You're reading: What Ukraine can learn from Argentina, US and Canada’s agriculture experience

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Not many countries in the world are global players when it comes to agricultural production. Ukraine, however, is one of them, thanks to its rich black soil and favorable climate.

Ukraine was the global leader in sunflower oil production, third in honey exports and fourth in corn exports as of 2018, according to a report by Aequo law firm. But the country can do better by upgrading its outdated technology, education, and legislation to encourage long-term investment.

There are a few countries that Ukraine can learn from.

Argentina

One of the largest countries in South America, Argentina is well known for its established agrarian traditions. Due to the country’s location, its climate allows it to produce a huge variety of agricultural products — from growing citrus crops and tea in the northern regions to raising cattle in its southern regions.

In 2018, Argentina was the third largest soybean producer in the world after the U.S. and Brazil, producing 53.7 million tons of soybeans, according to the Agriculture Ministry of Argentina.

There are some similarities between Ukraine and Argentina.

For example, nearly 55 percent of all exports in both countries are agricultural products, according to Alex Lissitsa, president at the Ukrainian Agribusiness Club. Both countries are in the top 10 grain producers, and among top honey exporters.

“We have the same scale of production as in Ukraine. We produce a lot of crops (in similar amounts) to Ukraine, like wheat, barley,” said Federico Burlando, a representative at Sociedad de Cerealiasts, a union for agrarian entrepreneurs from Argentina’s southwest provinces.

Brazilian agriculture businesses are also showing interest in Ukraine’s market, and some products are already successfully being exported.

“We export (to Ukraine) seeds, fish, Argentinian lemons,” said Elena Leticia Mikusinski, Argentina’s ambassador to Ukraine.

During 2018, Coingra, a family agrarian company from Argentina, exported 36 containers of dried green peas to Ukraine — approximately 860 tons, according to Dolores Valdemoros, commercial director at Coingra.

“I believe that Ukraine is a promising, thriving country and that we can complement each other,” Valdemoros said.

But both countries are also struggling to establish stable agrarian state policies, according to Lissitsa.

“In Ukraine, state decisions are accepted chaotically. And it is the same in Argentina. In fact, there is no state support. Moreover, (both countries) are constantly imposing export restrictions to get more money from farmers,” he said.

In the past five years, the Ukrainian tax system in agriculture has changed six times, constantly confusing businesses.

“We need a predictable and understandable agrarian policy — this means to have the same tax system for at least 10 years,” said Lissitsa.

Similarities, differences

There is also a cultural connection between the two countries. During the 20th century, there were three major waves of immigration from Ukraine to Argentina. Currently, there are around 350,000–500,000 ethnic Ukrainians living in Argentina, according to Ukraine’s embassy in Argentina.

“Ukrainians were (some of the founders) who built Argentina. I know many (Ukrainian diaspora) families and they are very good people and work a lot on some very difficult soils in Argentina. They built cities and they are very qualified,” said Burlando.

However, there are some major differences between the two countries.

Lissitsa was strongly impressed by Argentina’s developed agrarian industry during his six-week trip to Latin America in 2018.

“Despite the fact that there are fluctuations in weather and a lot of traffic, Argentina’s roads are in perfect condition, including rural ones,” Lissitsa said.

Meanwhile, Ukrainian roads are still some of the worst, and have been ranked 130th among the 137 countries surveyed in 2018 by the World Economic Forum.

Lissitsa names another major difference: farmers in Argentina don’t typically steal.

“Imagine: all innovations in Ukrainian agriculture are focused on not letting people steal. But (in Argentina) they simply don’t have to worry,” he said. “They don’t understand why people can steal fuel or spare parts… they do not understand how our workers can steal equipment, fuel, grain. It is nonsense to them.”

Most importantly, Argentina has a free land market, whereas Ukraine doesn’t because of a land-sales moratorium that has been in place for almost two decades.

Ukraine was the global leader in sunflower oil production in 2018, producing 5.9 million tons of sunflower oil, out of which 5.4 million tons were exported, according to the ProAgro Group, an information services company. (Oleg Petrasiuk)

According to the Berlin-based Centre for East European and International Studies, Ukraine has around 43 million hectares of fertile arable land, closely monitored by agrarian companies, both domestic and foreign.

With a land market, the maximum price per hectare could reach up to $3,000, according to Dmytro Yablonovskyy, deputy director at the Center for Economic Strategy think tank.

In Argentina, the land is already much more expensive. For example, for top quality land in the country’s central Pampa Province the price could be $20,000–25,000 per hectare. On average, the price of land in Argentina is closer to $10,000–15,000 per hectare.

Another difference is the productivity of land.

“We can teach Ukraine how to implement new technologies, because you could produce more,” said Mikusinski.

The problem of implementing new agrarian technologies is also tied to the lack of high-quality agrarian education and science in Ukraine.

Agrarian production in Ukraine could increase by 20 percent with greater use of advanced technologies.

U.S. and Canada

Like in Argentina, Canada and the U.S. both have advanced technologies and infrastructure.

These two countries also have developed land markets.

“For those who rent land in Ukraine, it means dealing with a huge number of land owners (and) that adds a lot of additional non-agriculture-related work,” said Sergii Reznichenko, agronomy manager at Corteva Agriscience.

By contrast, North America is much more efficient than Ukraine.

In the U.S., only one or two farmers cultivate 1,000 hectares of land, while in Ukraine it takes 10–20 people to do the same amount of work.

American farmers will also often use outsourcing for non-agriculture related services such as accounting, agronomics and repairs as it is much cheaper, according to John Shmorhun, CEO at AgroGeneration and a former DuPont executive.

“A farmer may not have his own combines if he works in a cooperative. The cooperative has a distribution system for chemicals, they help with sales,” said Shmorhun.

It is also difficult to insure land in Ukraine to minimize the risks caused by low prices on the global market or bad weather.

“In North America, if the cost of production, for example, is $100 but due to crop failure farmers will get only $80, then the state compensates $20 so the farmer can be profitable,” Lissitsa said.

At the same time, the state is less involved than in Ukraine.

“In the U.S. everything is privatized, the state does not interfere. Of course, there are certain rules on what farmer can grow, the water cannot be polluted, there is also an Environmental Protection Agency,” said Shmorhun.

Ultimately, the biggest problem for farmers in Ukraine is corruption.

“Corruption in Ukraine will exist as long as state authorities understand that they will not be imprisoned if they demand a (bribe),” Shmorhun said.