UKRAINE
Some 20 years ago, Ukraine exported two million tonnes of wheat a year – now it is around 20 million tonnes. The natural endowment of fertile black soil has helped the country become an export powerhouse in sunflower oil, barley, maize, rapeseed and wheat. The country has been an enthusiastic adopter of biofertilizers and other biological inputs, and already has a number of domestic and international companies present in the sector. Changes in land ownership are coming, and investment is being encouraged in agriculture, which accounts for more than 40 percent of the country’s exports.
It is 30 years almost to the month since Ukraine became an independent state from the former Soviet Union.Back in 2016, Ukraine’s Minister of Agriculture Oleksiy Pavlenko announced boldly that by 2020, the country’s output of grain would double compared to 2015, projecting a total production volume of 100 million tonnes (t) of grain per year. Certainly, the county has the natural assets that might make this possible – the famous black soil, or chernozem.But as will be seen from the latest statistics, the country has not reached that rather optimistic target. Total grain output in 2020 was 63 million t. But export growth has been strong, and from a biologicals point of view, it is a leading consumer of biofertilizers and biological inputs supplied by both domestic producers and international companies. Indeed, Ukraine is the second biggest inoculant market in Europe, after Russia, according to biologicals specialist company DunhamTrimmer.
Macro overviewWorld bank data gives the current population at 44 million as shown in Table 1. One trend to be aware of is the population of the Ukraine has been falling since the early 1990s, when it was 52 million. This is partly due to low birth rate, but also emigration – large numbers of Ukrainians work in Poland. This is an important factor when considering the working population in agriculture. Currently around 17 percent of the population are working in agriculture, equating to around three million people.
Ukraine’s GDP was estimated at USD$155 billion (bn) for 2020 by World Bank. This represents a rebound from the slump following the Euromaidan political events in 2013-14, where GDP fell to $91 bn in 2015 from a high of $183 bn in 2013. This was also accompanied by high rates of inflation.The years 2010-2016 saw the decline of the industrial sector’s contribution to GDP from 31.3 percent to 26.3 percent, while agriculture’s contribution grew 8.3 percent to 14.4 percent. The export share of agriculture also grew from 31 percent to 42.5 percent (Ref 2). Currently, agriculture represents 10-12 percent of GDP.
Importance of exportsAgriculture is particularly important to Ukraine when considering foreign trade, forming around 44 percent of exports by value in 2019 (Ref 8 with State Statistics). In 2008, Ukraine became a member of the WTO, which involved internal reforms such as lowering its tariff regime to WTO requirements, but that marks the start of the country’s growth in exports.However, Ukraine runs a trade deficit of around $5 bn in 2020, with total exports across all sectors of $49 bn and imports of $54 bn.Exports of corn and wheat have grown since 2010. In value terms, maize has grown from $786 million in 2010 to $5.2 bn in 2019 (Ref 8). Meanwhile, wheat has increased from $906 million in 2010 to $3.7 bn in 2019.
Agricultural trade for Ukraine is overall in surplus. Although the Ukrainian Agribusiness Club noted that Ukraine had become a net importer of dairy products in 2020.Ukraine’s agricultural exports tend to be concentrated on a few products. Grains, sunflower oil and rapeseed account for 74 percent of total agricultural exports by value (Ref 1).Although export ranking positions can change from year-to-year, Ukraine is routinely the number one exporter of sunflower oil, the number three or four in barley and maize, number six in wheat and number 7 in soybean (Ref 1).Of its wheat exports, which reached 21 million t in the marketing year 2019-20, the top five market destinations were Egypt, Indonesia, Bangladesh, Turkey and Tunisia.For the marketing year 2019-20 Ukraine’s maize production was 35.9 million t of which 30.5 million t were exported (Ref 8).The top five countries for maize exports from Ukraine in MY2019-20 were China ($929 million), Spain ($569 million), Egypt ($508 million), Netherlands ($506 million) and South Korea ($323 million).Ukraine can ship 40 million t of grains and oilseeds through 13 seaports. Over 60 percent of shipping volumes are concentrated in the Odessa region (Odesa, Illichivsk and Yuzhnyy ports) (Ref 1).
Trade agreementsA member of the WTO, Ukraine has concluded 17 free trade deals, the most recent in October 2020 between the UK and Ukraine, when the two countries signed a Political, Free Trade and Strategic Partnership Agreement.
But the most significant agreement from a political perspective, particularly when considering the Euromaidan events that precipitated it and the reforms that are engendered within the agreement, is the Deep and Comprehensive Free Trade Agreement (DCFTA) signed in 2013 with the European Union, and active from January 2016.
