June 10 (Bloomberg) -- DuPont Co., the largest U.S. chemical company by market value, is opening a seed plant in Ukraine tomorrow to meet increasing demand in the region that supplies corn and sunflower products.
The facility, with a planned annual capacity of 500,000 units and the potential to expand, cost DuPont $41.5 million, Jeffrey D. Rowe, the regional director for DuPont Pioneer Europe, said in an interview in Kiev today. The central Ukrainian plant will process seeds from this year’s harvest mostly for sale to domestic customers in 2014, Rowe said. Some output may be shipped to Russia.
“We feel that Ukraine is in a great position because of the location, the access to the Black Sea region, the ability to export, the ability to improve productivity on hectares that are in production right now and the ability to bring new hectares into production,” Rowe said.
Ukraine is the world’s biggest supplier of sunflower seed oil and the fourth-biggest exporter of corn in the marketing year ending Sept. 30 after the U.S., Argentina and Brazil, according to the U.S. Department of Agriculture’s statistics. Farmers increased corn plantings for the 2013 harvest by 48 percent to 2.8 million hectares as of May 3, Ukraine’s state statistics office shows.
The seed input will allow Ukrainian farmers to increase exports, “which the world needs,” Rowe said. Ukraine is “in a very good position” for export increase.
DuPont Pioneer, DuPont Co.’s agriculture division, is a market leader in Ukraine in production of corn seeds and the second-biggest producer of sunflower seeds, he said.
The country, which has 32.5 million hectares of arable land, has “a very good potential to dramatically increase the yields,” and is “a fantastic area” to grow corn and sunflower, he said. Ukraine’s average corn yields fell by more than 25 percent last year to 4.8 tons per hectare because of drought.
DuPont will use its global research to select products for Ukrainian farmers, in particular to supply seeds resistant to drought and heat stress, Rowe said.
If global commodity prices do not decline further than 15 percent to 20 percent, Ukraine will be increasing corn and sunflower planting areas in the future, Rowe said. He declined to give a forecast for the Ukrainian corn and sunflower harvest.
Macroeconomics for agriculture will continue to stay strong as global commodity prices continue to be “relatively high,” he said.
“I would expect double-digit growth to continue,” Rowe said. DuPont’s sales in agriculture rose 13.7 percent to $10.4 billion in 2012 from a year ago and had a 16.8 percent increase in 2011, according to its website.