10/2017
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17 U K R A I N E Agriculture Bulletin 212 farms to receive UAH 65 million in state support 2018 budget allocates UAH 7.3 billion for agriculture
EBRD grants USD 20 million loan to GNT
Agricultural production costs increase 22.5%
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3)
212 farms to receive UAH 65 million in state support .................................................................... 2 2018 budget allocates UAH 7.3 billion for agriculture .................................................................... 2 EU to increase Ukrainian quotas over next 5 years......................................................................... 2
Foreign Aid ................................................................................................................. 3 4) 5) 6) 7)
EBRD grants USD 20 million loan to GNT ........................................................................................ 3 EBRD to provide loan to Astarta-Kiev .............................................................................................. 3 FAO and GEF project to help restore lands ..................................................................................... 3 EU4Business conference to help increase food exports ................................................................. 4
Private Sector.............................................................................................................. 4 8) 9) 10) 11) 12) 13) 14) 15)
Ukrainian walnut industry growing ................................................................................................. 4 Agricultural production costs increase 22.5% ................................................................................. 4 Agribusiness forum to be held in Kiev ............................................................................................. 4 Agricultural exports reach record-high levels ................................................................................. 5 Certified seeds are Ukraine’s agricultural future ............................................................................ 5 Raider interest in agribusiness growing .......................................................................................... 6 Agricultural producers’ view of business climate down.................................................................. 6 Ukraine’s crop protection product barriers .................................................................................... 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)
212 farms to receive UAH 65 million in state support
November 2nd, 2017, http://minagro.gov.ua/uk/node/24879
212 farms (from 308 applications received) have been identified to receive a total of UAH 65 million in state financial support in 2017. The selected farms represent 24 regions of Ukraine and were selected based on a competitive selection process. Preference was given to farms with up to 500 hectares, members of cooperatives, those engaged in breeding cattle, berry, viticulture or organic production and those whose activities demonstrated dynamic development. Selection was made by a commission made up of representatives from public organizations, profile associations, advisory services and the Ministry of Agriculture. All meetings of the commission were broadcast online.
2)
2018 budget allocates UAH 7.3 billion for agriculture
October 18th, 2017, http://en.interfax.com.ua/news/economic/455628.html
The draft state budget for 2018 foresees the allocation of a total of UAH 7.3 billion to support agriculture: UAH 2 billion will be provided for the subsidy program; UAH 2.3 billion will be provided for the program to support the livestock sector; UAH 1 billion will be provided for 20% compensation for the cost of Ukrainian agricultural machinery; and UAH 1 billion will be provided for the farming support program and other programs. Of the UAH 2 billion allocated for the subsidy program to help agricultural producers develop and stimulate agricultural production, UAH 1 billion will be allocated to support cooperatives, and the other half will be allocated to support family farmers, classical farmers and those who want to become a farmer for the first time. Additionally, the formula for distributing subsidies to agricultural producers in 2018 will be changed, and a restriction on granting more than UAH 150 million in state support to one producer will be imposed. Under the farm support program, assistance will be provided for such areas as the cultivation of niche crops, berries, horticulture, vegetable growing, livestock and bioenergy. Financial support is also to be provided for the construction and reconstruction of livestock complexes in order to stimulate an increase in the number of animals and, as a result, contribute to the stabilization of meat prices. It is also planned to launch a program to improve the genetics in animal husbandry, especially for cattle and pigs.
3)
EU to increase Ukrainian quotas over next 5 years
October 6th, 2017, https://www.rbc.ua/rus/news/evrosoyuz-techenie-5-let-budet-uvelichivat-1507298561.html
European Union (EU) import tariff quotas are planned to increase for 18 Ukrainian commodity groups over the next five years. Additional quota allowances are already in place for Ukrainian honey, grape juice, barley, flour, processed tomatoes and oats and will be given (on January 1, 2018) to wheat and corn as well. These are expected to increase at an average rate of 10% per year over the next five years, and increased quotas will also be given to mutton, processed starch, eggs and other products during that time as well. This will result in most agricultural product exports from Ukraine to the EU passing without customs duties being imposed.
