10/2016
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5 UKRAINE Agriculture Bulletin Ukraine, Hungary to Discuss Deepening Cooperation in Agriculture USAID to Launch USD 20 Million Program for Small and Medium Farms Ukraine to Maintain Its Position as Leading Producer of Sunflower Oil Agroinsurance Premiums in Ukraine have Doubled
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3)
Ukraine, Hungary to Discuss Deepening Cooperation in Agriculture.............................................. 2 2017 Draft Budget Increases Support for Agriculture to UAH 10 Billion ........................................ 2 EU Proposes Increasing Ukrainian Grain Imports ............................................................................ 2
Foreign Aid ................................................................................................................. 3 4) 5) 6) 7)
EIB Considering Project to Support Ukrainian Grain Infrastructure ................................................ 3 Ukraine to Adopt Norwegian System for Monitoring the Fishing Industry .................................... 3 USAID to Launch USD 20 Million Program for Small and Medium Farms ....................................... 3 Poroshenko Enacts Bill Ratifying Agreement with EIB .................................................................... 4
Private Sector .............................................................................................................. 4 8) 9) 10) 11) 12) 13) 14) 15)
Ukraine to Maintain Its Position as Leading Producer of Sunflower Oil ......................................... 4 Losses from African Swine Flu in 2016 Estimated at UAH 25 Million ............................................. 4 Agroinsurance Premiums in Ukraine have Doubled ........................................................................ 4 EU Purchases of Ukrainian Agricultural Products on the Rise ......................................................... 5 Quota for Duty‐Free Agricultural Exports to the EU Nearly Exhausted .......................................... 5 Ukraine Listed as One of the World’s Main Food Producers .......................................................... 5 Ukraine Leads the Globe in Flour Exports by Volume ..................................................................... 5 German Harvesters to Be Assembled in Kherson ............................................................................ 6
Note: The Agriculture Bulletin presents a monthly roundup of headlines and news stories related to Ukraine’s agricultural sector. This bulletin is prepared by Business & Finance Consulting—a Swiss‐based development finance consulting company with a long history of working in Eastern Europe, Central, South and South East Asia and North Africa. Read more »
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BFC Agriculture Bulletin
State Initiatives 1)
Ukraine, Hungary to Discuss Deepening Cooperation in Agriculture
November 4th, 2016, http://www.ukrinform.net/rubric‐economics/2114324‐ukraine‐hungary‐to‐hold‐meeting‐of‐interagency‐ working‐group‐on‐development‐of‐agriculture‐trade‐and‐economic‐relations.html
Ukraine and Hungary intend to hold a meeting of the interagency working group on the development of trade and economic relations in the field of agriculture. According to Agriculture Minister Kutovyi, an recent meeting of the Ministers of Agriculture of both countries and planned expert consultations will lay a good foundation for the coming meeting of the interagency working group. Systematic development of mutually beneficial trade and economic relations in the agricultural sector is of great importance to both countries. Hungarian Agriculture Minister Fazekas noted that Hungary is eager to deepen relations with Ukraine, especially as it pertains to combatting the threat of African swine flu, developing organic agricultural production and cooperation in new methods of plant growing.
2)
2017 Draft Budget Increases Support for Agriculture to UAH 10 Billion
October 20th, 2016, http://ubr.ua/market/agricultural‐market/agrarii‐poluchat‐10‐mlrd‐grn‐gospodderjki‐442136
The government has agreed to increase funding support for the agricultural sector by two‐fold in the draft budget for 2017, setting the 2017 budget support for agriculture at UAH 10 billion. In announcing the budget increase for agriculture at the first reading of the draft law, Ukrainian Prime Minister Volodymyr Groysman stated that the government must give special attention to the national economic growth engine and, as such, must do everything it can to ensure that Ukraine’s agricultural products are competitive.
3)
EU Proposes Increasing Ukrainian Grain Imports
October 6th, 2016, http://www.unian.info/economics/1559517‐eu‐proposes‐to‐increase‐ukraine‐grain‐exports.html
The European Commission has proposed that the European Union (EU) increase its duty‐free Ukrainian grain imports. The proposal must be approved by the European Parliament and the Council of the European Union; however, there is no review date currently set for the proposal. If approved, it would be effective for three years. The proposal, which includes annual tariff rate quotas of 100,000 tons of wheat, 650,000 tons of corn and 350,000 tons of barley, is an effort to support Ukraine’s economy by increasing trade and granting concessions in the form of autonomous trade flows for certain agricultural and industrial products. This would be in line with accelerating the complete elimination of customs duties on trade between Ukraine and the EU. The EU is one of Ukraine's largest trading partner, accounting for more than 40% of its trade in 2015.
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BFC Agriculture Bulletin
Foreign Aid 4)
EIB Considering Project to Support Ukrainian Grain Infrastructure
November 3rd, 2016, http://en.interfax.com.ua/news/economic/381322.html
The European Investment Bank (EIB) is considering the possibility of financing a project to expand and modernize the Ukrainian grain infrastructure. The project would remove existing bottlenecks related to the transportation and storage of cereals, reduce in‐land transportation costs and increase the annual volume of exported agricultural commodities. There would also be positive benefits on the environment and to employment opportunities. EIB noted that the recipient of the funds could potentially be one or several companies which meet the requirements set by the project but declined to offer further details at this time.
