Ukrainian Agrarian Congress – significant market event

Source

APK-Inform

13423

 

World Food Day is celebrated every year around the world on October 16. Therefore, APK-Inform Agency and Ukrainian Grain Association chose the date for holding the first round of Ukrainian Agrarian Congress in Kiev - October 15-16. In the current economic conditions, the agricultural sector of Ukraine is almost the single industry showing the growth rates, which undoubtedly makes it the driver for the country`s economy. In addition, the role of Ukraine on the world food markets is becoming more significant, especially grain and oilseed market segments, which intensifies integration of Ukrainian agriculture to the global agricultural sector, and strengthens the mutual challenges and tendencies. Over 200 market participants, representing more than 120 companies, as well as government agencies and industry organizations from 20 countries gathered to discuss the prospects for development of the global agribusiness and Ukrainian in particular within frames of Ukrainian Agrarian Congress.

  

Dialogue between representatives of agricultural business and government became the traditional feature of the reporting conference. Ukrainian Agrarian Congress started working with a panel discussion "Analysis of the cooperation between the Ministry of Agrarian Policy and Food of Ukraine, the EBRD, the FAO, non-governmental organizations and representatives of the agricultural business in 2014/15 MY. The government policy on exports of grains and its by-products in 2015/16 MY: expectations of agribusiness. Key aspects of the State program for development of the agrarian sector of economy until 2020".

 

President of Ukrainian Agrarian Confederation, Leonid Kozachenko launched the discussion work, and noted that the government is doing everything possible to create the required conditions for realizing the potential of the agricultural sector of Ukraine, despite the observed negative economic trends in the country. As for the prospects of Ukraine on the global food market, he said that the country occupies the second position in the world rating of grain exporters, and the first - sunflower oil exports. At the same time, the role of Ukraine is quite important in provision of food security to such regions, as the Middle East and North Africa. At the same time, he expressed confidence that in the medium-term outlook Ukraine will increase the supply of agricultural products to South-East Asia, especially China.

In terms of development of the comfortable business climate in Ukraine, the domestic agro-industrial complex can significantly increase the volumes of raised investments, declared the President of Ukrainian Agrarian Confederation. During 10 following years, the agricultural sector of Ukraine needs to raise nearly 70 bln USD, which is not a serious problem in terms of development of the appropriate business environment. Such investment inflow will allow tripling the agricultural production volumes, and doubling grain production volumes.

In particular, L.Kozachenko added that the current level of material and technical equipment usage in the domestic agricultural complex is lower by 5 times compared with the index in the USA. As a result, the produced grain volumes are almost halved compared with the potential volumes. To date, investors are scared by political risks, lack of effectiveness of the taxation reforms, state regulation of market prices, non-payment of VAT, etc. Also, the land reform does not develop. As a result, we have rather low level of confidence to the authorities from both investors and agrarians, summed up L.Kozachenko.

In turn, the Deputy Minister on European Integration at Ministry of Agrarian Policy and Food of Ukraine, Vladyslava Rutytska noted that the expansion of sales markets is one of the priorities of the public policy in the agricultural sector. Also, it is important to further cooperate with the EU. The Ministry of Agrarian Policy plans to strengthen its measures aimed at fighting against counterfeit goods on the market of seeds, crop protection products and fertilizers. According to her, the Ministry will update the legislation to make it harder for the local markets and imports. Also, the Ministry will cooperate with the customs service, which will receive new updated laboratories, and trained staff.

 

Also, the IFC Country Manager for Ukraine, Olena Voloshyna confirmed that due to cancellation of the state certification of grain elevators in Ukraine, the agricultural business managed to save over 80 mln USD. Generally, the undertaken steps for deregulating of the agrarian business saved nearly 100 mln USD. At the same time, O.Voloshyna stressed some concerns of European farmers, who fear possible competition on the EU market from the Ukrainian agricultural producers, after the entry into force of the agreement on free trade zone between Ukraine and the EU, since January 1, 2016.

