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AGRICULTURE


Agricultural prospects in the balance


According to the Food and Agriculture Organisation (FAO) Ukraine could become one of the main suppliers of food on Earth. The annual joint report for 2010 by the Organisation for Economic Co-operation and Development (OECD) and the FAO are predicting a 20% increase in Ukraine’s food production over the next decade


Sergey Bovtenko


The USDA report (May 2010) notes that even infrastructure shortages and the growth of livestock production may not prevent the ability of the Black Sea states to fulfill their potential for replacing the US as the breadbasket of the world. According to the USDA report, the Black Sea states of Kazakhstan, Russia and Ukraine look set to raise wheat exports by half to more than 50 m tonnes by the end of the


decade, overtaking the US for the first time since the Second World War. Such conclusions require a good evidence base and in-depth analysis of


Ukraine’s agricultural sector and its internal processes. Key factors that may help or hinder Ukraine’s future as one of the key suppliers of food in the world are summarised below.


Country


Ukraine France Spain


Germany UK


Poland


Romania Italy


Total


42.9 27.6 24.9 17.0 16.0 14.8 13.9 12.7


agricultural area, m ha


Arable


32.4 18.3 11.9 11.9 6.1


11.3 8.9 7.0


agricultural area, m ha


Part arable agricultural area, m ha


76% 66% 48% 70% 38% 76% 64% 55%


UKRAINIAN AGRICULTURE: BASELINE Ukraine is an intensively cultivated country. Its agricultural area represents 42.9 million hectares, which is about 71% of the country’s surface. By comparison, in the European Union, agricultural land represents 41 % of the total. Some 76% of Ukrainian agricultural land is arable land, while in the European Union it is only 61%.


The landscape is highly favourable for agricultural activities and large-


scale farming: 60% of agricultural land is practically flat and the remaining 35% has slopes ranging from 1° to 3°.


Ukraine accounts for a third of the world’s chernozem areas (black soils)


with an enriched humus layer of between 40 to 50 centimetres, making it the country with the highest quality fertile black soils in the world. Also the country has a moderate, continental climate, which is perfect for the cultivation and plantation of both winter and spring crops of wheat, rapeseed, corn and other crops.


14 UkraineBusiness insight October/November 2010 22,7 11,3 2,9 2003/04 2004/05 2005/06 2006/07 Grain production 13,2 9,9 4,1 2007/08 Consumption 2008/09 2009/10 Exports Source: UkrAgroConsult


Ukraine exported 21.2 m tonnes of grain during the period July 2009 to June 2010.


Ukraine has remained the world’s third largest grain exporter after the


United States and the European Union, while Russia, which exports 19.9 m tonnes of grain, is fourth.


These recent figures are higher than average, but not record totals. In


the 2008/2009 season, Ukraine supplied 24.5 m tonnes of grain to foreign markets, of which wheat, barley and corn remain the main export crops.


Since the 2008/09 season Ukraine has consolidated its position in the


world grain market where it is at least 6th across many categories (13% Wheat market, 35% Barley market).


For two years in a row, Ukraine’s grain exports were valued at US $3.5


bn to US $4 bn (2005/06 saw record exports of US $ 1.38 bn). Total agricultural production in Ukraine in 2009 grew to over US $120 bn.


2010/11 39,5 Climatic, natural and geographical factors make Ukraine the 8th


largest farmland bank in the world. If we add to this the availability of necessary infrastructure and access to the sea, it is immediately obvious that Ukraine has the opportunity to become a very large player in the world grain market.


CURRENT PROGRESS IN UKRAINIAN AGRICULTURE: UKRAINE, THE WORLD’S THIRD LARGEST GRAIN EXPORTER


Ukraine’s grain balance overview, MT 53,3


46,0 39,5 40,5 37,3 31,3 24,5 21,2 16


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