08/2017
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15 U K R A I N E Agriculture Bulletin Nearly UAH 2 billion in agricultural subsidies in 2017 U.S. Embassy studies Ukrainian agricultural prospects Germany allocates USD 10 million for Ukrainian SMEs Ukraine reports record grain yield this year
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5)
34 new agricultural-related bills proposed ..................................................................................... 2 New program to help farmers buy machinery ................................................................................ 2 Ukraine, China to meet in Beijing in 2018 ....................................................................................... 2 Nearly UAH 2 billion in agricultural subsidies in 2017 ..................................................................... 2 Kyivstar to introduce digital agriculture platform ........................................................................... 3
Foreign Aid ................................................................................................................. 3 6) 7) 8)
U.S. Embassy studies Ukrainian agricultural prospects ................................................................... 3 EBRD to fund local currency credit line in Ukraine ......................................................................... 3 Germany allocates USD 10 million for Ukrainian SMEs................................................................... 4
Private Sector.............................................................................................................. 4 9) 10) 11) 12) 13) 14) 15) 16)
Agriculture attracts UAH 11 billion in investments ......................................................................... 4 Drones now available for crop mapping in Ukraine ........................................................................ 4 Fruit and vegetable association to be created ................................................................................ 5 Ukraine reports record grain yield this year.................................................................................... 5 24 dairy and meat producers can now export to the EU ................................................................ 5 Kusto Agro introduces land monitoring system .............................................................................. 6 Ukrainian agricultural exports increasing ........................................................................................ 6 Agricultural turnover with EU at USD 3.8 billion ............................................................................. 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)
34 new agricultural-related bills proposed
September 5th, 2017, http://agroportal.ua/news/ukraina/chto-zhdet-agrariev-v-novom-politicheskom-sezone/
The Agriculture Committee has submitted 34 bills that it recommends Parliament adopt during the 7th session of the 8th convocation. The most important bills are aimed at fulfilling Ukraine's obligations to the European Union (EU), addressing issues related to the production of organic products and settling land regulations. Committee Chair Alexander Bakumenko appealed to Parliamentary Chair and leaders of the Parliamentary factions to include plenary sessions on the schedule that would allow for the consideration of these bills on September 21, 2017. The most notable bills are: • No. 2845 — an EU integration bill seeking to harmonize Ukrainian legislation with EU food safety and hygiene standards • No. 5448 — an EU integration bill aimed at improving the legal framework for organic production, including the circulation and labeling of organic products • No. 6049 — a bill concerned with optimizing the use of arrays of agricultural land • No. 6673 — an EU integration bill proposing to improve existing phytosanitary procedures and create conditions for the effective work of the State Procurement Service
2)
New program to help farmers buy machinery
August 26th, 2017, http://zik.ua/en/news/2017/08/26/government_to_compensate
The government of Ukraine has announced a program to compensate farmers for 20% of the cost of agricultural machinery which is domestically made and plans to increase the compensation amount to 40% next year. The budget for the program is UAH 550 million this year and will be increased to UAH 1 billion in 2018.
3)
Ukraine, China to meet in Beijing in 2018
August 17th, 2017, https://www.ukrinform.net/rubric-economy/2287973
Ukraine and China have agreed to hold the seventh meeting of the sub-commission on agricultural cooperation in Beijing in 2018. The main tasks the sub-commission is charged with are diversifying the commodity structure of exports and imports and opening the Chinese market for a larger number of Ukrainian products. For their part, the Chinese side is interested in deepening cooperation in the agricultural sector and creating new cooperation projects. It is believed that joint work in genetics and breeding, livestock breeding and the development of renewable energy sources will significantly expand trade and investment cooperation.
4)
Nearly UAH 2 billion in agricultural subsidies in 2017
August 10th, 2017, https://www.ukrinform.net/rubric-economy/2283343
Ukrainian agricultural producers have already received UAH 1.91 billion in subsidies under the state subsidy program so far in 2017. This is half of the UAH 4 billion envisaged for the program this year. In August, UAH 590.7 million in subsidies were disbursed, which is UAH 61.8 million more than July. In June, more than UAH 590 million was transferred to 737 agricultural producers as part of the subsidy program. Page 2
BFC Agriculture Bulletin
5)
Kyivstar to introduce digital agriculture platform
August 9th, 2017, http://minagro.gov.ua/uk/node/24441
The Ministry of Agriculture has signed a memorandum of understanding with mobile network operator Kyivstar to help introduce the latest technologies into agricultural production processes. The agreement is focused on creating quality conditions for the development of small- and medium-sized farmers via the introduction of modern digital platforms for agricultural producers. It is also planned to create a mobile application that will allow for tracking the full production cycle, conducting trade operations and monitoring news, prices and weather changes.
