30 September 2015, 09:28
As part of the implementation of the EU-Ukraine Association Agreement, the Ukrainian government has an ambitious reform agenda that aims to overcome the political and economic crisis, and that lays the foundations for sustainable economic development.
The focus of these agricultural policy reforms is in the areas of: deregulation of the market for farmland; privatization of state-owned agricultural land and the establishment of an effective taxation system; and the introduction of EU quality standards for food production.
The aim of this process is a comprehensive reform of the administrative structures in Ukraine’s agricultural sector. It is expected that, in the long-term, stability in these and other key areas of agricultural policy will promote investment and will contribute to greater international trade in agricultural produce.
Against this background, the Deutsch-Ukrainische Agrarpolitische Dialog – in partnership with Deutsche Landwirtschafts-Gesellschaft eV (DLG), IAK AGRAR CONSULTING GMBH, Leibniz-Institut für Agrarentwicklung in Transformationsökonomien and Ost-Ausschuss der Deutschen Wirtschaft – has organised an information meeting at Agritechnica 2015. It will take place from 14:00 to 17:00 on November 10 in the Convention Centre.
The meeting is primarily aimed at German and international companies interested in the investment opportunities presented by Ukraine’s agricultural sector, and during the event, the current state of agro-food reforms in the country will be presented and the prospects for growth and investment will be discussed.
Representatives of the Ukrainian Ministry of Agrarian Policy and Food will be invited to report on the current state of the reforms, and to particularly outline the challenges from the perspective of the country’s general economic and financial policies.
Representatives of Ukraine’s parliament will be discussing the progress that has been made in legislating for the reforms, and those attending the meeting will also have the opportunity to hear about the prospects for the agricultural ecomomy globally and in Ukraine – where the reforms are expected to result in an economic up-swing.
A subsequent panel discussion, with German and Ukrainian experts from business, politics and science, will then debate the different aspects of the reforms, and the prospects for the further development of Ukraine’s agro-food sector, especially with regard to the investment, production and trade.
Agriculture in Ukraine
According to Iryna Korchagina of Agroexpert, the 43 million hectares of agricultural land in Ukraine represents almost 70% of the total area of the country.
She reports that figures from the Ukrainian Agribusiness Club (UCAB) suggest this supports 45,000 arable farms, with 67.3% of them cultivating up to 100 hectares; 15.8% with 100 to 500 hectares; 5.6% with 50 to 1000 hectares; 5.4% managing from 1000 to 2000 hectares; and a further 5.9% with more than 2000 hectares.
A feature of Ukrainian agriculture is the so-called agricultural “Holdings”, where several smaller businesses work together to farm thousands of hectares. There are currently 80 of these cultivating more than 10 million hectares, and the largest is Ukrlandfarming, that has a total of 650,000 hectares of arable land and is also involved in egg production. The second largest is NCH Capital (New Century Holding) with 450,000 hectares and specializing in grain production. The third largest is Kernel with 400,000 hectares with a focus sunflower oil and grain.
Agricultural land in Ukraine may only be leased at the moment as there is a ban on land sales until the end of 2015, and there are no area-based subsidies paid to farmers in the country.
Since the start of Ukraine’s political crisis two years ago, the demand for new agricultural machinery in the country has reduced by half, according to the UCAB. Farmers are either buying cheaper technology from Asian or CIS countries, or waiting until the economic situation in the country improves.
Subsequently, there has been a growing interest in second-hand agricultural machinery among Ukrainian farmers generally. This is a new development as traditionally it was only the smaller farmers in the country who would buy used machines due to their limited financial options.