QUALITY OF UKRAINIAN GRAINS

Black Sea Grain Conference

Kiev 20th April 2016

Gennadiy Shulga

AGENDA

� Wheat quality statistics.

� Corn quality statistics

� Export data and requirements of major importers

� Mycotoxins monitoring

2

SGS POSITION IN THE MARKET

A UNIQUE GLOBAL NETWORK OFFERING AN EXCLUSIVE COVERAGE

� 87,000 employees including scientists, engineers, doctors, chemists, auditors and

inspectors

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� In over 1,650 offices and

laboratories

� Covering most of the main countries and ports

� Representing about 46% of the global market share for inspections, verifications and testing services in the agricultural sector

AGRICULTURAL VALUE CHAIN

4

GrowersCountry

Buyers

Interior

Logistics

Traders

& Marketers

Grain

Processors

Additional

Logistics

Individual

Growers

Co-Operatives

Pool of farmers

Country

Merchants

Agency Networks

Road

Rail

Large Storage

Small Storage

Input

Companies

Export

Elevation

Ocean

Freight

Inspection

Services

Marketing Boards

Grower Controlled

Companies

Global Trading

Companies

Millers

Intensive

Animal

Industries

Industrial

Grain Users

Seed

Companies

Fertilizer

Chemicals

Underwriters

TESTING CENTER

� AGRI LAB Established in 1992

� Commodities: Grain, Rice, Oilseeds, Pulses, Feed Stuff,

Vegoils, Dry Milk, Casein, Sugar

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� Accredited by DSTU (State Committee on Technical

Regulation and Consumer Policy of Ukraine) to carry out metrological measurements

� Accredited by NAAU (National Accreditation Agency of Ukraine) to DSTU ISO/IEC 17025

� Accredited by GAFTA and FOSFA international associations for testing grain and oil products

� Methods: ASTM, DSTU, EN, GOST, IP, ISO, UOP…

QUALITY MAPS

� Regional Quality Maps for Ukraine, Russia, Kazahstan,

Serbia

� Data based on thousands of

independently tested samples, collected during harvesting.

� Heads up for possible quality

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� Heads up for possible quality

issues.

� Ability to deliver review on specific

parameters when required.

� Accumulated throughout the entire harvest period.

� Totally Independent.

� Available on Web platform

� Statistics available for last 13years.

.

UKRAINIAN WHEAT QUALITY BASED ON

QUALITY MAPPING DURING HARVESTING

Insect d

am

ag

ed

11.32 11.5112.08 12.37

10.811.66

12.5511.58

13.5713.03

5

7

9

11

13

15

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

7

Year

Pro

tein

Mo

istu

re

Test W

eig

ht

Fo

reig

n M

atte

r

Oth

er c

ere

als

Insect d

am

ag

ed

Bu

g d

am

ag

e

Sp

rou

ted

Sh

rivelle

d

Fallin

g N

um

ber

Wet G

lute

n

W

2012 13.57 13.31 77.23 0.81 0.56 1.45 1.36 0.47 1.62 343.07 21.87 236.85

2013 13.03 12.95 77.00 0.57 0.35 2.05 1.63 0.27 2.13 317.52 26.85 216.83

2014 11.85 12.91 77.24 0.54 0.14 1.45 1.44 0.44 1.44 317.40 23.69 189.41

2015 11.36 13.23 78.30 0.51 0.25 1.15 0.96 0.87 0.95 241.32 22.91 186.41

Average for

last 13 years

11.97 13.02 77.55 0.60 0.38 2.42 2.23 0.83 1.73 292.64 22.79 201.15

CROP QUALITY VS LAST YEAR – SOFT WHEAT

RUSSIAN FEDERATION

226

334

218

346

Avg 2014 Avg 2015

8

13.08 11.84

79.3

0.55 0.85

26.713.03 12.57

77.8

0.77

218

0.84

25.85

Protein Moisture Test weight

Foreign matter

W Bug damage

Falling number

Wet gluten

RUSSIAN WHEAT QUALITY HIGHLIGHTS

� Bug damaged and protein charts

from SGS Quality Map Platform.