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Foreign Aid 4)
EBRD grants USD 20 million loan to GNT
October 27th, 2017, http://www.ebrd.com/news/2017/ebrd-in-us-20-million-loan-to-ukraine-grain-operator-gnt-.html
The European Bank for Reconstruction and Development (EBRD) is providing a senior loan of USD 20 million to GNT, an integrated grain supply and export logistics group operating in Ukraine. The funds will be used to meet GNT’s working capital needs for the procurement and storage of agricultural commodities. The EBRD loan will allow GNT to meet growing demand for modern infrastructure and to provide better links with local farmers in order to maintain processing volumes at its newly expanded grain terminals, which were previously financed by the Bank. Ukraine, which is currently harvesting over 60 million tons of grain per year, increasingly requires modern grain-handling facilities and logistical solutions because insufficient, old infrastructure is no longer able to meet the demands posed by record yields.
5)
EBRD to provide loan to Astarta-Kiev
October 26th, 2017, http://www.ebrd.com/news/2017/ebrd-helps-ukraines-astarta-expand-its-grain-and-sugar-business.html
The European Bank for Reconstruction and Development (EBRD) is supporting Astarta-Kiev, Ukraine’s largest vertically integrated agricultural holding, improve its logistics via the introduction of innovative storage. The seven-year loan of up to USD 25 million is also aimed at achieving savings in the use of energy and resources as well as a reduction in greenhouse gas emissions. The loan is being made in accordance with the EBRD’s Green Economy Transition approach. The funds will be used to construct, extend or acquire grain and sugar storage facilities in the Poltava and Khmelnytsky regions of Ukraine. The investment is expected to result in energy and resource savings as well as in reducing greenhouse gas emissions. Once implemented, the project will achieve natural gas savings in excess of 750,000 cubic meters per year and reduce grain losses by up to 3,500 tons per year. The overall reduction in greenhouse gas emissions is expected to be around the equivalent of 1,600 tons of carbon dioxide per year.
6)
FAO and GEF project to help restore lands
October 26th, 2017, http://agroportal.ua/news/ukraina/fao-3040-ukrainskikh-zemel-nuzhdayutsya-v-vosstanovlennii/
One of the main problems in the Ukrainian agricultural and industrial complex is land, with an estimated 30-40% of it being depleted. To help with this, the Food and Agriculture Organization of the United Nations (FAO) and the Global Environment Facility (GEF) will assist Ukraine in facilitating the restoration of degraded lands in the forest-steppe and steppe zones of the country. Research institutes will be actively involved in the project, including the Ukrainian Research Institute of Forecasting and Testing of Machinery and Technologies for Agricultural Production, the Institute of Soil Science and Agrochemistry and the Ukrainian Center for Soil Ecology. Various farmer organizations and associations will also take an active role in the project. The total cost of the project is about USD 12 million, USD 2 million of which is being provided by GEF and USD 1 million of which is being provided by FAO. The rest (USD 9 million) is being provided by national partners such as the Ministry of Ecology and Natural Resources, the Ministry of Agriculture and the State Forest Resources Agency. The project will be implemented in three regions: Kiev, Kharkiv and Khmelnytsky. Page 3
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7)
EU4Business conference to help increase food exports
October 5th, 2017, http://finchannel.com/world/ukraine/68476-eu-project-helps-ukrainian-food-industry-discover-exportopportunities-in-europe
More than 65 businesspeople from across Ukraine gathered in the city of Mykolaiv for a conference on standards and the export potential of the food industry. The conference was organized by the EU4Business initiative and offered Ukrainian entrepreneurs an opportunity to meet leading international export experts, learn about opportunities for development in their industry and get acquainted with the best practices for entering European Union (EU) markets. Participants also found out about the requirements for product standardization, the potential for exports to EU markets, ways to increase the competitiveness of goods and information on access to quality raw materials.
