Although Ukraine's agricultural industry is popular among international investors, Canada is only responsible for less than $25 million of last year's trade turnover in the sector with Ukraine. But Canada can still fill a major gap with its vast agriculture expertise and farming machinery.
Although overall trade turnover between the two countries fell in 2014, to $264 million, agriculture could drive a rebound.
“Agriculture is a priority for us,” Canada’s Citizenship and Immigration Minister Chris Alexander told the Kyiv Post in April, seeing a strong connection between Ukraine’s and Canada’s farming industries.
Some companies are already strengthening this bond.
Ag Growth International, a Canadian grain-machinery company, is one of Canada’s most prominent exporters to Ukraine, making its first sale in the country in 2009. The company sells storage equipment for up to 300 metric tons of grain. Although 2014 was a tough year for the company in Ukraine, growth has been good in the last six years. Its customers range from local farmers who buy individual pieces of grain-storage equipment to multinational investors building grain storage terminals at Ukraine’s outdated seaports.
“In 2016 we should equal our best year in Ukraine,” Shane Knutson, vice president of international sales at Ag Growth International, said.
Nevertheless, business is becoming more difficult for smaller farmers. In particular, finding hard currency to purchase machinery from abroad is a constant problem. Another issue is the lack of proper know-how. For example, some buy expensive equipment that they don’t know how to use properly, said Victoria Umin, Ag Growth International’s regional director in Ukraine.
“It’s difficult to find people with the skill set to understand how to use this equipment,” Knutson added.
Because of lack of storage, most farmers need to sell their produce immediately. In Canada, 85-90 percent of grain can be stored on a farm for up to eight months with modern storage.
“If they can store grain on the farm, it allows them to control their destiny when they sell the grain,” Knutson said. This helps famers save money since the produce does not have to be sold during peak seasons when prices are lowest.
Canada has also been teaching Ukrainian farmers. The Canadian Embassy has dairy and grain projects under way in Ukraine’s Dnipropetrovsk and Lviv oblasts with plans to expand.
For Ukraine’s southern oblasts, in collaboration with the Mennonite Economic Development Associates, the embassy launched a fruit-and-vegetable project for seven years that will enable 25,000-30,000 producers to access markets. “It’s basically creating the infrastructure… to allow Ukraine to sell its agricultural products more quickly, more effectively into the European and global markets,” Canadian Ambassador Roman Waschuk said.
The Ukraine Horticulture Development Project is MEDA’s second project in Ukraine following its first five-year initiative in 2008. Canada’s Department of Foreign Aid is providing CA$19.7 million in addition to MEDA’s CA$2.5 million to work on Ukraine’s horticulture sector.
MEDA’s country manager for Ukraine Stephen Wright says that the industry is disorganized. “There’s a lot of good work that could be done,” Wright said. The Ukrainian horticulture sector is almost the same size as the grain sector.
Most horticulture growers work on small plots that are often half a hectare large. They then sell their produce on highways or at markets, which is “incredibly ineffective,” Wright said. Standardizing the produce and its packaging and connecting farmers to sell together, rather than separately, should be some of the goals, he said.
MEDA’s first project shows the difference between selling a 500-kilogram batch of tomatoes and selling a five-ton batch of tomatoes to a trader. The difference in price was more than 20 percent, Wright said.
The problem stems from a lack of trust within communities. “You can have a group of people in the same village growing the same produce, and they don’t talk to each other because they view each other a little bit with skepticism,” Wright said. Instead, growers should look at the benefits of working together in cooperatives.
But there is progress. Wright said that Canadian investors, despite many doubts, are considering the agricultural sector. “That interest is really up,” he said.
Ukraine’s potential is impossible to ignore. “Brazil and Ukraine are the two spots in the world that everybody in our industry talks about,” Ag Growth International’s Knutson said.
Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected].
