Ukrainian - American Agrarian Congress – door to success for Ukrainian agriculture

Source

APK-Inform

2736

During last years Ukraine attracts a lot of interest of world community and the political situation in the country is not the only reason of the concern. Ukrainian agriculture generates high interest as it is one of the most highly developed economic sector of the country and the only one that showed positive dynamic in 2014.

Role of Ukraine on the global agricultural stage is constantly growing. Ukraine is the leading exporter of sunflower oil in the world, it occupied a place among world TOP-10 grain exporters in 2013/14 MY and can reach high results in 2014/15 MY. But in order to develop its potential Ukraine needs to attract investments. Currently, US companies are examining ways to invest in Ukrainian agriculture, energy sector etc. Ukrainian - American Agrarian Congress was focused on the main task of Ukrainian government and private companies – to find the investors.

The information-analytical agency APK-Inform and the All-Ukrainian public organization Ukrainian Grain Association were the Congress organizers.

AgroInvest project of the USAID, the U.S.-Ukraine Business Council (USUBC) and the US Grain Council were the partners of the Ukrainian - American Agrarian Congress.

Ukrainian - American Agrarian Congress was held under support of the Ministry of Agrarian Policy and Food of Ukraine, the Ministry of Economy and Development of Ukraine, American Chamber of Commerce in Ukraine (ACC), Ukrainian Agrarian Confederation (UAK) and International Finance Corporation (IFC). DuPont, Monsanto и John Deere were the sponsors of the event.

Ukrainian-American agrarian dialogue between representatives of the governments and market operators was the feature and core of the conference. Agricultural potential of Ukraine and   experience of USA were presented at the conference by high number of informative presentations. The first day of the conference was devoted to contribution of the USA and Ukraine into global food security, investment climate in agriculture and prospects of agricultural infrastructure/logistics.

The first half of the second day of the conference was devoted to land market and agricultural technologies in Ukraine. Session covering international grain markets development closed the congress.

More than 170 participants from 13 countries took part in the conference.

Oleksiy Pavlenko, Minister of Agrarian Policy and Food of Ukraine, Vladyslava Rutytska, Deputy Minister on European Integration, Ministry of Agrarian Policy and Food of Ukraine, Leonid Kozachenko, President of Ukrainian Agrarian Confederation, Head of Interfactional Agrarian Caucus in Parliament of Ukraine, Oleksiy Vadaturskyi, General Director of Nibulon and so on were the honorable guests of the conference.

Morgan Williams, President and CEO of U.S.-Ukraine Business Council (USUBC) was the “star” of the 1st and the 2nd sessions, who added extra energy in interaction between speakers and participants.

Almost each presentation covered investment issue one way or another. Oleksiy Pavlenko pointed out that in 2015-2016 the Ministry of Agrarian Policy and Food of Ukraine expects to attract nearly 25 bln USD of investments into the agro-industrial complex of Ukraine. In particular, there is expected to attract investment for agricultural resources and technologies, irrigation systems, deep processing of grains, infrastructure and logistics. Also, the Minister noted that Ukraine will continue functioning as one of the world leading producers of food, but agricultural producers will shift from quantity indices towards stability and quality.

Leonid Kozachenko mentioned that it is quite possible to increase annual grain production in Ukraine to 120 mln tonnes by 2025, versus the current level of 53 mln tonnes that requires nearly 65-70 bln USD of investments. The objectives to be achieved within 10 years, provided that the sum of investments will total nearly 6.5 bln USD annually.

Volodymyr Klymenko, President of the Ukrainian Grain Association stated that the grain market infrastructure of Ukraine needs improvement and updating due to growing production and export, so it requires nearly 17.7 bln USD of investments. In particular, reconstruction and construction of inland elevators, meeting the modern market requirements, with the general capacity of nearly 47.3 mln tonnes, require 8.5 bln USD of investments.

