UKRAINE: AGRICULTURE WONDERLAND ?

When referring to Ukraine, everybody talks about its huge potential to be a huge exporter of all kind of food products. It's more than 350,000 km2 of arable land, more than 57% of the total territory, considered to be the best and most fertile land in the world, should allow Ukraine to become a major player in the world when speaking about agriculture commodities such as grain, sunflower seeds, dry peas, sugar beat.



 Unfortunately, although this sector occupies more than 20% of local workforce, it does only count as approx. 6% of the GDP of the country.
 Ukraine exports grain ( 1,6 mil. Mt ), Sugar beat ( 1,4 mil. Mt ), Sunflower seeds ( 117,000 Mt ), Berries ( 115,000 Mt ) etc...but this could be 5-10 times more !!!!

 Why this situation is not changing for the last years although every goverment always speaks about the necessity to undertake changes on legislation to improve situation on this sector ?

 It is very hard to find a unique explanation for today's situation and at the same time, there is not a magical solution to improve it in the next years.

 Although there is always been a huge interest to invest in Ukraine's agriculture sector, not many companies or privates have succeed, specially if we refer to foreigners. There's a huge controversy, about the fact to give access to property of agriculture land to foreigners, which is till today forbidden. On the new draft being prepared by the Goverment, this question is being silenced, and our opinion is that, the situation will remain as till today. Some local tycoons and politicians are taking huge benefit of today's situation as they do have access to control huge extensions of land, which in many cases, they do not owe and just rent, getting a huge profit on the explotation of them. Anyway, although investment has been done in the last few years, specially in machinery to harvest, actual owners are not investing or putting as much attention as they should on increasing the performance per Ha. Low prices on labour, cost of rent of land ( 120-300 $/ Ha. ), do not motivate actual companies involved on this business to improve its performance. In many cases, these structures are supporting politicians which are blocking any changes or amendments on situation in this sector ignoring the general interest of the people of Ukraine.

 Let's have a look on a absolutely different scenario. Imagine foreigners are given the chance to buy agriculture land. This will provoke a sharp increase of prices as companies from abroad, which in some case can achive results 5 or 6 times better using techniques already applied in other countries, will be willing to pay a much higher price for purchasing the land than local investors.

 Of course, there is a very difficult balance in this question. How can be 'national interest' preserved but at the same time can we assure a improvement in agriculture sector in Ukraine ?  How can we launch a reform that could allow local farmers to keep control of its land and allow foreigners to have access and invest in agriculture in Ukraine ? In our opinion, this can only be done, first by creating a very safe enviroment for foreign investment, assuring a long-term access to land to these companies either by rent or sale of land. In these conditions, companies would be investing in technology, equipment, transfering technology to local partners and employees to launch their activities in Ukraine.
 At the same time, in order to sell their production at profitable prices, these companies should have an easy access to export channels or possibility to sale at competitive prices to local wholesale companies in a competitive economy.

 Unfortunately, today we do not have the legal system and laws which guarantee investment from foreign players in this sector. Channels to sell abroad are monopolized by few companies or individuals not willing to give away their privileges. Neither we have an open internal competitive market which would allow producers to sell at good prices to wholesalers nor supermarkets.

 All these isssues have to be readdress from new Goverment, if we want this sector to be one of the main players on the future growth of living standards of the country. In other case, we will continue watching people leaving villages as salaries and conditions of life are not improving, we will continue to see a very low qualified workforce willing to work in this sector ( with very low salaries ) and we wil continue to listen to people crying that Ukranian rural life is dying out.

 When we realize about situation which is facing our world, with an increase of population, increase of prices of food products, we do need to believe that situation will improve as world needs Ukraine to be a major producer of food products and Ukrainians need this to happen to assure a better future for themselves.