03/2017
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10 U K R A I N E Agriculture Bulletin Tariff quotas announced within CUFTA IFC financing USD 37 million for Yuzhny grain terminal ‘Black Sea Grain: Wind of Change’ conference in Kiev Ukraine looks to benefit from agricultural boom
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4)
Three main priorities for developing agriculture ............................................................................ 2 Tariff quotas announced within CUFTA........................................................................................... 2 Agrarian Fund to finance farmers with UAH 1.7 billion .................................................................. 2 Project launched to update phytosanitary legislation .................................................................... 2
Foreign Aid ................................................................................................................. 3 5) 6) 7) 8) 9)
IFC financing USD 37 million for Yuzhny grain terminal .................................................................. 3 EBRD and FINTECC to support Agrofusion expansion ..................................................................... 3 EBRD planning up to EUR 200 million investment .......................................................................... 3 Ukrainian dairy sector strengthening .............................................................................................. 4 EIB to finance tomato processing line in Ukraine ........................................................................... 4
Private Sector.............................................................................................................. 4 10) 11) 12) 13) 14) 15)
‘Black Sea Grain: Wind of Change’ conference in Kiev .................................................................... 4 African swine flu outbreak confirmed in four regions .................................................................... 5 Early spring sowing in Ukraine begins ............................................................................................. 5 Ukraine looks to benefit from agricultural boom............................................................................ 5 Capital investments in agriculture increases 63% ........................................................................... 5 5 more Ukrainian food companies can sell to the EU ..................................................................... 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)
Three main priorities for developing agriculture
April 4th, 2017, https://www.ukrinform.net/rubric-economics/2205166-agrarian-policy-minister-kutovyi-outlines-threepriorities-for-development-of-ukraines-agriculture.html
Agriculture Minister Taras Kutovyi has outlined three main priorities for the development of Ukraine’s agricultural sector within the framework of the ‘Medium-Term Plan of Priority Actions for the Government until 2020’: land reform, food safety and quality, and the development of organic production. The ministry also plans to improve the procedures for stimulating the development of the agricultural sector by supporting small- and medium-sized agricultural producers. According to the Minister, the development of Ukraine’s organic market depends on proper state control of the production, circulation and labeling of organic products. Therefore, a priority for the Ministry will be to bring Ukrainian legislation regarding veterinary and phytosanitary control into line with European Union (EU) legislation.
2)
Tariff quotas announced within CUFTA
March 31st, 2017, https://www.ukrinform.net/rubric-economics/2203382-economy-ministry-restrictions-to-be-applied-to-grainmeat-dairy-and-egg-exports-within-cufta.html
Tariff quotas will be applied to some agricultural products delivered from Ukraine as part of the CanadaUkraine Free Trade Agreement (CUFTA). In particular, Canada has applied tariff quotas on the import of Ukrainian beef, veal, pork, chicken, turkey, eggs and egg products, dairy products, margarine and peanut butter. For its part, Ukraine has tariff quotas on the import of Canadian frozen pork and salo. Sugar has been completely removed from the free trade agreement. The Verkhovna Rada ratified the Canada-Ukraine Free Trade Agreement on March 14, 2017.
3)
Agrarian Fund to finance farmers with UAH 1.7 billion
March 30th, 2017, http://minagro.gov.ua/node/23510
The Agrarian Fund, a public joint-stock company, has announced the start of the 2017 ‘Spring Forward’ campaign. This year, the Fund will finance Ukrainian farmers with a total of UAH 1.7 billion as part of the campaign, up from last year’s total of UAH 1.5 billion. Last year, preference was giving to small- and medium-sized farms; this year, the Fund will work to increase the number of contracts with mediumsized agricultural companies and farms.
4)
Project launched to update phytosanitary legislation
March 24th, 2017, http://minagro.gov.ua/uk/node/23498
In March 2017, the ‘Approximation of Ukrainian Legislation with the EU in the Field of Plant Protection Products and Plant Health and Strengthening Associated Inspection and Laboratory Services’ twinning project was launched in Ukraine. The project will be focused on reviewing and updating legislation in the field of phytosanitary, checking operating activities of inspection and laboratory services, and developing a strategy and action plan for obtaining international ISO 17025 accreditation at the Odesa Border Control and Toxicology Laboratory. It is also planned to develop a strategy for obtaining ISO 17025 accreditation for interregional laboratories in Uzhhorod, Ternopil, Poltava and Zhytomyr. Page 2
BFC Agriculture Bulletin
Foreign Aid 5)
IFC financing USD 37 million for Yuzhny grain terminal
April 3rd, 2017, http://elevatorist.com/novosti/4004-ifc-predostavlyaet-mv-kargo-37-mln-dlya-stroitelstva-zernovogo-terminala
The European Bank for Reconstruction and Development (EBRD) and Cargill, the Ukrainian Port Authority, have partnered with the International Finance Corporation (IFC) within the framework of a USD 150 million project at the Yuzhny seaport (Odesa region). IFC will provide a loan of USD 37 million for the construction of a grain terminal at the seaport. The grain terminal will have a capacity of 5 million tons of grain per year. The project is considered crucial for helping Ukraine increase its export competitiveness, support foreign exchange earnings and reduce logistics costs for exporters.