Private Sector 8)
Ukrainian walnut industry growing
October 31st, 2017, http://vremya.eu/novosti/novosti-selskogo-hozjaistva/ukraina-voshla-v-troiku-mirovyh-proizvod.html
Ukraine now produces approximately 110,000 tons of walnuts, tied with the European Union (EU) and Chile for third in the world in walnut production, trailing only the United States and China. Asian markets are the main outlet for the walnuts; however, peeled walnut exports to Europe are growing, up nearly 16% in the last five years and amounting to 7,000 tons (USD 25 million in value) in 2016. In fact, Ukraine is the fourth largest supplier of such nuts to the EU, behind the United States, Moldova and Chile. Ukraine does have a chance to increase its position, however. In order to accomplish this, it must overcome the fact that most (90%) of walnuts are grown and collected by households, making export consignments generally unsorted and considerably inferior in quality to many other countries’ supplies. Expanding the area of industrial plantations used for nut growth would increase consistency and quality and make processing and export easier and more appealing.
9)
Agricultural production costs increase 22.5%
October 31st, 2017, https://www.ukrinform.net/rubric-economy/2335121-production-of-agricultural-products-in-ukraine-risesin-price-by-225.html
The production costs of agricultural products in Ukraine increased 22.5% in January-September 2017 compared to the same period in 2016. At the same time, the cost of the production of plant products increased 23.8%, and the production costs of animal products grew 18.8%. In September of this year, compared with August, the costs agricultural production rose 1.2%, including 1.3% for plant growing and 1.1% for livestock.
10) Agribusiness forum to be held in Kiev October 30th, 2017, http://agroportal.ua/news/ukraina/lidery-agrobiznesa-soberutsya-v-kieve-na-forum/
The ‘Ukrainian Agribusiness Forum 2017’ will be held in Kiev on November 14, 2017. The forum will bring together all key stakeholders to discuss what Ukraine needs to do to consolidate its position as a leading player in global agricultural markets. More specifically, participants plan to discuss topics related to increasing the production and export of value-added products, increasing the market share in new Page 4
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priority export markets, conducting coordinated advertising campaigns, the prospects for adopting land reform and how to attract investments in the latest technologies and agricultural logistics. More than 100 top managers from agro-industrial companies are expected to attend the forum along with members of parliament, representatives from the Ministry of Agriculture, leading investors and experts.
11) Agricultural exports reach record-high levels October 18th, 2017, http://ucab.ua/en/pres_sluzhba/novosti/agrarniy_eksport_yde_na_rekord
The share of agricultural products in Ukraine’s overall export structure increased year-on-year from 40.2% to 41.3% for the first three quarters of 2017. According to the State Fiscal Service, the foreign trade surplus of Ukrainian agricultural products increased by almost a third (31%) compared to the same period in 2016 and reached USD 10 billion. During January-September 2017, imports of agro-food products amounted to USD 3 billion (an increase of 6%). Exports reached USD 13 billion, 24% higher than last year's figures. If these trends hold, Ukraine would set a record of USD 17.9 billion in total agrofood product turnover. The largest increase occurred in the exports of crop products, fats and oils. Crop product exports increased 21% (up USD 1.1 billion over last year), mainly due to increased supplies of corn and rapeseed. The supplies of fats and oils grew 27% (up USD 734.5 million over last year). Sunflower oil was the greatest driver of growth (up USD 1 billion over last year). The supplies of prepared foodstuffs increased by USD 410 million (25%), and sunflower oil and sugar became the main exported products. The smallest increase was shown by livestock products (up USD 251 million), which increased mainly due to supplies of poultry meat and shell eggs.
