Africa, the continent home to the world’s fastest growing middle class, has become the latest target for Ukraine’s farmers amid shifting export markets.
“The African continent is one of the most promising according to indicators of development, so Ukraine is working on expanding exports of agricultural products to this region,” Agriculture Minister Oleksiy Pavlenko said on Jan. 25.
He was referring to a boom in consumer spending in Africa that is slated to reach $1.4 trillion by 2020, according to the McKinsey Global Institute. Some 313 million people, or 34 percent of Africa’s population, spend $2.20 per day, according to the African Development Bank – the financial institution defines middle class on the continent as people who spend $2-$20 a day.
About $3.4 billion worth of Ukrainian goods were sent to Africa through November last year, accounting for 10 percent of the nation’s total exports, the Economy Ministry reported. Egypt is the leading consumer in this area.
Ukraine has already benefited from duty-free quotas for agricultural products to the European Union last year, and a broader free-trade deal came into effect this year with the 28-nation bloc. The nation’s farmers fulfilled quotas in eight out of 36 commodity groups.
After Ukraine lost roughly $7 billion from Russian consumers last year due to unilateral trade bans and restrictions that have intensified since 2012, domestic producers have focused more on opportunities in Asia, namely in Turkey and China, the EU, and lately in Africa.
Africa may compensate for the lost Russian market, filling state coffers with $1.5 billion in export earnings, Deputy Agriculture Minister Vladyslava Rutytska wrote in an opinion column in Novoe Vremia magazine.
And as Africa’s middle class grows, so does its demand for food. Given Ukraine’s close proximity to the continent and its fast-developing farming industry, the country is well positioned to satisfy Africa’s needs. Globally, Ukraine is already a top 10 exporter of poultry, grain, and honey, according to Pavlenko.
Currently, Ukraine mostly exports to Africa wheat, corn, barley, and oilseeds, as well as sunflower, soybean oils and their by-products, eggs, and condensed milk.
In 2015, “we again opened the Egyptian market, which had been blocked,” Pavlenko said. Egypt purchased 6 percent of the 200,000 tons of poultry that Ukraine exported.
Over the year, Ukraine has also significantly increased exports of meat, cheese, yoghurt, butter, vegetables, confectionery, water, wine, and tobacco, the Agriculture Ministry reported.
Pavlenko considers North African countries as the largest trading partners for domestic agricultural producers, who could earn $1.3 billion a year. Now Ukraine’s policy makers want to expand economic cooperation.
Rutytska said that some African consumers already demand products of European quality. Therefore, Ukraine must adopt European standards and rules if it wants to further tap the African market.
“In 2016, we need to intensify the joint efforts of government and business to increase the presence of Ukrainian exporters in these markets and promote Ukrainian agricultural products on the African continent,” she said.
South Africa is the biggest consumer in the Southern African Development Community. “It is a stable country, where we should only build long-term relationships,” Rutytska said.
In the East African Community, Kenya imports the largest share of Ukrainian agricultural products. Trade growth in this region could bring in around $85 million annually.
The main consumer of Ukrainian goods in the Horn of Africa is Ethiopia. The country has the potential to buy an additional $37 million worth of Ukrainian agricultural products.
“We consider the possibility of a free trade zone within the countries of West Africa because here you find one of the strongest economies in sub-Saharan Africa – Nigeria,” Pavlenko said.
Nigeria, Niger, Guinea, and Mali import milk powder from Ukraine.
“If we create a free trade zone within ECOWAS (the Economic Community of West African States), exports of Ukrainian products will increase by several times,” he added.