DCFTA reformsThe terms of the DCFTA include the implementation of a number of measures over a 10-year period, including market access, technical barriers to trade (TBT), food safety for legislative harmonization and customs issues (Ref 21).When it comes to public procurement, for example, Ukraine adopted a new law in 2015 that is compliant with the relevant EU directive, with the addition that e-auctions are compulsory to reduce corruption.
One policy paper made the point that the DCFTA is unprecedented since the country has committed to reforms without having the prospect of EU membership (Ref 15). Nevertheless, Ukraine has benefited from grants from the EU (grants meaning they are not repaid) to the amount of 4.83 bn euros up to 2020. Assistance was given to eastern and central European countries prior to 2006 and their accession to the EU membership, totaling 21 bn euros. When comparing with Ukraine’s grant, it should be noted this was split across 10 countries, with Poland and Romania receiving the most (around 6.1 bn euros and 5.3 bn euros, respectively.)The DCFTA has already had resultsin terms of harmonization for the export of some agriculturalproducts. By 2016, Ukraine had authorized exporters to the EUin animal-product categories:fishery products, poultry meat,eggs, minced poultry meat, raw milk and dairy products (Ref 21).In terms of overall trade, the EUhas run a trade surplus with Ukraine since 2012, according to Eurostat data. That deficit was nearly 10 bn euros in 2013. It was 6.6 bn euros (USD$7.8 bn) in 2020.Since 2016, the increase in agricultural products exported to EU from Ukraine has helped to moderate Ukraine’s overall trade deficit, which was highlighted at the top of the section.In agricultural products, Eurostat outlined in an article of trade with Ukraine (Ref 6), a breakdown ofgoods was given. In 2020, the EU
had a trade surplus in machinery and vehicles. (6.1 bn euros), chemicals (4 bn euros), energy (0.9 bn euros), other products (0.3 bn euros) and other manufactured products (0.2 bn euros).
The EU had trade deficits in food and drink (0.5 bn euros) and raw materials (4.5 bn euros) – agricultural commodities will come under ‘raw materials’, since Eurostat follows the Standard International Trade Classification (SITC) that includes oilseeds, animal and vegetable oils.Ukraine’s tariff-free quotas into theEU for various products were increased from 2018, which partly explains the Ukraine’s increase in exports from 2017 to 2018 to EUas a region. The quota increaseswere significant – for example, barley quoted of 270,000 t was increasedby 345,000 t to 615,000 t.
The maize quota increased from 450,000 t by 675,000 t to 1,125,000 t. Wheat had a smaller increase from 960,000 t, up by 75,000 t, to 1,035,000 t. This explains the increase in those export values for maize and wheat from Ukraine to EU member states.There is still a long way to go in the full implementation of the DCFTA, so any final assessments should wait until the next time New AG International does a country focus on Ukraine. The main point at this stage is to be aware that it has an impact on the agriculture sector. And one key aspect is VAT. Harmonization of VAT with the EU is part of the DCFTA.
Taxing nature of VATIntroduced in 1992 in Ukraine, VAT replaced a Soviet-style turnover tax. It now forms around one-third of the government fiscal revenues.A special VAT rate was introduced for agricultural producers, lower than the standard rate. See the box ‘Special VAT regime and refunds’ for how this works in theory, but essentially it is a way of the government giving indirect support to farmers. The system was based on a refund system. However, refund arrears have become a major problem for various participants in the supply chain. VAT refund rules for grain changed several times in the period up to 2014 (Ref 17).The policy on VAT reimbursement and exemption was unclear and unpredictable, according to Review of Agricultural Investment Policies of Ukraine (Ref 13), published in 2015.
Uncertainty can still be seen some six years later. In 2021, the Ukraine parliament restored a 20 percent VAT rate on some agricultural commodities, saying the introduction of a 14 percent rate was a mistake and had increased the tax burden on processing industries, according to a Reuters news report (Ref 7).
The point about VAT is that only the final consumer is taxed. All the other participants buying and selling along the chain can claim back the amount of tax they have paid.With a special VAT system, some sellers don't have to pay back the VAT they added to their sales invoice to the relevant tax collecting agency. Typically, the VAT rate will be lower than the standard rate of 20 percent.Special VAT systems for the farm sector are common in many countries. As a consequence, farmers tend to generate a surplus in their VAT account, and therefore it is seen as an indirect method of support.Imagine the special VAT rate is nine percent for farmers. By way of example: when a farmer sells to the grain elevator under a special VAT regime, the farmer will add nine percent, or whatever the prevailing special rate is, to the invoice. Under a special rate system, the farmer keeps this nine percent whatever VAT they have paid for their farm inputs. Typically, the VAT payments on inputs are lower than VAT on outputs, so the farmer runs a surplus on the VAT account and makes a profit (Nivievskyi, Ref 16).When the elevator sells to a trader, the elevator adds 20 percent to the invoice. The elevator will reclaim a refund for the nine percent paid to the farmer. The elevator does not have an exemption like the farmer and will transfer the 20 percent to the tax authorities. The system of refunds in the Ukrainian context has in the past run into arrears.
