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The global economic crisis and its after-effects seem to have distracted the world’s attention away from problems related to the cost of food and its supply. This represents a major opportunity for large agricultural states such as Ukraine. The country is poised to become a major producer and supplier of agricultural commodities. Even more importantly, this will be a chance for re-definition, to create a national business brand, which will be associated with a new powerful, prosperous and flourishing Ukraine.
Our focus on agriculture
The EBRD has operated in Ukraine for over 17 years and has always paid special attention to the agricultural sector. We have committed over 20 per cent of our €5.3 billion investment portfolio to projects associated with agribusiness. The Bank has traditionally supported major international investors such as Groupe Bel, Champagne Céréales, Cargill or Toepfer, which have been provided new technologies, better business practices and created new jobs in Ukraine. At the same time, the EBRD has always maintained its focus on financing strong local companies and brands such as Obolon (brewing) or Astarta (sugar production).
The Bank’s agribusiness investments are introducing significant efficiency improvements to the costly and energy-intensive production process. This is especially relevant for Ukraine – one of the most energy-inefficient countries of the former Soviet Union. Many transactions resulted in a reduction of carbon emissions and became eligible for carbon credits under the Kyoto Protocol.
Even in difficult post-crisis times the EBRD remains firmly on track to maintain its record level of investments (of US$ 200 million) to the sector, which was reached in 2009. Since the beginning of 2010 the Bank has already channelled over US$ 150 million into various agribusiness projects ranging from sugar and poultry meat production to grain storage and transportation.
How EBRD funding makes a difference
It is not, however, the volume but the nature of projects, which captures attention. In May 2010 the EBRD supported Ukrainian Agrarian Farms Limited, which operates 60 agricultural companies located across the country. The loan, among other objectives, will facilitate annual additional return of up to 57,000 hectares of currently unused arable land to cultivation. A US$ 50 million loan to Nibulon, a leading Ukrainian grain exporter and producer will play an important role in the development of the adequate and functional storage and shipment infrastructure along the Dnieper River, which is currently not used for active cargo transportation.
The third transaction in three years with Astarta, Ukraine’s major agribusiness operator and sugar producer, will introduce significant energy efficiency improvements at Astarta’s production facilities. They will become an important energy efficiency benchmark for the industry. The latest loans signed in July 2010 will support JSC Myronivsky Hliboproduct, one of Ukraine’s largest agro-industrial companies, focusing on the production of poultry and the cultivation of grain and a leading international agricultural commodity operator, Noble Group, which is aiming to develop and strengthen its grain infrastructure and processing facilities in the Black Sea region.
Despite the healthy pipeline of projects, the future of investments in Ukraine’s agriculture will depend on several key factors. Legislation – such as that on land and tax codes – is one. The country has enormous agribusiness potential and its development depends on coordination between the government and investors.
By Anton Usov
Further information: please contact the EBRD press office
Last updated 11 August 2010