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2 May '17

Logistics Consulting Group presents investment project of Crimean wheat export to China

Logistics Consulting Group presented its investment project of Crimean grain export to China at the III Yalta International Economic Forum.

Prior to 1991 Crimea produced 1.5 million tonnes of high-quality wheat a year. After it was reintegrated into Russia, production of wheat in Crimea has been picking up, rising from 650,000 tonnes in 2014 to 850,000 tonnes in 2016. Its internal consumption of wheat stands at about 400,000 tonnes a year. “Organising export to China assures steady demand for up to 500,000 tonnes of wheat annually for years ahead and will bring investments into the development of the production of cereals and infrastructure for their storage and transportation,” reads the presentation of the project.

Up to 30% of the total financing of the investment project will be put up by strategic co-investors and co-owners of the Crimean exporting company, and 70% will be loans from Chinese banks as well as development institutions such as the Silk Road Fund.

In accordance with the terms set by China, wheat will be delivered in sacks by sea in containers via the port of Novorossiysk. A local marine container line will be set up between Crimea and Novorossiysk. Organising regular container transportation between Crimea and China will give Crimean exporters and importers access to the countries where container ships call en route from Novorossiysk to China, including the Middle East, Iran, Pakistan, India, South-East Asia, Korea and Japan,” the authors of the project note.

The implementation of the Logistics Consulting Group project will put in place a through line for delivery of Crimean wheat to the Chinese market from collecting wheat from Crimean producers at quality control, sanitary treatment and packing to delivering wheat to Chinese buyers at their storage facilities. Deliveries will be made via regular Chinese marine container lines linking the port of Novorossiysk with the port of Tianjin in China, with containers from the said lines loading at ports in Crimea.

The use of customs and tax benefits of free economic zones in Crimea and Tianjin will greatly reduce costs and optimise financial flows.

On the basis of regular cargo haulage organised for transporting wheat Logistics Consulting Group will also carry imports of fertilizer, farm machinery, construction materials, bathroom fixtures, electrical appliances and building technology from China to Crimea thus contributing to the production of these goods in Crimea and their sale to other Russian regions.

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