Exporters and zero rate VATThe trader might decide to export the grain, and under this circumstance there is zero-rated VAT. Most countries follow this practice of zero VAT on exports. The trader will be refunded the 20 percent that was paid to the elevator, providing the trader can prove the grain was exported.
Problem of arrearsThe problem of arrears is elaborated on in detail by Oleksandra Betliy. Other sources will highlight how arrears can lead to downward pressure on farm-gate prices since buyers higher up the chain will want to reduce their exposure if they are waiting for refunds for any length of time."High fiscal pressure results in VAT refund arrears, which put additional pressure on agricultural producers in the form of lower farm-gate prices," states Betliy (Ref 17). ●
VAT rescueThe use of special VAT is allowed under EU rules and offers Ukraine a chance to stimulate activity is particular sectors.One of the balancing acts for the Ukrainian government is to support the agriculture industry while also deriving revenue from its activity.For example, policy makers have been looking at trying to stimulate the processing of oilseeds in Ukraine. In December 2017, a freeze (albeit temporary) was put on VAT reimbursements for exporters of raw oilseeds, namely soybean and rapeseed. This intervention is designed to stimulate domestic processing (Ref 1).“In practice, exporters of the raw oilseeds would be obliged to pay VAT to their suppliers but will not be able to claim VAT refund on export. Ultimately this might lead to reduction of prices and production volumes of the mentioned oilseeds.” (Ref 1).In terms of soybean and rapeseed production that doesn’t seem to have come to fruition yet.In the opening paragraph of this report, the target of Ukraine increasing grain output to 100 million t by 2020 was set out by Agricultural Minister Alexei Pavlenko in 2016. This has not happened. At the time, analysts said taxation reform would act against this target being achieved. Specifically, the VAT that grain producers had to pay had increased, and this would lower profitability and, presumably, this would act as a brake on large production expansions.
InvestmentAgribusiness investmentDirect investment across all sectors in Ukraine was around USD$35.8 bn in 2019, an increase on previous years which were flat around $32 bn. By direct investment, here State Statistics is referring to equity or share capital.For agriculture, this was $542 million in 2019. The amount has moved around in recent years (from $452 million in 2018 to $502 millionin 2015).But it has been higher – $777 million in 2013 (Ref 8).By comparison, the manufacturing industry would receive $11.6 bnin 2019.In 2019, the largest share ($293 million) was in annual and biennial crop production, with $171.1 million in livestock farming. The technology side, which might come under “other”, was $10.3 million.Capital investments – long-term assets by Ukrainian agribusinesses was 59 bn Ukrainian hryvnia (USD$2.2 bn).The proportion of that was 44 bn hryvnia into annual and biennial crops, which is where much of the export currency is derived.Storage capacity is seen as one area of investment. In 2016, Cargill and MV Cargo announced they would build a new grain terminal at the Black Sea port of Yuzhnyy (see map), with a total investment of USD$100 million. The terminal was constructed and started operations in 2018. “This [dredging of the water] will enable the new terminal to handle large vessels with a deadweight of up to 100,000 metric tonnes that the new facility will attract to the port,” Cargill stated in the original announcement in 2016. The extra annual capacity was reported as five million t per yearof grain.Investment will also be coming from IFC (see Irrigation section).
Farm structureUnderstanding farm structure in Ukraine requires a brief history lesson. But there is a relevance that is timely to the discussion as will become apparent on the section on land reform.When Ukraine became independent from the Soviet Union in 1991, all the
land was in state ownership. One of the main objectives of land reform at the time was to put it in the hands of farmers – ‘Land for those who work it’ was the slogan at the time (Ref 5).Effectively, farm workers became part owners of the enterprise in which they worked and were entitled to a small area of land through so-called land certificates. The Land Law in 1992 put a limit on the amount of land an individual could own – 50 hectares (ha) – and that individual had to be a Ukrainian national.However, further reform was needed by the end of 1990s, and actual physical land plots – not just a certificate – were given to individuals. Some seven million rural residents became owners of land, with an average size of 4.2 ha(Ref 9).