Foreign Aid 6)
U.S. Embassy studies Ukrainian agricultural prospects
August 18th, 2017, http://minagro.gov.ua/uk/node/24537
The United States Embassy in Ukraine has conducted a study with Ukrsadprom and the ‘Agriculture and Rural Development Support Project’ of the United States Agency for International Development (USAID) on the business prospects of Ukraine in the production, storage, processing and packaging of fruits and vegetables. The purpose of the study was to show the potential of the Ukrainian fruit and vegetable market to American suppliers of agricultural equipment and technologies in the hopes that they will become interested in investing in Ukrainian agriculture, especially in the light of most news about Ukraine that reaches the U.S. being negative in nature. According to the study, Ukraine ranks fifth among European Union (EU) countries in terms of agricultural production and has an enormous potential for continuing to develop this sector. The study also found that, in 2016, Ukraine increased vegetable exports by 57% (as compared to 2015) to a total of USD 153 million. This was accomplished mainly through increasing supplies to the EU but also by opening new markets in Asia (Bangladesh, Nepal, and Sri Lanka) and Africa (Kenya and Guinea).
7)
EBRD to fund local currency credit line in Ukraine
August 15th, 2017, http://www.ebrd.com/news/2017/ebrd-provides-local-currency-credit-line-in-ukraine-.html
The European Bank for Reconstruction and Development (EBRD) is providing a local currency loan in the amount of UAH 514 million (USD 20 million) to OTP Leasing (OTPL). The funds will help OTPL expand its operations in local currency to small- and medium-sized enterprises (SMEs) throughout the country as well as manage its balance-sheet currency structure. The EBRD loan will also contribute to OTPL’s development strategy, which is designed to diversify its customer base and target smaller agricultural producers with land banks exceeding 5,000 hectares. Additionally, the use of local currency will give great comfort to potential borrowers as they will not be exposed to currency exchange risks. Using the EBRD financing and partner programs with suppliers, OTPL can offer final customers UAH loans for leasing machinery and vehicles at a rate of 12-13% and for a period of 3 years. Ukraine’s leasing market has contracted severely in recent years and, at the moment, is less than 1% of GDP, compared to up to 14% of GDP in countries such as the Czech Republic, Hungary and Poland. Therefore, this loan agreement with OTPL is seen as important in terms of boosting market confidence and development as the loan will promote local currency lending in Ukraine and help strengthen the market position and competitiveness of domestic SMEs.
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OTP Leasing LLC is a universal leasing company that was founded in June 2008 as a subsidiary of OTP Bank PJSC. EBRD is the largest international financial investor in Ukraine. To date, EBRD has made a cumulative commitment of almost EUR 12.2 billion through 377 projects since the start of its operations in the country in 1993.
8)
Germany allocates USD 10 million for Ukrainian SMEs
August 14th, 2017, http://112.international/finance/germany-to-allocate--10-million-for-development-of-ukrainian-enterprises19839.html
The Emerging Europe Growth Fund III will facilitate access to long-term financing for small- and mediumsized enterprises (SMEs) in Ukraine. To accomplish this, the German Investment and Development Association (DEG) will contribute USD 10 million to the Fund. The Fund hopes to be able to increase its capital to USD 150 million in total. Through its participation, Germany is sending a signal for other private and institutional investors to make similar investments. The Fund invests in export-oriented industries, in particular, in the IT, light and food industries as well as in electronic commerce and health enterprises.
Private Sector 9)
Agriculture attracts UAH 11 billion in investments
September 5th, 2017, http://agravery.com/uk/posts/show/agrosektor-be-rekordi-za-tempami-investicij
Investments in the agroindustrial complex for the first quarter of 2017 amounted to UAH 11 billion, with approximately 80% of those investments made into plant growth production. The majority of funds were used for modernizing equipment and building new facilities such as the construction of processing plants and the construction of elevator complexes for the reception, processing and shipment of crops for export. The growth rate of capital investment in the agroindustrial complex over the last 16 years is approximately 150%, the highest rate among all sectors of the economy.
10) Drones now available for crop mapping in Ukraine September 4th, 2017, http://agroportal.ua/news/novosti-kompanii/ukrainskim-agrariyam-stanet-legche-sozdavat-kartyposevov/
Beginning on September 1, 2017, SmartFarming became an official partner and dealer of the American company DroneDeploy. This means that SmartFarming can now offer its customers new services for working with drones as well as support and training as the official dealer of DroneDeploy. The main service of the company is related to flight automation and data collection, which enables the creation of 3D models, map-tasks and orthophotos. It is also possible to enter information and photos from the fields to make a comprehensive database of crop conditions and their histories.
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11) Fruit and vegetable association to be created August 29th, 2017, http://agroportal.ua/news/ukraina/v-ukraine-poyavitsya-plodoovoshchnaya-assotsiatsiya/
An initiative to create a Ukrainian fruit and vegetable association is underway, with the first constituent assembly planned for early November 2017. The idea for the association is to work on real changes to legislation that will help the industry, especially: creating a transparent procedure, abolishing obsolete nitrate norms, creating clear rules for hiring seasonal workers and creating transparent cooperative legislation that will allow professional producers to more easily cooperate. The association will also support the export of fruits and vegetables, the accumulation and dissemination of knowledge and best practices, the attraction of investments and the increasing of trade and farmer cooperation.
