22 May 2014, 11:51

Prospects for Ukraine’s agriculture production increase

Prospects for Ukraine’s agriculture production increase
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Ukraine is believed to have enormous potential for the development of its agriculture because of its arable land. However, after the collapse of the Soviet Union, the sector has undergone through a severe transformation, it has also experienced a change in the structure of ownership.

Currently, the country is the world's third biggest producer of maize and sixth for wheat, according to the International Grains Council. Some analysts say whether the country is able to soon provide a significant increase in agricultural production remains to be seen.

Quite a few global organizations have been supporting Ukraine in its move to develop agriculture, one of them is the International Finance Corporation (IFC), part of the World Bank, which puts agribusiness at the center of its investment and advisory work in the country. Rufat Alimardanov,IFC's regional manager for Ukraine and Belarus, told Radio VR though Ukraine is a competitive player on the global scale, it has a way to go to realize its potential across the whole value chain.

“Ukraine has over 40 million hectares of agricultural land, which is about 70% of the total area, and of that 40 million about 32 million are arable. What is more important, Ukraine can fully meet its domestic demands on agriculture, which makes Ukraine a very important grain exporter. Obviously, Ukraine needs to do a lot, to build infrastructure to be able to export more. If we speak about the production of machinery, that requires much more modernization and investment,” Rufat Alimardanov said.

However, months of political crisis have had knock-on effects for agribusiness and farmers. The banking crisis in the country already in recession made it all but impossible for small businesses to take out loans. Kendrick White, founder and managing partner at Marchmont Capital Partners, says in a tough situation when people might be facing lack of food, home agriculture brings excellent opportunities to survive.

“People would be thinking of how to grow as much as possible for themselves and their home, this is a uniquely kind of Slavic issue, people will go into a certain survival mode. They'll do more planting of more hectares of potatoes,” Kendrick White said.

For the whole country, analysts predict a drop in agricultural production this year. Ukraine's maize output is expected to drop to 23.3 million tonnes, down 18% on the last harvest, while wheat is forecast to drop 16% to 18.3 million tonnes, reported monitoring agency Agritel. Meanwhile, world wheat prices have jumped 30% since February, largely driven by the ongoing crisis.

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