From 2001, a moratorium was introduced on the buying andselling of agricultural land. This meant there was no land market; land could only be rented. The moratorium has been renewedeach year for a one-year period.The moratorium does not,however, prohibit the renting of agricultural land.This is how the large ag companies have built up their land banks – by rent agreements with large numbers of small-scale individual landowners. The amount of rent paid is regulated by the State Service for Ukraine.By the end of 2017, the top 70 agricultural companies operated around six million ha, or 20 percentof arable land (Ref 1). Table 2 lists the top 10 agri-holding companiesby area.
The recent history of land ownership gives rise to the current farm structure.In 2019, around 23.2 million ha were rented from owners, 12 million ha cultivated by owners, 3.3 million ha rented from the state and 2.9 million hectares of uncultivated land (Ref 8).Corporate farms are referred to as “enterprises” and tend to be large holdings on leased land. According to one source (Ref 13), they number around 17,500 and account for about 60 percent of agricultural land.It can be seen from Table 2 that the top 10 enterprises account for 2.7 million ha. Only around 10 enterprises are bigger than 100 ha (Ref 8).By 2011, there were 79 large holdings operating on 5.1 million ha (Ref 13).Household plots tend to be over a small area as the name would suggest. “Small-scale farmers refer to households that are generally small and largely subsistence-oriented. In contrast with corporate and peasant farms, they are not registered legal entities.”There are 4.3 million small households averaging 1.7 ha. Despite primarily being used for subsistence, this category accounts for 30 percent of land and 48 percent of gross agricultural output (GAO) in 2011(Ref 9).However, it should be noted the majority of area designated for greenhouses is categorized as ‘household’ by State Statistics Service of Ukraine (see Greenhouse section).A third category that is referred to in the literature is family farms. Some of these can also be privately owned enterprises (Ref 9).
Land reformIt is timely that New AG International should be covering Ukraine for one of its regional reports.In March 2020, the Verkhovna Rada of Ukraine adopted the draft law No.2178-10 ‘Amendments to Certain Legislative Acts of Ukraine Regarding the Turnover of Agricultural land’ (Ref 8).This has paved the way for the launch of a land market in Ukraine, based on law No.552-IX. Since 1 July 2021, Ukrainian nationals will have the right to buy agricultural land. From 2024, legal entities will be able to buy land if the founders or ‘the beneficiaries’ are Ukrainian.
There will be some limits – one individual can own up to 100 ha, while a legal entity can own 10,000 ha. See opinions on what this land reform might mean for agricultural production from our academic contributors.
Production structureThe foundation of agriculture in Ukraine is crop farming, based on the production of grains and vegetable oil. In 2017, crop farming accounted for 72 percent of output in value terms, while animal husbandry accounted for 28 percent (Ref 1).Crop yields tend to be below those in the European Union and rest of world (ROW). FAO figures for 2016 give Ukraine an average yield of 4.2 t per hectare for wheat, against EU 5.3 t/h and ROW of 3.4 t/h. Maize for Ukraine is listed at 6.6 t/h, against EU 7.1 t/h and ROW 5.6 t/h (Ref 1).
Table 3 shows the area, production and yield for the top crops grown in Ukraine, and their corresponding percentage of the arable land. Wheat, sunflower and maize are the big three, by area and production volume. arley follows, and soybean has grown steadily in the previous decade.Agriculture trendsThree long-term trends seen in Ukrainian agriculture are the rise in maize production largely on the back of higher yields, the rise in sunflower area and production driven by export volumes, and the decline in sugar beet area and production. A more recent trend is the rise of soybean production.Charts 1 and 2 provide a graphical illustration of the first two long-term trends, and then there is a discussion on sugar beet.Chart 1 shows that the area in grains and legumes, indicated by the line, has seen modest growth overall since 1990. Although the overall area has not increased greatly, the yields have
increased steadily through the decades, indicating greater use of inputs and more efficient practices.
Chart 1: Sown area of grain and legumes combined from 1990-2020 and growth in yields, tonnes per hectare, right axis
Chart 2: Growth of sunflower area (000 ha) in Ukraine and yield (t/h) right axis.
The big increase in sunflower area is shown in Chart 2 – notice the blue line.
Ukraine has become the world’s number one producer of sunflower oil, and number two for rapeseed. This number one position for sunflower oil can be seen in the rise of the sunflower area since 1990. The area has grown by a CAGR of four percent. In contrast, the combined grains and legume area shown in above chart was a CAGR of less than one percent for the same time period.