12) Ukraine reports record grain yield this year August 29th, 2017, https://en.lb.ua/news/2017/08/29/4378_ukraines_agrarian_ministry_reports.html
The Ministry of Agriculture has reported that Ukraine’s grain yield this year is a record for independent Ukraine. In total, the harvesting of early grains and leguminous crops has been completed over an area of 9.6 million hectares, with 37.3 million tons of grain being harvested. The highest yield of cereals and leguminous plants was in the Khmelnitsky region (5,660 kilograms/hectare), followed by Ivano-Frankivsk (5,210 kilograms/hectare), Vinnytsia (5,000 kilograms/hectare), Ternopol (4,980 kilograms/hectare) and Chernivtsi (kilograms/hectare). Ukraine also harvested: 8.6 million tons of barley, with an average yield of 3,430 kilograms/hectare; 471,000 tons of rye, with an average yield of 2, kilograms/hectare; and 2.1 million tons of rapeseed, with an average yield of 2,760 kilograms/hectare. In addition, Ukraine has collected 26.6 million tons of wheat (with an average yield of 4,180 kilograms/hectare), 487,000 tons of oats (with an average yield of 2,500 kilograms/hectare), 1.1 million tons of peas (with an average yield of 2,670 kilograms/hectare), 41,000 tons of buckwheat (with an average yield of 1,080 kilograms/hectare), 29,000 tons of millet (with an average yield of 1,510 kilograms/hectare). The largest batch of grain was harvested in the Odesa region (3.8 million tons), followed by Zaporizhzhya and Kharkiv (2.8 million tons each), Dnipropetrovsk (2.6 million tons), Vinnytsia (2.4 million tons) and Mykolaiv (2.3 million tons).
13) 24 dairy and meat producers can now export to the EU August 23rd, 2017, http://ubr.ua/market/agricultural-market/bolee-20-ukrainskikh-proizvoditelej-smohut-eksportirovat-mjasoi-moloko-v-es-3851768
13 dairy producers and 11 meat producers in Ukraine have been certified to export to the European Union (EU). While it would be ideal for every dairy or meat enterprise to be able to export products to the EU, the inclusion of these producers as eligible to export to the EU will help the industry by not only opening up new markets but also by allowing other domestic producers who are not certified to fulfill domestic demands. The certification necessary for exporting to the EU can be an expensive process for an enterprise as it requires certification of the entire production process — from the collecting of raw materials to finished product.
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14) Kusto Agro introduces land monitoring system August 18th, 2017, http://en.interfax.com.ua/news/economic/443089.html
Kusto Agro Group has introduced a land monitoring system that both tracks the effectiveness of the use of land and acts as a land leasing database. The software creates visual images that show where leasing terms are expiring by combining land parcel information with maps of the country. Kusto Agro also said that, thanks to the system, the company can also draw up contracts to exchange information with other companies for the more effective use of assets. Kusto Agro is part of Kusto Group (Singapore), which does business in the oil, energy, agricultural and construction sectors, among others. The company's land bank in Ukraine is 12,000 hectares in the Vinnytsia, Zhytomyr and Khmelnitsky regions. The company also has three elevators, with a total storage capacity of 90,000 tons.
15) Ukrainian agricultural exports increasing August 10th, 2017, http://finchannel.com/world/ukraine/67230-in-the-first-half-of-2017-ukraine-increased-the-exports-ofnearly-all-types-of-agricultural-products
According to customs figures, exports of almost all types of Ukrainian agricultural products significantly increased in the first half of 2017 as compared with the same period last year. In particular, exports of live animals increased nearly 60%, and the export of meat and edible meat offal increased 46%. Ukraine also increased exports of dairy products by 22% and exports of poultry eggs and animal fats and oils by 140%. In addition, Ukrainian exports of other vegetable or animal fats grew by 183%, straw and animal feed by 100%, flour-milling and groats products by 37%, sunflower oil by 29%, oilseeds by 21% and grain and cereal crops by 21%.
16) Agricultural turnover with EU at USD 3.8 billion August 10th, 2017, http://24tv.ua/ru/zona_svobodnoj_torgovli_v_dejstvii_kak_ukraina_torguet_agrarnoj_produkciej_s_es_n851307
In the first six months of 2017, the trade turnover in agricultural products between Ukraine and the European Union (EU) amounted to USD 3.8 billion, adding a net value of USD 1.7 billion to Ukraine’s economy. The main agricultural exports to the EU were grain and oilseeds as well as sunflower oil and oilcake. In turn, Ukraine imported cereals, oilseeds, cocoa beans and chocolate, various food products, alcohol and alcoholic beverages, processing waste and tobacco products from the EU. Domestic exporters have already fully used duty-free quotas for honey, wheat, corn, barley, sugar, processed tomatoes and apple and grape juice. The quota for malt is at 98% and is at 50% for poultry meat and butter. In July, additional trade preferences from the EU were agreed to for a period of three years. They provide for an increase in duty-free supplies of cereals, honey, barley, processed tomatoes and grape juice. This is expected to come into effect either this autumn or at the beginning of 2018, following approval by the EU council. Six countries are the EU’s largest trading partners with Ukraine: France, Germany, Italy, the Netherlands, Poland and Spain. Their cumulative share in turnover exceeds 73%.
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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.