Agribusiness: Ukraine's vital role

The recent political crisis in the Arab world has already fuelled demand for grain from the likes of Algeria and Egypt. In these circumstances, coordinated efforts of all major agribusiness powers and food suppliers are especially important. They are bracing themselves for new challenges related to the cost of food and its supply.

Unlocking Ukraine's potential
Ukraine is potentially one of the countries that may provide solutions to the global food shortages. A country which has the potential to produce around eighty million tonnes of grain every year aspires to establish itself as a leading global food supplier and it would like to play a key role in addressing the issue of the global food security.

At the same time, recent actions of the Ukrainian authorities aimed at introduction of grain export quotas as well as other grain market legal and functional irregularities may significantly hamper the country's chances to become one of the world's breadbaskets.

In order to address these issues the EBRD, together with the Ukrainian Ministry of Agrarian Policy and Food and key sector stakeholders including the Ukrainian Grain Association, the Ukrainian Agrarian Confederation and the Agrarian Markets Development Institute organised a round table event in January 2011 in support the development of the grain sector in Ukraine. The presence of all major international and local grain companies operating in Ukraine at the event underscored its significance.

 An important outcome of the event was a memorandum signed by all the key parties. It is going to establish key principles for the functioning of a transparent grain market in the country.

The next steps
According to the memorandum, the signing parties are going to work closely on harmonising the relations between grain sector regulators and private operators. This will include drafting of legislation aimed at the introduction of new pre-harvest financing instruments and new standardisation and certification principles. In turn, private companies are committed to invest in grain storage and transportation facilities as well as to work with the Ukrainian farmers to promote and develop highly efficient production and grain processing technologies. The Ministry of Agrarian Policy and Food will engage in early consultations with key stakeholders before introducing or proposing normative acts affecting private participants in the grain sector.

The EBRD, which has been operating in Ukraine for almost 18 years, has always put agribusiness high on its agenda by committing over 20 per cent of its €6 billion investment portfolio to projects associated with agribusiness in the country. Now, when the Ukrainian economy continues to recover from the recent financial downturn, there are several industries, which engineer this recovery. One of the indisputable locomotives of the process is agribusiness and the Bank continued supporting it by committing almost $160 million in agribusiness projects in 2010.

By Anton Usov

Last updated 3 February 2011