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UKRAINE IS ONE OF THE WORLD’S TOP SIX GRAIN EXPORTERS AND THE WORLD BANK PREDICTS AGRICULTURE PRODUCTION COULD DOUBLE THERE IN THE NEXT FIVE TO 10 YEARS
25 per cent of the former Soviet Union’s agricultural output and today exports substantial amounts of grain, vegetables, sugar beets, sunfl ower oil, milk and meat. In addition, food processing, especially sugar, is an important industry sector. Ukraine is one of the world’s top six grain exporters and the World Bank predicts that agriculture production could double in the next fi ve to 10 years. “Bearing in mind that this forecast comes at a time when world demand for food and food prices is expected to rise considerably, we think that the agricultural sector in Ukraine will be dramatically developed,” says Niall Cullens, head of commercial section at the British Embassy in Kiev. “IFC, the World Bank’s private
fi nancing arm, and the European Bank for Reconstruction and Development are funding major projects in the sector. We see opportunities for UK companies in the areas of food safety and the supply of equipment and technology, particularly to improve crop production and biofuels. The country needs help in developing more large-scale industrial farming as a tremendous amount of smallholdings makes up the Ukrainian farming industry. “Organic food is in early development and UK companies could provide expertise in the certifi cation process and marketing.” Ukraine’s economy was expected to
grow between four and fi ve per cent in 2011 and the longer-term outlook is positive, with some analysts predicting a possible return to the double-digit growth last seen in 2006/7. A large country, Ukraine’s population of 46m is highly educated, with a strong tradition
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www.ukti.gov.uk
in science and technology. UK exports to Ukraine, which stood at £327m in 2010, are growing year-on-year and increased by 14 per cent from January to August 2011 over calendar year 2010. Clusters of suffi ciently wealthy and sophisticated consumers in the country’s cities mean that retail is another sector offering major potential. Marks & Spencer, Mothercare, Next, River Island and Peacocks are all doing well. As in any country, expensive vehicles bring admiration and status. Cars are one of the UK’s strongest exports to Ukraine, including Jaguars, Bentleys, Range Rovers and other top marques to increasingly wealthy consumers. Although Ukraine imports a large amount of gas, it also has signifi cant domestic resources that provide around a third of the country’s requirements. There is a strategic goal of reducing reliance on imported gas and boosting domestic production, improving energy effi ciency and developing renewable energy sources.
The UK has the potential to bring necessary expertise to all of these areas and there are requirements in exploration, extraction, technology, high-tech equipment, transportation and knowledge transfer. Shell and TNK-BP are already doing good business there, as are fi rms such as Cadogan Petroleum. As with Poland, both GlaxoSmithKline and AstraZeneca are present and the government’s planned healthcare reforms may bring further openings. The UK education brand is strong in Ukraine. Growing numbers of students are coming to the UK for secondary and tertiary education courses.
The UK also provides courses for MBA and computer-assisted design qualifi cations. English-language training is increasingly popular, especially in the run up to EURO 2012, while English is often spoken in the major centres as the language of business. Although not part of the European Union, Ukraine borders four EU countries – Hungary, Poland, Romania and Slovakia. It is in advanced negotiations for a deep and comprehensive free-trade agreement with the EU as part of a future association agreement, under which Ukraine will mirror EU single-market legislation, which will eventually make business easier for UK fi rms.
“UK companies need to be committed to do business in Ukraine,” says Cullens. “In addition to our tailored Overseas Market Introduction Service (OMIS) reports, visiting and spending time here to build up contacts and clients is essential. You also need to be familiar with the business environment. The big four accountancy fi rms are here – KPMG, Ernst & Young, PricewaterhouseCoopers and Deloitte – and they can provide the necessary legal, accountancy and tax advice.
“Customs clearance can be a lengthy
process and there are issues surrounding product certifi cation, establishing a business and over-burdensome bureaucracy. That said, the modern and enthusiastic younger generation will give Ukraine the impetus to advance dramatically over the next fi ve years. Now is the time to be looking at developing business opportunities because in a few years everyone else will be here and you will have missed the boat.” ■
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