5)
Ukraine to Adopt Norwegian System for Monitoring the Fishing Industry
October 28th, 2016, http://minagro.gov.ua/node/22469
An agreement has been reached between the State Agency of Fisheries of Ukraine and representatives of the government of Norway that will mean that Ukraine will receive Norwegian software to remotely monitor fishing vessels and the hauls they make. The software sharing is just the first step in a comprehensive cooperation between Ukraine and Norway and is the result of a long negotiation process which began in November 2015. According to official statistics, industrial fishing in Ukraine is about 80 thousand tons. But the real figure, according to expert estimates, is much higher and reaches at least as much as 200 thousand tons when including undeclared fishing and poaching. The use of Norwegian expertise is crucial to reforming fisheries in Ukraine as it will improve the efficiency of fighting against illegal fishing. The Norwegian monitoring system of industrial fishing is based on the use of new, hi‐technologies. The special software can be installed as an application on a smartphone or a tablet and can help in monitoring a ship remotely as well as input data on fishing in real time. Such data immediately flows into a single electronic database that is open for employees of the State Agency of Fisheries of Ukraine and the Fish Patrol. This will allow, for example, spot‐checks to be carried out at any time.
6)
USAID to Launch USD 20 Million Program for Small and Medium Farms
October 13th, 2016, http://www.unian.info/economics/1570107‐usaid‐to‐give‐ukraine‐20‐mln‐for‐small‐medium‐farms.html
Ukrainian Agriculture Minister Taras Kutovyi has announced that the United States Agency for International Development (USAID) plans to allocate USD 20 million for the implementation of a large‐ scale, four‐year program to support small‐ and medium‐sized farmers in Ukraine. The Agriculture and Rural Development Support program will provide comprehensive support to small‐ and medium‐sized farmers and will work to develop a transparent legal framework for agricultural land markets, modernize irrigation systems, and improve the country's export competitiveness. The program also aims to support selected rural communities.
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BFC Agriculture Bulletin
7)
Poroshenko Enacts Bill Ratifying Agreement with EIB
October 12th, 2016, http://en.interfax.com.ua/news/economic/376205.html
Ukrainian President Petro Poroshenko has enacted law No. 1530‐VII on the ratification of the financial agreement between Ukraine and the European Investment Bank (EIB). The agreement seeks to support the agricultural sector in Ukraine and allows a loan of EUR 400 million for 12 years with a four‐year grace period. The funds will be spent on modernization of the fishing industry and mariculture in Ukraine as well as the implementation of projects for planting grain crops and oilseeds. The agreement between Ukraine and EIB was first signed in Kiev on December 28, 2015.
Private Sector 8)
Ukraine to Maintain Its Position as Leading Producer of Sunflower Oil
October 28th, 2016, http://finchannel.com/world/ukraine/60903‐in‐2016‐17‐my‐ukraine‐to‐keep‐its‐leading‐positions‐in‐the‐ global‐production‐and‐exports‐of‐sunflower‐oil
The production volumes of sunflower seeds in Ukraine is expected to reach a record level of 13.5‐14.0 million tons for the 2016‐2017 season. Such production will allow Ukraine to hold onto its position as the leading producer of sunflower oil on the global market. This year, Ukraine is expected to produce 5.5 million tons of oil, providing 4.9 million tons for export, up from last year’s 4.9 million tons produced and 4.4 million tons exported. In addition, Ukraine’s share of sunflower oil in the global market will hit an estimated 56% this season. Ukraine will also produce 5.5 million tons of sunflower meal and export 4.95 million tons of it, providing for the needs of 56.4% of the global market for the product.
9)
Losses from African Swine Flu in 2016 Estimated at UAH 25 Million
October 25th, 2016, http://en.interfax.com.ua/news/economic/378990.html
According to the Ukrainian Agribusiness Club (UAC), some 9,100 pigs have been killed in Ukraine since early 2016 due to African swine flu. This has resulted in a loss of an estimated UAH 25 million. The UAC also estimates that there could be as many as 100‐110 outbreaks of the disease in 2017, with one in four outbreaks recorded at farms. Ukraine's State Service for Food Safety and Consumer Rights Protection has asked the Verkhovna Rada for UAH 200 million to monitor the situation; however, the 2017 draft budget currently only apportions UAH 56.8 million for such activities. Volodymyr Lapa, head of the state‐run service, has implored lawmakers to reconsider this amount as it is not believed to be enough to fight African swine flu, lumpy skin disease, rabies, cattle leucosis and other diseases that pose a threat to Ukrainian cattle and pigs.