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UKRAINIAN BARLEY

DATA FROM QUALITY

MAPS

Mo

istu

re

Test W

eig

ht

Fo

reig

n M

atte

r

Oth

er C

ere

als

Sp

rou

ted

Sh

rivelle

d

10

Year

Pro

tein

Mo

istu

re

Test W

eig

ht

Fo

reig

n M

atte

r

Oth

er C

ere

als

Sp

rou

ted

Sh

rivelle

d

2012 11.45 12.90 61.93 1.05 0.91 0.01 5.67

2013 11.65 13.24 61.18 1.23 0.81 0.00 6.10

2014 11.06 13.15 63.43 0.74 0.46 0.00 5.60

2015 10.89 13.19 62.36 1.21 0.95 0.00 3.72

Average for last 13

years11.19 13.28 62.49 1.05 0.61 0.02 6.28

STATISTICS OF EXPORTED UKRAINIAN WHEAT

Product Parameter Min Average Max

FEED WHEAT Protein on dry basis 10.24 11.29 13.41

Moisture 10.71 12.44 14.02

Test Weight 74.80 79.40 83.10

Admixture 0.03 0.46 1.65

Sprouted 0.00 0.84 3.02

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MILLING WHEAT Protein on dry basis 10.23 12.17 15.17

Moisture 10.22 12.27 13.43

Test Weight 75.00 80.40 85.50

Admixture 0.08 0.37 2.44

Sprouted 0.00 0.62 5.20

Bug Damage 0.05 1.19 5.98

Falling Number 120.00 260.00 501.00

Wet Gluten (Glutomatic) 18.40 23.80 31.60

W 112.00 242.00 455.00

STATISTICS OF EXPORTED RUSSIAN WHEAT

Product Parameter Min Average Max

FEED WHEAT Protein on dry basis 8.65 11.88 18.00

Moisture 9.17 12.75 22.80

Test Weight 61.70 76.20 83.40

Admixture 0.00 1.22 14.20

Sprouted 0.00 0.00 0.00Number of feed wheat samples tested 248MILLING WHEAT Protein on dry basis 10.73 13.20 15.97

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MILLING WHEAT Protein on dry basis 10.73 13.20 15.97

Moisture 10.67 11.74 12.92

Test Weight 74.20 77.90 80.70

Admixture 0.41 0.90 2.34

Sprouted 0.00 0.20 0.50

Bug Damage 0.50 0.67 1.74

Falling Number 238.00 324.00 466.00

Wet Gluten

(Glutomatic)29.40 28.20 32.05

W 109.00 217.00 354.00

COMPARISON OF MILLING WHEAT QUALITY

� Quality of Black Sea region wheat is proven to be one of the

best.

Parameter Ukraine Russia Kazakhstan France Germany Argentina

Protein on dry basis 12.17 13.20 13.54 11.3 12.4 10.90

Moisture 12.27 11.74 13.90 12.9 13.3 12.38

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Moisture 12.27 11.74 13.90 12.9 13.3 12.38

Test Weight 80.40 77.90 75.50 79.6 80.50 79.90

Admixture 0.37 0.90 3.65 0.8 1.2 0.45

Sprouted 0.62 0.20 0.51 0.1 0.00 0.00

Bug Damage 1.19 0.67 0.20 0.0 0.00 0.08

Falling Number 260 324 292 295 353 405

Wet Gluten

(Glutomatic)23.80 28.20 29.30 22 29.1 23.2

W 242 217 296 180 208 198

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LOADING OF VESSELS IN 1995

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RUSSIA AND UKRAINE EXPORT DATA AS OF

10.04.2016

� Russia and Ukraine exported/shipped since July 2015

53142k mt of wheat, corn and barley to more then 70

countries.

� I refer to seagoing trade. Up to now 3668 shipments.

� Export of all grains and oilseeds with derived products

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� Export of all grains and oilseeds with derived products

is more then 59mln mt.

� Main commodity is wheat 31779k mt

� Corn shipments 14980k mt

� Barley export totaled 5512k mt.

� Diversified geography of export 15 countries imported

more then 1mln mt of grains.