When breaking down grain and legume data, it can be seen that the overall wheat area has declined, but yields have kept production close to historical highs.Within the grains data, there has been a massive shift to maize, demonstrated in Chart 3. The purple bar shows the growth in maize. The green bar also shows the growth in soybeans.
Chart 3: Showing declining production volumes of some grainsand the growth of maize and soybeans 000 tonnes
From Chart 3, wheat production has declined and re-bounded.Wheat area in 1990 was around 7.6 million ha, while in 2020 it was 6.6 million ha.
In other trendsThere has been a steep decline in sugar beet production in Ukraine, from a colossal 44 million t in 1990 to 14 million t by 2010 and 9.2 million t in 2020. Cherkasy, Khmelnytskiy, Poltava and Vinnytsya were the big producing regions,with Vinnytsya producing twomillion t in 2020.The loss of former Soviet Union markets from 1990 and limited international competitiveness has been cited as the reason for the decline (Ref 14). Furthermore, the economics of production have shifted: “Sugar beet production offers the lowest level of profitability compared to other crops,” according to USDA FAS in 2019 (Ref 4).
Fruit trendsWhen looking at fruits and berries combined, the area of bearing age stock has declined since the year 2000, from a total of 378,000 hato 191,000 ha, a decline of nearly50 percent.However, during that period, production has increased from 1.45 million t to 2.02 million t in 2020, an increase of nearly 40 percent. So, what has happened here? It is necessary to break up this category.Apple and pear production is one example of where the area has declined in the past 20 years, but production has increased.The apple area is down significantly, from around 227,000 ha in 2000 to 85,000 ha in 2020, while production has increased from 648,000 t to 1.1 million t during the same period.The area for cherries has declined but production is holding level. Both apple and cherry indicate that cultivation practices have managed to increase yields while working off a lower area.Area for peaches and apricots has also declined but yields too have increased. For peaches, yields have increased from 2.6 t/ha to 6.4 t/ha, while the increase in apricot yields is more moderate, from 8.8 t/ha to 9.3 t/ha.Strawberry is another example of where the overall area has declined, but yields have increased.So, a common theme in fruits and berries is that growers are getting more production from less land, either because of more inputs or cultivation techniques.
Grapes squeezedA major story around Ukraine’s fruit production has been the decline of grape production, which has declined since 2000 by around 62 percent, from around 100,000 ha to 37,000 ha.Yields have held up, but not enough to stop a marked drop in grape production. One news story in 2019 highlighted that Ukraine’s production of grapes had fallen to a record low since independence in 1990, according to Ukrainian Agribusiness Club Association (UCAB). The report cited a record low production of 124,000 t, and a large decline in wine volume.
Cracking the walnut marketUkraine is a large walnut producer and exporter, and the crop is grown in several regions across the country (see regional section). Although the area has declined slightly in the last 20 years – from 15,100 ha to 13,400 ha – the yields have increased from 3.3 t/ha to 8.1 t/ha in 2020, and have even been higher in intervening years.
VegetablesWhen it comes to vegetable production, Ukraine produced around 9.7 million t of vegetables in 2020, covering around 457,000 ha. This excludes potato, which adds another 20 million t of production. Ukraine is the fifth largest potato producer in the world, behind China, India, U.S. and Russia. Despite its great production volumes, however, Ukraine is not a potato exporter. There is high consumption per capita, and according to International Year of the Potato, a large part of the crop is lost each year to pests (mainly the Colorado potato beetle) and inadequate storage.
Regional breakdownFirstly, something that readers might not know: Ukraine is a large producer and exporter of honey. With around 2.6 million honeybee colonies, Ukraine’s honey production was 69,900 t in 2019. Zhytomyr is the largest producing region, with three other large producers being Khmelnytskiy, Mykolayiv and Dnipropetrovsk (Ref 8).Exports of honey go to various destinations: in 2019, Germany was largest importer with 12,300 t while Poland imported 11,800 t. Many other European markets import Ukrainian honey, with around 3,900 t going to the U.S.Two of the big crops, barley and wheat, are grown in most regions of the country.The top five productive wheat growing regions in 2020 were in Kharkiv, Zaporizhzhya, Dnipropetrovsk, Kherson and Donetsk, mainly in the east of the country (see map).
