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1:34 AM Friday, July 28, 2017
Agriculture
Ukraine To Displace US as Top Grain Exporter?
James Brooke
Challenges: lack of silos and rail cars; farm lobby backs scrapping land leasing for land market
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KYIV – As Ukraine’s parliament gears up to debate allowing sales of farmland, agriculture executives say that Ukraine already is on its way to becoming a world food power.

“In 10 years, Ukraine could exceed the US as the number one world exporter of grain crops,” John Shmorhun, president of AgroGeneration SA, told executives and investors gathered Wednesday for the Empire State Capital Partners New Ukraine Investment.

A farm land market, modern management and investment in modern technology could boost production at a critical time for the world.

“We are going to see 9 billion people in world in the next 20 years,” Shmorhun, an American, continued, referring to a 20 percent increase in the world’s population. During that period, he said, Ukraine could double its grain production from last year’s bumper crop level of 66 million tons.

For starters, of 32 million hectares of arable land, Ukraine does not till 5 million hectares and underutilizes half of the rest, according to a food security report by SigmaBleyzer, a privately held American company with extensive farm investments in Ukraine.

China, India, and North Africa growing markets for Ukraine’s grain exports, said Shmorhun, who recently returned from representing his French company in China and South Korea. In Asia, many consumers like the fact that Ukrainian farmers do not use genetically modified organisms, or GMO.

A similar growth story came from Mykola Kovalski, Marketing Director for Astarta Holding, Ukraine’s largest sugar producer.

After $500 million invested over the last decade, Astarta’s milk production tripled and its sugar production jumped eight-fold, Kovalski told the audience of about 200 Ukrainian and foreign business people.

Astarta, he said, has invested heavily in bioenergy with five units attached to farms around the nation. Producing over 25mw of power, Astarta plans to take advantage of a new law, passed in March, which liberalizes heat and power sales.

“Technologies are improving,” he said, reviewing his company’s circular integration of farms, food processing and energy generation.

He and other panelists agreed with Shmorhun that Ukraine could double grain production in 20 years.

“Land market reform is key,” Taras Vysotskyi, general director of the Ukrainian Agribusiness Club, the nation’s leading farm lobby.

“With land market reform, we will see either very fast growth of the sector – more than 5 percent – a year, or we will see stagnation,” warned Vysotskyi, whose association favors replacing the current leasing system with a land market.

Ukraine’s agriculture needs $5 billion in investment each year to grow at a fast pace. At present, it is only getting $1 billion a year.

It is unclear if Ukraine’s Rada, or Parliament, will approve a land market bill before its summer session ends, in July.

Agriculture Challenge – Logistics.

“We are missing 15 million tons of inland storage facilities,” Shmorhun said, referring to modern grain silos. “As we saw last year, Ukraine does not have enough grain cars, not enough maneuvering locomotives.”

The new leaderships of railroad, a state-owned monopoly, says it is buying new cars and locomotives. The goal is to have this new rolling stock in place in time for the fall harvest.


For comments and story tips, please contact UBJ Editor in Chief James Brooke at james.brooke@theubj.com

Photo: John Shmorhun, president of AgroGeneration S.A., talks Wed. to a participant at the Empire State Capital Partners New Ukraine Investment Conference in Kyiv’s Parkovy conference center. (James Brooke)

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