RUSSIA AND UKRAINE EXPORT DATA AS OF

10.04.2016

� 15 countries with import of more then 1mln mt

Israel

Iran

Indonesia

Libya

South Africa

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0 1000000 2000000 3000000 4000000 5000000 6000000 7000000 8000000 9000000

Egypt

Turkey

China

Spain

Saudi Arabia

Bangladesh

Thailand

Korea South

Netherlands

Italy

Ukraine

Russia

EGYPTIAN REQUIREMENTS PARAMETERS

CONTRACTUALSPECIFICATION METHODS

1) TEST WEIGHT:

MIN 77 KG/HL ACCEPTABLE DOWN TO 76 KG/HL, WITH DEDUCTION OF A RATIO 1:1 FROM THE PRICE ISO 7971-3

2) MOISTURE:

MAX 13 PCT ISO 712

3) PROTEINS : 12.0 PCT MIN. ACCEPTABLE DOWN TO 11.50 PCT. ON DRY MATTER WITH DEDUCTION OF A RATIO 2:1 ISO 20483

4) TOTAL SHRUNKEN, BROKEN GRAINS, DAMAGED KERNELS GRAINS, OTHER CEREALS GRAINS, EXTRANEOUS MATTER, HARMFUL AND/ OR TOXIC SEEDS, BUNTED GRAINS AND ERGOT

MUST NOT EXCEED 5 PCT MAX. Calculated as per USDA

А) SHRUNKEN AND BROKEN GRAINS: WHICH ARE WHOLE GRAINS PASSING THROUGH A STANDARD SIEVE WITH RECTANGULAR MESH SIZE 1.63 X 9.53 MM SHOULDN'T EXCEED 5 PCT MAX

USDA

SHOULD NOT EXCEED 4 PCT (INCLUDING 1 PCT MAX. FOR BUG DAMAGED), AND INCLUDING HEAT DAMAGED

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B) DAMAGED KERNELS GRAINS:

SHOULD NOT EXCEED 4 PCT (INCLUDING 1 PCT MAX. FOR BUG DAMAGED), AND INCLUDING HEAT DAMAGED GRAINS, PUTREFACTIVE GRAINS, SPROUTED GRAINS AND GRAINS ATTACKED BY PESTS (SHOULD NOT EXCEED 32 SEEDS/100 GRAMS)

USDA

C) OTHER CEREALS: ARE THOSE WHICH BELONG TO OTHER CEREALS OTHER THAN THOSE OF TRITICUM AESTIVUM L, SHOULD NOT EXCEED 1.5 PCT. WITH DEDUCTION OF A RATIO 1:1 FROM THE PRICE

*See remark

D) EXTRANEOUS MATTER : WITH DEDUCTION OF A RATIO 1:1 FROM THE PRICE AND PRORATE) WHICH IS DIVIDED INTO THE FOLLOWING: Visual

1- NON-ORGANIC EXTRANEOUS MATTER:

SHOULD NOT EXCEED 0.5 PCT, INCLUDES NON ORGANIC COMPONENTS LIKE DUSTS, SAND, STONES, ETC..)

Visual

2-ORGANIC EXTRANEOUS MATTER:

SHOULD NOT EXCEED 1 PCT, INCLUDES ALL ORGANIC MATTERS OTHER THAN WHEAT, OTHER CEREALS, HARMFUL AND/OR TOXIC SEEDS, BUNTED GRAINS SUCH AS FOREIGN SEEDS, GRASS SEEDS’’(SAMMA’ LOLIUM TEMULENTUM’), ZOMMEIR (AVENA FATUA, A SATIVA, A STERILIS), OLLEIA (CONVOLVULUS)’’ SHOULD NOT EXCEED 25 SEEDS/ KG, PARTS OF STRAW, DEAD INSECTS, PARTS OF INSECTS, FILTH (SHOULD NOT EXCEED 0.1 PCT), … ETC. AND TO BE COMPLETELY FREE FROM AMBROSIA ARTEMISIIFOLIA SEEDS.