At the same time, to implement the investment plan it is necessary to resolve several problems. The speakers of the second panel discussed this matter. Aitor Ezcurra, Chief Investment Officer of IFC pointed out 4 main problems preventing to raise investments to the private agricultural business: the access to finances and financial risk management sector; the infrastructure imperfection (roads, ports, storehouses) which increases the supply chain losses and total agribusiness expense; the imperfection of land legislation in many countries; the absence of certain common standards and principles of agricultural investment in many countries that provides a significant barrier to inflow of funds.

John Shmorhun, CEO at AgroGeneration stated that the most complete realization of the agricultural potential of Ukraine is impossible without making of a series of reforms at the macroeconomic and sectoral levels. In particular, the reforms include holding of the institutional and economic reforms, strong and consistent policy of the National Bank Ukraine, the fight against corruption, etc. Also, the Government should actively stimulate domestic agricultural producers, thereby increasing the exports. D.Shmorhun called improving and transparency of the activity of Ministry of Agrarian Policy, the reform on land register, increasing the minimum term of agricultural lands rent (to 7-15 years) as the required measures to be realized in the agrarian sector of Ukraine.

Heinz Strubenhoff, Agribusiness Program Manager at the IFC/World Bank Group expressed the same opinion. He stated that corruption, deep-seated in the agricultural business of Ukraine, as in many other sectors of the Ukrainian economy, is one of the main obstacles towards the complete realization of the agricultural potential of Ukraine. In addition, various bureaucratic rules for obtaining permission documents and excessive government intervention in activities of the agricultural market make things worse. All of the above actually negate the available benefits of the agricultural sector of Ukraine - cheap and high-quality agricultural lands, availability of the well-developed infrastructure and Black Sea ports, as well as high the excellent geographical access to the major countries-importers of Ukrainian agricultural products.

Moreover, speakers put an emphasis on the development of river logistics in Ukraine. Thus, Oleksiy Vadaturskyy, General Director of Nibulon pointed out that infrastructure development of the river transportation in Ukraine, including dredging of the Dnieper, construction of grain terminals and the river fleet, requires raising of foreign investments. In particular, investments of foreign banks are necessary for construction of ten river terminals, and dredging of the Dnieper river. Also, investments are needed for purchasing of nearly 400 thsd tonnes of metal from domestic steel companies, and ensuring work for shipyards for nearly four years, in order to form the cargo and towing fleet with deadweight of 550 thsd tonnes. Ukraine needs just 0.5 bln USD to turn the Dnieper as the full-scale transport corridor, and allow transporting grains, seeds and other goods, which would significantly improve the Ukrainian logistics system.

Yuri Skichko, Director of Hermes-Trading LLC also covered this topic during his speech. He pointed out that the updating of grain infrastructure in Ukraine that virtually has not been developed since USSA would help to redistribute cargo flows more effectively.

In her turn, Vladyslava Rutytska, Deputy Minister of Agrarian Policy and Food of Ukraine mentioned that the development of the river grain cargoes logistics in Ukraine is the one of the investment key direction for provision of sustainable exports of the commodity.

The second day of the conference gathered a lot of participants willing to listen to speakers. Dmytro Prikhodko FAO’s Agricultural Economist and Mykola Gorbachov, Director of New World Grain (Soufflet Group) and Head of Grain and Oilseed division of European Business Association in Ukraine were moderators of two last sessions.

Edward W. Allen, Senior Agricultural Economist of the USDA stated that Ukraine would preserve its high position on the world market within next 5 years. At the same time, the national currency devaluation processes will prevent Ukrainian producers from significant decreasing of the grain production.

At the same time, according to Dmitry Prikhodko by 2023 the share of Ukraine will total nearly 5% of the global wheat market, and 12% - coarse grains market. The USA will keep the top positions of wheat and coarse grains exports with the share of 31% of the general market volume (at the level of 170 mln tonnes).

Resuming the results of the conference, we would like to point out the high level of speakers’ professionalism and involved audience represented mainly by corporate CEOs. We hope that the congress not only revived longstanding mutually beneficial cooperation between Ukraine and USA, but also created a way to new achievements and success for Ukrainian agriculture.

 

Irina Ozip

P.S. all presentation from Ukrainian - American Agrarian Congress you can download here.

 

 

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