New plant: Pava accelerates supplies of wheat gluten and starches

Ambitious Russian grain processor PAVA spears higher margin value-added ingredients, announcing plans to break ground on a grain fractionation plant for the production of wheat gluten, starches and syrups. Scheduled to be up and running in 2010, the new plant will seek to extract "all valuable components" from the wheat kernel.
The Barnaul-based firm said the project, based on the advanced deep processing of grain, aims to gain wins from both Russian and international firms.

Since 2000 the bull market for wheat has seen a near 400 per cent upward shift in price, with a sharp angle upwards in recent months. But for their manufacturers, the attraction of higher-margin cereal ingredients is far from waning. They are eager to hi-jack potential gains to be made from growing demand from their customers, for example, the bakers and snack makers.

The move to value-added ingredients has the cash-generating potential to bring strident gains to the firm, and one that compares to the lower-margin activity of flour milling, a core business for the Russian firm.

"The purpose is to extract and maximise on the higher-margin activities of the kernel," a spokesperson for Pava tells BakeryandSnacks.com.

Contributing to financing for the new plant, to be built in the Asian part of Russia, the spokesperson added that the firm is "planning a listing on London's Alternative Investment Market (AIM)."

Pava is currently listed on the Moscow Interbank Currency Exchange and the Russian Trading System.

"Leading European multinational corporations have already shown big interest to such products of advanced grain processing as starches, feed, wheat germ oil, wheat gluten and alcohols," says the Russian company that processes flour, bran and mixed feed grains.

Citing the 'unlocked potential' of Russia's grain production segment, Pava has also announced it will establish a division for agricultural production, activities of which will include the acquisition and cultivation of land assets in different parts of Russia, characterised by high yields. Presently, PAVA controls 60 000 ha of land.

"The company focuses on high margin crops; the majority of wheat grain will be used as raw materials supply for PAVA’s own production," says the 2500-strong firm, with ambitions "to become Russia's leading agro-industrial holding company".

In the two years prior to completion of the new advanced processing plant, wheat will be used for flour-making at the company’s current facilities. The remaining wheat grain and crops other than wheat, will be traded on both domestic and foreign markets.

AgriMarket.Info reported last month that subsequent to 2007 results, PAVA "became the best exporter of the national flour-milling industry." Apart from commercial sales, a large volume of the company’s products is regularly shipped to overseas markets as food aid within the framework of the United Nations World Food Programme (UNO WFP).

Lindsey Partos
bakeryandsnacks.com