6)
EBRD and FINTECC to support Agrofusion expansion
March 29th, 2017, http://finchannel.com/world/ukraine/64115-ebrd-and-fintecc-support-agrofusion-expansion
The European Bank for Reconstruction and Development (EBRD) is providing a USD 15 million loan to Agrofusion Group for expanding tomato farming and processing activities. Agrofusion, a vertically integrated and family-owned company, is planning to finance the construction of its third tomato processing plant, which will be able to produce around 34,000 tons of tomato paste. The planned expansion will help achieve a 50% increase in production capacities. The loan will also fund the construction of new greenhouses and the procurement of necessary agricultural equipment as well as be used as working capital. The launch of a new processing plant will allow Agrofusion to meet growing demand for organic food products both outside Ukraine and internally as well as strengthen its external competitiveness. The company will also benefit from a USD 700,000 grant from EBRD’s ‘Finance and Technology Transfer Center for Climate Change’ (FINTECC) program. The grant money will be used to implement a range of high-tech farming solutions to reduce water leakages in irrigation systems and significantly reduce the amount of plastic waste generated during the production cycle. In addition, a newly introduced longterm drip irrigation system will ensure the targeted application of water. The system can also be used to inject fertilizers into the soil in a more efficient way. It is estimated that the new system will save 1.2 million cubic meters of water annually as well as reduce energy needs and CO2 emissions.
7)
EBRD planning up to EUR 200 million investment
March 26th, 2017, http://ubr.ua/market/agricultural-market/ebrr-investiruet-v-selskoe-khozjajstvo-ukrainy-200-mln-evro3838055
The European Bank for Reconstruction and Development (EBRD) is planning to invest EUR 150-200 million in Ukrainian agriculture in 2017. EBRD intends to support the diversification of agribusiness in Ukraine and help Ukraine reach the next level of development. Other aspects of EBRD support in 2017 include its participation in a dialogue on regulating the agricultural sector, its provision of technical assistance and development of a platform for exchanging opinions on the functioning of the meat industry and the dairy sector. EBRD also backs the creation and strengthening of agricultural cooperatives. For the past eight-nine months, EBRD has been strengthening financial support for small- and mediumsized enterprises (SME) and trying to help increase management efficiency and introduce new technologies in agribusiness. Page 3
BFC Agriculture Bulletin
8)
Ukrainian dairy sector strengthening
March 22nd, 2017, http://www.fao.org/in-action/fao-helps-strengthen-dairy-sector-in-ukraine/en/
The milk and dairy sector in Ukraine is showing signs of recovery after a period of stagnation in which producers struggled to deliver high-quality raw materials. With support from the Food and Agriculture Organization (FAO) of the United Nations, the European Bank for Reconstruction and Development (EBRD) and the Ukrainian Dairy Sector Working Group (WG), the sector is now starting to show signs of greater efficiency, productivity and inclusivity. The WG has been instrumental in introducing changes to Ukrainian government legislation, including new quality and safety standards, and in developing the investment case for industrialization. Active dialogue between agribusiness companies and the Ukrainian government is a key factor in contributing to sector development. It has created a more transparent policy environment conducive to investment and it is helping to diversify export markets for dairy products. Additionally, study tours to other countries and events such as the Eastern European Dairy Congress have helped promote Ukrainian dairy producers and facilitated an exchange of ideas, technologies and market knowledge, helping Ukraine’s dairy sector expand to new markets such as China, the European Union, the Middle East, sub-Saharan Africa and Asia. As a result of knowledge and facilitation support from FAO and EBRD, the WG is significantly contributing to making Ukraine’s commercial dairy industry more modern, productive and sustainable than ever before. The next steps for Ukraine’s dairy sector are to invest in creating processing plants aimed at producing high-quality dairy products for both domestic and export markets and to develop and strengthen cooperatives and associations.