The Сouncellor to the Board for Agriculture at Crédit Agricole Вank, Jean-Jacques Hervé confirmed the above-mentioned opinion. To date, financial institutions should more actively provide alternative sources of financing to Ukrainian agrarians for purchasing of the necessary resources, especially material and technical resources. First of all, banks need to be sure that the company`s management is stable. In addition, the economic context plays its important role, in particular liquidity and the cost of company`s financial resources. And J.-J.Hervé called imposition of the mechanism of agricultural receipts and the mutualisation of risks between partners, among the most important innovations in financing of the Ukrainian agro-industrial complex. The second of the reporting mechanisms is quite attractive for financial donors, because it is quite difficult to calculate the risks of investing in the agrarian sector of Ukraine. However, despite the howling potential of the Ukrainian agricultural sector, financial donors prefer investing in the industry in rather cautious way, the expert added.

During his speech the EBRD Director for Ukraine, Sevki Acuner noted that until the end of 2015, the loan portfolio of the European Bank for Reconstruction and Development to the agricultural sector of Ukraine will possibly increase to 850 mln EUR. As for the prospective directions of investment in the Ukrainian agricultural business, the speaker highlighted the importance to establish energy efficient technologies. According to him, such technologies will contribute to development of the agro-industrial complex and the economy. In addition to financing agricultural producers, the EBRD also heavily invested in development of agricultural logistics. Thus, S.Acuner stressed that the Bank will continue financing Ukrainian agribusiness. But the EBRD has certain limitations, which are linked to the existing projects only, but not the general risks of Ukraine.

After completion of the panel discussion, the Ukrainian Grain Association and the Stock exchange trading grains, oilseeds, fruit crops and foodstuffs (Argentina) signed the Memorandum of understanding. The signing ceremony of the memorandum took place within frames of the Congress. The purpose for the memorandum conclusion is provision of the required trading platform for cooperation between the signatories in the sphere of agriculture, including such issues as crops production, processing, investment, trading, information and technologies sharing. In particular, the signatories plan to actively cooperate in the sphere of development of agricultural commodities trading (including stock exchange trading) between Ukraine and Argentina, support the further raising of investments to the agricultural sector, share experiences and information on the issues of biotechnologies, seeds and biofuels production.

 

In turn, APK-Inform analyst, Andrew Kupchenko noted that due to the dry weather conditions, set throughout almost whole territory of Ukraine in the autumn, the uncertainty of prospects for winter crops planting significantly increased. Dry autumn in Ukraine did not allow farmers to fully implement the winter wheat planting works. A year before the planting campaign was delayed because of the rainy weather witnessed in early autumn, and winter wheat was planted on 6.8 mln ha. The expert of APK-Inform Agency forecasted that winter wheat for harvest of 2016 to be planted throughout 5.5 mln ha, down 19% a year. Subject to normal seedlings and a favorable overwintering to help to harvest 16.7 mln tonnes of grain down 33% than in 2015 (25.1 mln tonnes).

 

As for the further economic conditions of agricultural production development in Ukraine, the Deputy Minister of Agrarian Policy and Food of Ukraine, Volodymyr Lapa said that some changes in the tax and budget policy had negative consequences for the domestic agriculture. He called the change of the tax base of the fixed agricultural tax, non-payment of VAT for exported crops, cancellation of compensation to agricultural producers of the cost of sold milk and meat at the expense of accumulated VAT from industrial processors of the above-mentioned products, etc. among the major negative results. General, he said that the government plans to impose various measures which will further create favorable conditions for development of agribusiness.

 

Within frames of the event, conference participants discussed all topical issues on development of the agrarian sector of Ukraine and the world market of agricultural products, shared their opinions on the prospects of promotion of domestic agricultural products to foreign markets, received required information about the prospects of development of the agrarian sector of Ukraine, etc. The conference organizers plan to hold the following stage of discussion of the reporting issues in April 2016 in the capital of Azerbaijan, Baku.

On behalf of the conference organizers, we thank all participants of the Congress for taking part in the Congress work. Special thanks to partners of the event - the European Bank for Reconstruction and Development (EBRD), the Food and Agriculture Organization (FAO), international legal offices Interlegal, Project AgroInvest (USAID), the exclusive financial sponsor - Crédit Agricole Вank, as well as the sponsors - agribusiness group AP-GRUPP and First Logistic Company LLC.

 

Alina Styozhka, APK-Inform Agency

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