatisfied when grain prices fall, but it depends on the market conditions and the rate of the Moldovan leu. If MDL is strengthened, we are forced to reduce the purchase prices within the domestic market, as the price on the world's markets is set in US dollars.

InfoMarket: By the way, the National Bank stated that there is an increase in foreign currency into Moldova this year. What is the share of foreign currency earnings from export of grains and sunflower?

Vaja JHASHI: The export of sunflower seeds and grain grew up to $15 million weekly, since the beginning of September… this not only from our company but all agricultural companies. We have small share of the foreign exchange market in our country, we believe this situation is putting serious pressure on the exchange rate of Moldovan leu.

InfoMarket: When do you think this pressure will be diminished?

Vaja JHASHI: We expect the reduction of the exchange rate earnings from the export of agricultural products in January-February next year. We cannot influence the policy of the National Bank but I would like to note that in fact no one benefits from strong exchange rate of lei. It is not profitable for our exports and imports. The exchange rate should be stable. Ups or downs lead to uncertainties. It is often happens that agricultural farms stop to sell their products, wanting to get greater advantage in anticipation of rate changes. The fact that Moldovan lei is not stable doesn’t have a decisive influence on world’s grain prices but we have to adapt to the strengthening of the leu in order to reduce the purchase price (lei) in accordance with the exchange rate changes. Local manufacturers are not happy, they’re usually waiting Moldovan leu will be diminished towards US dollar... no one is aware if it’s happen or not… who knows maybe leu will become even stronger, therefore, everyone needs stability in the foreign exchange market.

InfoMarket: In addition to the export capacity, Trans Oil group has two oil extraction plants. Have you already purchased raw materials for them to work all year round?

Vaja JHASHI: We have already supplied our needs in sunflower seeds, somewhere within 60-65% for the past six months. We will continue to buy sunflower seeds until the end of October, maybe even November and we will have enough raw materials until May next year.

InfoMarket: Do you take every year large loans from international financial organizations or banks?

Vaja JHASHI: Yes, they are redeemable annually. Do the math: to purchase the volume of agricultural products we provide our plants every year, as well as export needs, we need at least $100 million. It is a great burden on the company, no one keeps such huge finances, so we resort to credit. This is something usual for this type of activity. It is profitable for all: Farms are paid the money for their products in time, the lenders as well. We have proved that we are reliable partner.

InfoMarket: Floarea Soarelui oilseeds factory has entered the top 10 largest enterprises of Moldova with an income of 58.7 million euro which rose over the year, according to the ranking of SeeNews. 55.93%, How was this growth achieved?

Vaja JHASHI: Due to the export of sunflower oil in Iraq. We won the tender of the Ministry of Defense of Iraq for the supply of refined bottled "FLORIS" oil for $25 million annually. Iraq is a large consumer of sunflower oil. We are finishing the execution of the contract this year and starting in November we will begin negotiations on the extension of the contract. Let's hope for the continuation of this work.

InfoMarket: You mentioned high yield of sunflower seeds this year, it is enough for the domestic market and for the export. What about cereals? Is it enough cereals in Moldova so that the country can afford to export them?

Vaja JHASHI: It is enough. We expect 4.5 million tons of grain and sunflower seeds this year, while Moldova needs only 2 million tons. That is, the export of grain and sunflower seeds will be 2.5 million tons this year. For comparison: the total amount of these seeds was 3.8 million tons last year.

InfoMarket: It seems that the most yielding year was the 2014th for the last decade...

Vaja JHASHI: Grain - yes, somewhere within the 15% increase compared with this year but the sunflower harvest has been stable in recent years, approximately 550-600 thousand tons. I think it will be a record, exceeding 2014th figures, the export of grain this year, both at the expense of the collected seeds, through the export of residues left since 2016.

InfoMarket: What are the immediate prospects for the Trans Oil Group of Companies in the Republic of Moldova?

Vaja JHASHI: First of all, we invest in the modernization of our assets, it is an ongoing process. This year, we also thought that if there is a tendency of surplus of sunflower seeds in Moldova, which is currently exported, then we will consider the construction of a small oil extraction plant in Giurgiulesti port.

Also, starting this year, we will begin to provide our port facilities for general use. There will be created a separate company, it will handle independently, the collection of applications for the transshipment of grain through the port, including Trans Oil group of companies. The transshipment process will be streamlined. The current transshipment capacity of the port is 750 thousand tons of grain per year, if there is not enough space in the port, then we will increase its capacity to 1 million tons (it’s not to mention our capacities in the port of Reni, Ukraine). Thus, even small exporters can apply, the newly created company will be responsible for distribution and execution of applications. In other words, the export of grains from Moldova through the port will be streamlined and simplified for all economic agents since November.