9)
EIB to finance tomato processing line in Ukraine
March 17th, 2017, http://en.interfax.com.ua/news/economic/409761.html
The European Investment Bank (EIB) approved financing for a tomato processing line in Ukraine. The proposed investment underpins a strategy to increase the competitiveness of Ukrainian business through the expansion of capacity and resource efficiency. The total cost of the project and the recipient of the funds were not disclosed.
Private Sector 10) ‘Black Sea Grain: Wind of Change’ conference in Kiev April 5th, 2017, http://www.blackseagrain.net/novosti/xiv-international-conference-black-sea-grain-wind-of-change201dkicked-off
The ‘Black Sea Grain: Wind of Change’ conference was held in Kiev, bringing together over 700 delegates from 400 companies and 53 countries to discuss the latest drivers of agricultural markets, adjusting business strategies in a rapidly changing world, and new and valuable global operator contacts. This year, the conference was focused on trends and developments in agricultural production and leaders in the world grain market; there was also a discussion panel on Ukraine’s agricultural sector in 2017, specifically regarding investment deficits despite high returns in 2017.
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11) African swine flu outbreak confirmed in four regions March 29th, 2017, http://en.interfax.com.ua/news/economic/412256.html
Confirmation of an outbreak of African swine flu has been recorded in the Vinnytsia, Zaporizhia, IvanoFrankivsk and Kyiv regions. The disease was diagnosed during the examination of selected biological material samples from the pigs. Measures are being taken to localize the disease and prevent the spread of its pathogens. African swine flu causes a hemorrhagic fever and has a high mortality rate in domestic pigs. There is currently no vaccine against the disease.
12) Early spring sowing in Ukraine begins March 28th, 2017, http://en.interfax.com.ua/news/economic/412088.html
Ukraine has started its early spring sowing campaign in all regions and sowed crops on 845,000 hectares. Spring barley has been sown on 578,000 hectares, peas on 183,000 hectares, spring wheat on 43,000 hectares and oats on 42,000 hectares. In addition, fertilizers have been applied to 6.8 million hectares of winter crops, 95% of the targeted 7 million hectares. Early spring sowing is planned for 2.4 million hectares while the total spring sowing works are planned for 7.2 million hectares.
13) Ukraine looks to benefit from agricultural boom March 23rd, 2017, https://www.unian.info/economics/1838734-ukrainian-agricultural-boom-why-it-matters-to-irish-farmersmedia.html
Ukraine recorded another record level of grain harvest in 2016, exceeding 66 million tons. This boom in Ukraine’s agricultural sector is being felt in Ukrainian trading partners like Ireland. The impact of Ukraine's agricultural export resulted in Ukraine exporting 284,908 tons of corn to Ireland last year and fostered interest from both countries in further developing bilateral cooperation opportunities. Some experts hold Ireland, as a key global fertilizer exporter, could turn to Ukraine to supply this key input. At the same time, Ukraine has a deficit in quality bovine stock and genetics and also imports a lot of its farm machinery, areas where Ireland could capitalize. With Ukraine expecting another strong year in agriculture in 2017, Ukraine could find mutual benefit with Ireland and many other nations around the world, helping the country continue to develop its agricultural sector and push for further growth.
14) Capital investments in agriculture increases 63% March 9th, 2017, http://ucab.ua/en/pres_sluzhba/novosti/obsyag_kapitalnikh_investitsiy_v_apk_zris_na_62
During the first three quarters of 2016, the volume of capital investments in agriculture grew 63% to UAH 29.8 billion. The largest share, 81%, went for crop production; 13% went for livestock; and 6% went for other activities (mixed farming, seed raising, growing perennial plants, etc.). Increased investments in the agricultural industry confirm that the sector is reliable and developing dynamically. Since 2012, the share of agriculture in the total capital investment structure has grown from 6.6% to 14.6%.
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15) 5 more Ukrainian food companies can sell to the EU March 6th, 2017, http://zik.ua/en/news/2017/03/06/another_5_ukrainian_companies_can_sell_their_products_in_eu_1055793
Another five Ukrainian businesses have obtained licenses to trade with European Union (EU) countries, including one dairy company, one poultry meat producer and three honey producers. In 2016, 277 Ukrainian businesses had licenses to sell goods in the EU, including 97 food companies.
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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com Articles are taken directly from local sources without any fact-checking; they are provided as a convenience and for informational purposes only. Business & Finance Consulting (BFC)’s editing is limited to providing a short summary in English of the texts, highlighting the main points of the original articles. All rights reserved by the authors. BFC takes no responsibility and does not make any representation or warranty, express or implied, or assume any responsibility whatsoever for the content, accuracy, and reliability, or completeness of any of the articles.