Kharkiv is high on yield too, reaching 5.1 t/ha in 2020. But other regions tend to outperform it, such as Sumy, Vinnytsya, Khmelnytskiy and Ternopil.When it comes to barley, Odessa has historically been one of the highest producing barley regions. Mykolayiv was the largest producing region in 2020, followed by Dnipropetrovsk, and Kherson. The region of Lviv, although not a large producing region, has one of the highest yields, at 4.4 t/ha.Maize – a crop that has increased in volume – is grown in many regions too. There has been a significant increase in maize production in the region of Chernihiv since 2010, posting the highest volume in 2020 with 4.3 million t. Growth in production volumes is also seen in Poltava, Sumy and Khmelnytskiy. Poltava is another region that has increased in maize production in the last decade with 3.6 million t, while Vinnytsya has increased to more than 2 million t in 2020. The regions with the highest yields are Ternopil, Volyn, Khmelnytskiy and Vinnytsya, with yields being close to 9 t/hafor 2019.
Sugar beet production has been in decline across the regions. From 44 million t in 1990 to 13.2 million t in 2000, production stands now at around 9.2 million t. Declines have been seen in Cherkasy, Vinnytsya and Poltava. It is assumed that some hectares have been switched to maize. Vinnytsya was one of the largest regions, and – as mentioned above – still produced 2 million tin 2020.
Sunflower, similar to barley and wheat, is grown across many regions. Production has increased significantly in the last decade, from 6.8 million t in 2010 to 13.1 million in
2020. Kharkiv was a key producing region that has grown from around 450,000 t in 2000 to around 1 million t in 2020. Kirovohrad and Dnipropetrovsk are 1 million t/y regions too.Potato production has increased in recent years, with the largest centres of production in the north and west of the country. Vinnytsya and Zhytomyr are two of the largest producing regions.
When it comes to vegetables, a few regions dominate. Kherson produced around 1.3 million t in 2020, followed by Lviv with around 800,000 t.Cucumber yields vary across the regions (cucumber and gherkin production): from 13 t/ha in Lviv to 40 t/ha in Kherson.
Tomato growing in Ukraine is dominated by five regions; Kherson is the dominant region with Mykolayiv also significant.The big fruit and berries regions are Vinnytsya and Chernivtsi.Apple production is centred in Khemlnytskiy and Vinnytsya regions.The big producing regions do not always have the highest yield – some of the smaller ones have higher yield. A good example of this is Poltava.Plum growing has increased in volume. The largest producing region by some distance is Khmelnytskiy. One of the highest yielding regions for plums is Rivne, which is home to fertilizer producer Rivne Azot, the only CAN producer in Ukraine. The highest yielding region for plums is Poltava. Both Rivne and
Poltava have shown an increase in production volumes since 2010.Cherry is another example of where area has decreased but production volumes have remained stable, or increased slightly, indicating improved practices and possibly greater use of inputs. The highest yielding region for cherry is Odessa. It is also the largest producing region by some margin. Rivne is one of the high yielding cherry production areas.Apricot production seems to be variable; 2018 was the highest in some years at 111,000 t, close to the volume produced in 2000 at 102,000 t. Ukraine is not a major exporter of apricots, so most production is for domestic consumption.The production volumes of both apricots and peaches have declined, along with the areas.
Regarding peaches, Odessa is the largest producing area with around 6,000 t out of a national total of 17,000 t in 2020.The strawberry area has remained flat since 2000. Productivity has increased, reflected in the higher yields. Zhytomyr and Kyiv are the dominant strawberry growing regions.Raspberry and blackberry production have increased productivity, with volumes increasing from a similar area from 2000 onwards. The increasing trend line for yield reflects this production increase in the previous 20 years. The key producing regions for raspberry and blackberry are Zakarpattya, which borders Romania, Hungary and Slovakia. Large volumes are from Kyiv, Donetsk, Dnipropetrovsk and Karkiv. It’s on yield that Zakarpattya stands out – 13 tonnes/ha – while Kyiv was about 7 t/ha, according to the 2020 data.
Walnut production has increased, with the area stable. Higher yields have been achieved and walnut is produced widely in the country. Production tends to be on private farms. In 2020, highest production was in Cherkasy, closely followed by Khmelnytskiy, Chernivtsi, Zakarpattya, Donetsk and Dnipropetrovsk. Cherkasy production volumes have increased notably since 2000, growing from around 1,200 t to 11,000 t for 2020. Dnipropetrovsk has reached similar high volumes to Cherkasy in previous years. Only the U.S., Mexico and Chile export more walnuts than Ukraine, according to Fruit-Ukraine.org.
Ukraine’s vineyardsVineyards are found mainly in areas bordering the Black Sea, such as Odessa, Mykolayiv and Kherson, and also in the western region of Zakarpattya.
As mentioned above, the area has declined since 2000 by around 62 percent, from around 100,000 ha to 37,000 ha. Yields have held up, but not enough to stop a marked drop in grape production.Poltava and Kirovohrad have the highest yields, closely followed by Dnipropetrovsk. The largest producing region for grapes is Odessa, but it has lower yield at around 7 t/ha. Odessa is the main producing region for sparkling white wines.