Visual

E) TOTAL HARMFUL AND/OR TOXIC SEEDS, BUNTED GRAINS AND ERGOT

SHOULD NOT EXCEED 0.5 PCT WHICH IS DIVIDED INTO THE FOLLOWING: (WITH DEDUCTION OF A RATIO 1:1 FROM THE PRICE AND PRORATE)

Visual

- HARMFUL SEEDS NOT EXCEED 0.5 PCT. Visual

- BUNTED GRAINS NOT EXCEED 0.5 PCT. Visual

- TOXIC SEEDS NOT EXCEED 0.05 PCT. Visual

- ERGOTS NOT EXCEED 0.05 PCT. Visual *Other cereals considered as fraction in the category of foreign material as per USDA

**As per ISO 3093 procedure, calculated on 14 % moisture basis.

INDONESIAN REQUIREMENTS

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ISRAELI REQUIREMENTS

Minimum quality standards set by the Ministry of Agriculture

Commodity

Maximum

Foreign

matter

Maximum

Damaged

Minimum

whole

kernels

Maximum

Moisture

Minimum Test

Weight

% % % % Kg/100 liter lb/bu

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corn 2 8 90 14.5 66.9 52

barley 2 6 92 14 55.3 43

sorghum 2 6 92 14 68.2 53

wheat 2 6 92 14 70.8 55

Damaged kernels includes heat damaged, insect damage, broken kernels and mouldygrains, rotten and Fusarium damaged grains as per ISO 7970:2011Foreign matter includes all matter which is not the kernels (both organic and non-

organic).Whole grains = 100 % - (Damaged kernels + Foreign matter) – by calculation

Максимальное процентное содержание примесей, не

являющихся основным зерном анализируемой злаковой культуры:

1. Битые зёрна (Broken grains) 2. Зерновые примеси (Grain impurit ies)

(а) невыполненные зёрна (shrivelled grains ) (б) другие злаки (other cereals) (в) зёрна, повреждённые вредителями (grains damaged by pests) (г) зёрна с изменённым цветом зародыша

(grains in which the germ is discoloured) (д) зёрна , перегретые при сушке (grains overheated during drying) 3. Проросшие зёрна (Sprouted grains)

12 %

5 % 7 %

X X X X

0,50 %

4 %

А . Максимальное с одержание влаги

14,5 %

В . Максимальное количество зёрен,

полностью или частично потерявших стекловидность (Maximum percentage of wholly or partia lly mitadiné grains)

н.п.

Г . Максимальное содержание танина (*)

(Maximum tannin content)

н.п.

E. Минимальная натура (кг/гл) (Min imum spec ific weight (kg/h l))

73

F. Минимальная массовая доля белка (*)

(Min imum prote in content)

10,5 %

EU REQUIREMENTS TO SOFT WHEAT

(ЕU) № 742/2010

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Приведен свободный перевод терминов

3. Проросшие зёрна (Sprouted grains) 4. Сорные примеси (Miscellaneous impurit ies),

в том числе: (а) посторонние семена (extraneous seeds): — вредные (noxious) — другие (other) (б) испорченные зёрна (damaged grains), из которых:

— зёрна , испорченные в результате самосогрева- ния или действия высоких температур при сушке (grains damaged by spontaneous heating or too ext reme heat ing during drying) — зёрна , поражённые фузариозом

— другие (other) (в) посторонние материалы (ext raneous matter) (г) шелуха (husks) (д) спорынья (ergot)

(е) головня (decayed grains) (ж) примеси животного происхождения (impurities of animal origin)

4 % 3 %

0,10 % Х

0,05 % Х

Х Х Х

0,05 %

Х Х

(Min imum prote in content)

G . Число падения (секунды) (Hagberg fa lling number (sec onds))

220

H. Минимальный индекс седиментации (мл) (Min imum Zeleny index (ml))

22

«Х» указывает на то, что значение показателя ограничи- вается лишь пределами содержания , указанными в пунктах 2 и 4 таблицы

«н.п .» не применим , не требует определения (*) в пересчёте на с ухое вещество

Quality Parameters Specification Comments

Test Weight (Min.) 76Kg/hl Possible

Damaged Kernels (Max.) 3% Real range 2.5-6% as per usda

Foreign Material (Max.) 0.7% Possible taking in mind minor admixture of other

BANGLADESH IMPORT REQUIREMENTS

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minor admixture of other cereals

Shrunken & Broken Kernels (Max.)