12) Certified seeds are Ukraine’s agricultural future October 15th, 2017, http://bunews.com.ua/economy/item/agribusiness-sowing-the-certified-seeds-of-ukraines-excitingagrarian-future?category_id=11
Ukraine is internationally-known as an agricultural powerhouse. Ukrainian agriculture represents 42.5% of the country’s total exports, and agricultural lands constitute 70% of the territory of the country. Today, Ukraine is the number one sunflower oil exporter globally and the world’s number two grain exporter. Being an essential part of the agricultural sector, seeds represent a highly competitive industry with advanced technological capabilities and a sharp focus on innovation. Certified seeds are the product of a production process designed to deliver specific plant breeding achievements to farmers and the food industry, and the use of certified seeds is crucial as it has numerous advantages such as varietal purity, guaranteed quality assurance and enhanced genetics. It is for these reasons that a more transparent and simple certification system in Ukraine would lead to greater access to the new opportunities the agricultural market has and will have in the future. Although the majority of Ukrainian bylaws that regulate plant variety registration are currently under development, the current state of affairs is not contributing to the well-being of the sector. On the contrary, it currently minimizes business opportunities for seed companies and blocks development. It is time to make the system transparent and bring legislation into line with best international practices.
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13) Raider interest in agribusiness growing October 12th, 2017, https://economics.unian.info/2184374-raiders-seize-twice-as-many-agri-businesses-in-2017-as-last-yearmedia.html
The Anti-Raider Union of Entrepreneurs has reported seven dozen cases of forcible seizures of agricultural enterprises since the beginning of the year, twice as much as in 2016. In recent years, raiders have shown an increased interest in agriculture; in fact, it is one of the few sectors showing a growth in raider attention. It should be noted that these hostile takeovers take place mostly in Central Ukraine, with some also being reported in the south of the country.
14) Agricultural producers’ view of business climate down October 12th, 2017, http://ubr.ua/market/agricultural-market/ukrainskie-ahrarii-terjajut-veru-v-perspektivy-svoeho-biznesa3855566
A recent study of the agricultural business climate has shown a deterioration in the perception of the business climate and business prospects by Ukrainian agricultural producers. Surveys also indicate a high confidence by producers in their own management capabilities. In particular, survey respondents believe that the availability of high-level equipment has had a positive impact on business but also that macroeconomic conditions have had a significantly negative impact on the business climate in Ukraine. The best assessment of the business climate was demonstrated by agricultural producers in the central, southern and western regions, with the northern and eastern regions having a largely negative view of the business climate in Ukraine. Respondents with land banks of less than 5,000 hectares also held a more negative view of the business climate than those with land banks of 5,000 hectares or more. Livestock producers also evaluated the business climate more negatively than crop producers, possibly indicating the need for long-term investment in the livestock sector.
15) Ukraine’s crop protection product barriers October 7th, 2017, http://bunews.com.ua/economy/item/agribusiness-crop-protection-product-barriers-and-pesticidedestruction-issues?category_id=11
One of the most crucial issues international producers of innovative crop protection products (CPPs) face in Ukraine is the practical impossibility of importing samples of unregistered CPPs for the purposes of state trials and research. The ‘Law on Pesticides and Agrochemicals’ requires that importers must submit proof of the product’s state registration in the country of production. What this does, in reality, is impede a CPP’s ability to enter Ukraine and be tested here. This is due to the fact that CPPs are often developed for crops, for conditions or for pests that do not exist in the country of production. In other cases, CPPs are being submitted in both Ukraine and the country of origin simultaneously, meaning that no registration from the country of production exists. This has the effect of blocking Ukrainian farmers from access to the world’s best innovations, forcing them to use older generations of products and receive lower yield than they could have otherwise achieved. The solution is simple: amend the law to allow an inflow of CPP innovations into the agricultural sector of Ukraine. Equal conditions and fair competition for all market players are vital to both attracting investments and unlocking the full potential of the agricultural sector.
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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.