Decreasing grape production has led to a reduction in Ukraine wine production. The decline has been attributed to drought and diseases, according to Ukrainian Agribusiness Club Association.
Irrigation in UkraineUkraine's irrigation infrastructure operates at just one-quarter of its potential capacity, according to the International Finance Corporation (IFC), part of the World Bank Group, in a statement in September 2021.“In a move to increase private sector participation for an inclusive and climate-resilient agricultural sector, IFC and the Ministry of Agrarian Policy and Food of Ukraine have signed a memorandum of understanding (MoU). Attracting private sector investment and expertise will help modernize and expand the country's irrigation and drainage sectors,” noted the statement.Irrigating one million ha of land in southern Ukraine, the country's warmest and driest region, would require USD$2 bn of investment, according to the World Bank.The percentage of arable lands that receive irrigation is low – around two percent, only around 400,000 ha, if we take the total area of key crops (25 million t).In Table 6, the percent of irrigated area against total sown area for the main crops is shown. The area of grains and leguminous crops that is irrigated is 188,000 t or one percent of total area for 2020. For grapes, notice that there is a higher percent of total area irrigated, at 11 percent.
Biological productsWith the growth of soybean production in Ukraine, it is unsurprising inoculants are one of the most widely consumed biological products in the country. Inoculants are also applied to maize and wheat according to Stoller Ukraine (see below).Indeed, when it comes to biofertilizers, DunhamTrimmer rates Ukraine as being the second largest market in Europe, after Russia.Although difficult to quantify, biological products that speed up the rate of stubble decomposition (sometimes referred to as cellulose destructors) is a large market in Ukraine. Biopolymer products to prevent pod-cracking of rapeseed are also available and reflect the large rapeseed area.A recent academic research paper (Ref 18) surveyed farmers in Ukraine and found an interest in using biofertilizers. The paper defined biofertilizers as including products by specific microorganism (rhizobium, azotobacter, azospirillum); products based on algae, phosphate solubilizing bacteria, mycorrhiza; and by technology type, such as liquid biofertilizers or seed coating. In the conclusion, the paper postulated that demand was currently higher than the market could supply.In terms of consumption by region, the area of land treated with ‘biological products’, which could mean inoculants but also other biostimulant/soil products, is highest in the following four regions: Kyiv 10 percent, Poltavska 13 percent, Khmelnytska 12 percent and Cherkasy 11 percent, according to Pro-Consulting, a Ukrainian consultancy specializing in the Ukrainian economy and its sectors.It is no coincidence that Khmelnytska is the largest producer of soybeans (around 320,000 tin 2020).Some of the large enterprises have adopted the use of biological products. One local source said one of the large agri-holding companies treats around 500,000 ha with biological products.The market for biological preparations has grown between 2015 and 2020 from around 650 t to 7,000 t of product, according to Pro-Consulting.The market share of segments has also changed in recent years. Inoculants comprised around 50 percent of the market, with biofungicides at 35 percent, bioinsecticides at eight percent and stubble decomposers at six percent in 2018. By 2020, biofungicides had moved to the dominant position with 63 percent of the market while inoculants were at 30 percent, according to Pro-Consulting. From 2018, there was a significant jump in the domestic manufactured volumes, from around 1,800 t to the 7,000 t. These estimations suggest there has been recent investment in production capacity, particularly in biofungicides.
The Italian biologicals company Valagro, now part of Syngenta, launched its biostimulant product YieldON in Ukraine in 2017 at Grain Tech Expo in Kyiv.