10) Agroinsurance Premiums in Ukraine have Doubled October 24th, 2016, http://ubr.ua/market/agricultural‐market/v‐ukraine‐vdvoe‐uvelichilsia‐obem‐premii‐po‐agrostrahovaniu‐ 442835
The volume of agroinsurance premiums has grown to UAH 156 million, up from UAH 77.7 million last year. At the same time, the insured area decreased (from 689 thousand hectares to 675 thousand hectares) as did the number of contracts (from 1062 to 787). The growth of premiums was caused by a
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raise in insurance costs to 2.7% on average (4.2% in the winter insurance, 2.4% in the spring and summer). In total, approximately UAH 10 billion has been paid on insured accounts.
11) EU Purchases of Ukrainian Agricultural Products on the Rise October 20th, 2016, https://www.rbc.ua/rus/news/es‐uvelichil‐obemy‐zakupok‐ukrainskoy‐selhozproduktsii‐1476966400.html
The first nine months of 2016 saw the volume of agricultural trade in Ukraine increase by 2.3%, thanks largely to an increase in imports and exports with the European Union (EU). The EU’s share in the total export of agricultural products through the first nine months of this year amounts to 28.6%, with EU countries purchasing USD 2.7‐3.0 billion in Ukrainian agricultural products. The leading importers of Ukrainian agricultural products are Asian countries, which purchased USD 4.8 million in the first nine months of 2016. The volume of exports to Africa amounted to USD 1.5 billion during that same period.
12) Quota for Duty‐Free Agricultural Exports to the EU Nearly Exhausted October 19th, 2016, http://zn.ua/ECONOMICS/ukraina‐ischerpala‐pochti‐vse‐kvoty‐es‐na‐postavki‐selhozprodukcii‐ 227655_.html
Ukraine has almost exhausted the entire quota of duty‐free import of agricultural products to the European Union (EU) and has completely exhausted the quota for the duty‐free import of chicken meat, corn, wheat, oats, barley, honey, cereals, processed tomatoes, malt, apple and grape juices. Due to difficulties with certification, they have yet to be fully exhausted for meat products (except poultry) and there is space remaining for a few other products such as garlic and mushrooms. For its part, the European Commission has expressed a willingness to increase the quota of duty‐free imports for certain food groups.
13) Ukraine Listed as One of the World’s Main Food Producers October 17th, 2016, http://www.ukrinform.net/rubric‐economics/2102887‐agriculture‐ministry‐ukraine‐included‐in‐list‐of‐ countries‐viewed‐as‐main‐food‐producers.html
There are not so many countries in the world that can make products to feed the growing population of our planet; however, Ukraine has been listed by international experts as one of the main producers and exporters of the food products that will be required to feed to world. As such, it is important for Ukraine to continue to develop its agricultural sector, especially through the use of modern technology and production intensification while keeping in mind the interrelationship of production, rural development, and the environmental impact of agriculture.
14) Ukraine Leads the Globe in Flour Exports by Volume October 11th, 2016, http://uatoday.tv/business/ukraine‐becomes‐global‐leader‐in‐flour‐exports‐783684.html
Ukraine became the world's leader in flour exports in the 2015‐2016 marketing year with shipments amounting to 344,000 tons, up 32.5% from the 2014‐2015 marketing year. The USD 72.9 million‐worth of flour leads the world in terms of supply. North Korea was the largest consumer of Ukrainian flour in 2015‐2016. The Eastern Asian region accounts for the largest share of Ukraine's exports, 48% of the total and 7% higher than the previous year. The Middle East accounts for 18% of total exports, down from 26% last year, and Commonwealth of Independent State (CIS) countries account for 11% of total exports, down from 15% last year. Page 5
BFC Agriculture Bulletin
Despite Ukraine leading the global flour market by volume, Ukrainian flower is the cheapest in the world with the United States (303,000 tons worth USD 151.02 million), Russia (289,000 tons worth USD 87.66 million), India (284,000 tons with USD 114.83 million), Canada (239,000 tons worth USD 144.46 million) and the United Kingdom (231,000 tons worth USD 120.26 million) all providing less flour to the global market but receiving a greater return than Ukraine. Ukrainian also imports flour from the United Kingdom, the Czech Republic, Moldova, and Panama.
15) German Harvesters to Be Assembled in Kherson October 9th, 2016, http://zik.ua/en/news/2016/10/09/german_harvesters_to_be_assembled_in_kherson_934492
Claas harvesters are to be assembled at an engineering plant in Kherson following the successful assembly of a Tukano harvester by a team of German and Ukrainian engineers. The harvesters will be assembled from German parts, with some of them scheduled to be replaced by Ukrainian‐made parts in the near future. By the end of 2016, the plant will have assembled 100 harvesters. Each harvester will cost an estimated UAH 2 million, and farmers will be able to purchase them on credit. Claas’s investment program in Ukraine hopes to build modern harvesters for Ukrainian farmers and also boost the country’s engineering sector.
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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com In this bulletin, BFC provides extracts from articles that have been published by others and as a result cannot be held responsible for such content. The articles do not necessarily reflect the opinions of BFC, its staff, its associates or its partners. Copyright of articles is retained by their authors.