4% Possible as per usda

Wheat of other classes 4% (including Max. 2% contrasting classes)

Possible

Protein Content (Min.) 12.5 (at Dry Matter Basis) Possible

Moisture Content (Max.) 13.5% Possible

Dockage (Max.) 1% (All dockage shall be deductible from the value)

Possible

Radioactivity (Max.) 50Bq/Kg of Cs (Relaxable for the crop of SAARC & South-East Asian Countries)

Possible

CROP QUALITY VS LAST YEAR – CORN

42

51

Avg 2014 Avg 2015

RUSSIAN FEDERATION

2.891.72

Avg 2014 Avg 2015

UKRAINE

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12.4

0.77 1.93

12.2

0.71 1.96

Moisture Foreign matter

Broken seeds, EN

Ambrosia, seeds per kg

14.2 0.69

1.0

13.9 0.48

3.0

Moisture Foreign matter

Broken seeds, EN

Ambrosia, seeds per

kg

MYCOTOXINS ISSUE

� According to FAO up to 25% of grains is lost every year

because of contaminations (e.g. diseases, fungi, insects).

� Toxins are very dangerous for human and animal health,

allowed limits in ppb.

� Globally the Authorities and consumers have become

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� Globally the Authorities and consumers have become

more and more strict as regards to their expectations of

food and feed safety, in EU especially after crop 2012.

� In case of contamination the cargo is loosing value and in

some cases may have to be destroyed.

� Consequence of non compliance can be a big multi

million dollars issue and our clients were asking us for

sophisticated instrument for risk mitigation and proving

that they are managing food safety issues.

MYCOTOXINS MONITORING PROGRAM

� We continue for 2nd year to screen corn for following Mycotoxins:

Aflatoxin ( B1 and total), Ochratoxin, Deoxynivalenol, Zearalenone,

Fumonisins, HT-2/T-2.

� Following certification schemes including GMP+, OVOCOM, GTP

(Cocerial), AIC, EFISC, QS confirmed that it’s good Early Warning

Notification System and risk mitigation tool.

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� List of countries for monitoring:

� Ukraine

� Bulgaria

� Hungary

� Croatia

� Romania

� Russia

� Serbia

� Slovakia

� Czech Republic

FOOD

aflatoxin ochratoxin fumonisin vomitoxin zearalenone T2/HT2

< 2 % Romania

> 2 % <10 % Ukraine

> 10 % Bulgaria

Slovakia

Hungary

Probability for having corn exceeding the EC limits with corn crop 2014:

STATISTICAL CHANCE OF HAVING ISSUE

27

Hungary

Serbia

Croatia

FEED

aflatoxin ochratoxin fumonisin vomitoxin zearalenone T2/HT2

< 2 % Romania

> 2 % <10 % Ukraine

> 10 % Bulgaria

Slovakia

Hungary

Serbia

Croatia

SGS UKRAINE STATISTICS FOR GMO

� CORN represented in Ukraine by events MON863, MON810, NK603,

MON88017, GA21, TC1507, DAS59122, Bt11 (but no MIR 162)

� Situation is improving. None of above events was found in shipments in excess of0.1%

� No lots were observed with GMO presence above 0.1%.� 15.4% of corn were found without any GMO content.� But 58.6% of shipments were containing botanical impurities of Soybeans MON40-

3-2 at level <0.1%.

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3-2 at level <0.1%.

� SOY BEANS represented in Ukraine by event MON 40-3-2

� RAPESEEDS represented in Ukraine by event GT 73.

Negative

6.99%

<0.1% 0.1-0.9% 0.9-10.0% >10.0%

41.12% 19.89% 9.40% 22.60%

Negative

9.94%

<0.1% 0.1-0.9% 0.9-10.0% >10.0%

20.60% 33.13% 28.78% 7.55%

AVAILABLE SOLUTION

� Non Rejection Guarantees

� A policy specifically protecting the

principle against rejection and consequent losses resulting from

the detection of a harmful substance or prohibited GMO event within a cargo. Included

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event within a cargo. Included

within the policy is a full Inspection and Testing process.

� Already Available :

• Non GMO Guarantee into E.U.

• Non-authorized GMO Traits

for China and E.U.

• Undesirable substances for

E.U. destinations.

Gennadiy ShulgaVice President

� SGS Inspection & Testing services along the whole supply chain are

helping our clients to avoid many problems and contribute in facilitation of

international trade.

CONCLUSION

Vice President Agriculture, Food and Life

SGS Group Management Ltd,

1 place des Alpes1211 GenevaDesk: + 4122 7399374

Mob: + 4178 6043263Gennadiy.Shulga@sgs.com