You're reading: Equipment-short agriculture sector still generates profits

Agriculture is Ukraine's only growing and profitable industry, Agriculture Minister Oleksiy Pavlenko told participants of a Feb. 17 business conference.

The nation’s abundance owes to its
incredibly fertile land as opposed to efficiency.

With 63.8 million tons of grain
production in 2014, a 2.4 percent increase, yield ratios are almost two times
lower than in the European Union.

But it’s more than enough grain for
Ukraine to become even more active in exports. “We’re actively working
with Asia, Egypt on opening the new markets,” Pavlenko said.

One of the big players, Oleg Bakhmatyuk,
head of the nation’s largest land owner Ukrlandfarming, said his company is
planning expansion to Afghanistan, China and Iran.

Meanwhile, Myronivsky Hliboproduct, a
major poultry maker, also admits it is working hard to increase exports, since
the European Union applies quotas on Ukraine imports.

“We’re ready to discuss the increase
of the quotas,” Pavlenko said. “This year, we want to press the
regulations so we could come to the EU market with Ukrainian pork.”

The ministry wants to extend to seven
years the minimum land-lease terms, Pavlenko said. Private land ownership still
seems to be a long way off.

“The land market if one of the three
most corrupt spheres in Ukraine along with the judicial system and
police,” said Stefan Verbunt, a Kyiv-based expert with the EU land market
project. “It’s corrupt from top to bottom – that’s what people think. So
you will need to restore the public trust in government and land market. The
government needs to explain what they do and do what they explain.”

Every parcel of land should be in an
online public cadaster that includes the information about all the land
transactions, Verbunt said.

Besides regulating the agricultural
industry, the ministry also manages a number of business entities that could be
a subject to privatization. However, politicians have insisted on keeping
“strategic enterprises” under state ownership.

To manage those state companies better,
the ministry audits them. It includes checking the assets of Ukrspyrt, an
alcohol monopolist, as well as Agrarian Fund and State Grain Corporation.

Even though agriculture is the most
promising sector of Ukraine’s economy, the debacle with the debt default of
Mriya, a Frankfurt-listed grain producer, is souring moods. Debtholders have
taken charge of Mriya, with $1.3 billion of debt.

Other problems in the sector include low
usage of fertilizers because of their high cost and poor equipment. The nation
has 2.5 times fewer tractors per hectare of arable land than the United States.

Industry lobbyists are demanding
subsidies from the government to keep the sector competitive with the EU, which
subsidizes agriculture. However, the International Monetary Fund, which wants
to lend Ukraine $17.5 billion over the next four years, is recommending cuts to
government subsidies.

Kyiv Post associate business editor Ivan Verstyuk can be reached at [email protected].