Some research institutions are also involved in product manufacturing
and sales. BTU-Center is one example (see interview). Another is the Zabolotny Institute of Agrobiology and Virology in Kyiv, which commercializes nitrogen fixation products.Another company, Cherkasy Biozakhyst, is based in the agriculturally strong region of Cherkasy, which has a major fertilizer producer based in the region (see fertilizer section) and can produce around 250,000 t of soybeans.Cherkasy Biozakhyst produces biocontrol products, including macros such as trichogramma, and biofertilizers (phosphate mobilizing bacteria, nitrogen fixation for soy and other legumes). The company website says it biological products are used in 18 regions of Ukraine on an area of more than 500,000 ha.Mineralis Ukraine (not to be confused with mining company Minerals Ukraine) is a domestic manufacturer of liquid micronutrient products, as well as inoculants, biopolymer products to prevent cracking of pods for rapeseed, a bioinsecticide product (Scarado-M), biofungicide and cellulose destructor.ENZIM is a large producer of enzymes and biological actives, stating an annual capacity of 4,500 t on its website. ENZIM Group is located in Ladyzhyn, Ukraine, which is in the region of Vinnytsia, a large maize and potato producing region. Established in 1970, the company has an agriculture unit, ENZIM Biotech Agro, selling inoculants, biostimulants, soil improvers, complex fertilizers and biocontrol products in the form of bioinsecticides and biofungicides.A number of companies in Table 7 are importers. Founded in 2005, Agritema imports a range of biological products from various partners, including Van Iperen and Lallemand.Agrosem, a large inputs and machinery supplier in Ukraine, lists biopreparations on its website. Agrosem is a distributor of Yara fertilizer products, and has a central office in Kiev, with regional offices in Volyn, Khmelnytskyi and Lviv.Summit Agro Ukraine supplies biostimulants and biocontrol product (Bestcure – biofungicide against gray rot, using citrus aurantium L., citrus reticulata as active ingredient).In July 2020, Stoller Ukraine announced that Groundwork BioAg, Ltd. and Stoller Ukraine had launched Rootella mycorrhizal inoculants in Ukraine. Rootella products were registered for commercial use by the Ukrainian Ministry of Agrarian Policy and Food in 2019. Stoller Ukraine says it has built a customer base that is applying Rootella for a second consecutive year on row crops such as maize, soybean and wheat.Vitagro states on its website that it provides agricultural producers with inoculants, mycorrhizal products and microfertilizers.
BiocontrolBiological crop protection in Ukraine was estimated at five percent of the crop protection market in 2020 by one local source.When it comes to conventional crop protection, the usual companies are active in the market. One reference gives the conventional market share for 2019 as follows: Bayer (17 percent), BASF (16 percent), Syngenta (16 percent), Corteva (10 percent), Adama (7 percent), Agrohimtech (3 percent), Defenda (2.6 percent), Green Express (2.4 percent), Terra Vita (2.1 percent) and UPL (1.8 percent) (Ref 8).In terms of crops and volumes of pesticides, the big field crops are the unsurprising recipients. Sunflowers received 7,100 t, the highest. Then corn, wheat, soybean, rapeseed and sugar beet.Published in December 2020, an academic paper said Ukraine had 13 companies producing biocontrol products and “268 insectaries to grow insect predators and produce entomopathogens. As the Ukrainian economy generally declined beginning in 1991, 40 percent of the beneficial insectaries were shut down and have not been restored.” (Ref 18).
Talking to me from the company’s headquarters in Kyiv, BTU-Center’s head of international sales Dmytro Yakovenko has a map of the world behind him. There are pins in the countries where the company is currently selling products. One is in Kazakhstan. Yakovenko says the company has been doing business there for around three years, and he himself has made several trips there.
“Kazakhstan has very specific conditions. Dry weather, and low yields,” said Yakovenko, adding the company sells inoculant seed treatments in this market, which he notes are relatively inexpensive. Pricing is all important for agricultural inputs, where pesticides are often viewed as too expensive.The company currently exports to 15 countries, and Yakovenko is keen to have more pins in the map in the coming years.
Company structureSo, who is BTU-Center? Members of IBMA might be familiar since it is the only company from Ukraine to be a member.Founded in 1999, BTU-Center is a private family-owned business comprising three core segments. There is the agricultural side, which produces biofertilizers, seed treatments, PK mobilizers, biostimulants and biocontrol products. Other agricultural products include probiotics, silage additives and products for composting. The company began agricultural research in 2005 and launched its first products in 2007. In total, the company has some 66 products registered in Ukraine.There are two other main segments to the business: the medical side produces dietary supplements, while the third segment – and indeed the founding segment in 1999 – is the unit producing soil bioremediation products for cleaning up oil pollution.
Product mixYakovenko says the company’s facilities have a capacity of 10,000 t/year of microbial products, which is applied on 4 million hectares spread across Ukraine and its export markets. Around 57 of the products are registered as organic.The company’s biological products include inoculants, biostimulants, complex and soil fertilizers, insecticides, fungicides, mycorrhiza, products for soil residues decomposition, adhesives and preparations for cattle farming. Approximately 75 percent are biostimulants and biofertilizers, with biopesticides forming the remaining 25 percent.The company’s portfolio is distributed to the agrarian market through its own representative network. For the hobby market (household growers), the company sells through retail shops.The first agricultural products were Azotofit, a biostimulant, and Fitocid, a biofungicide, launched in 2007 in Ukraine. Azotofit is now marketed as Azotohelp in the EU and European markets.The company has six products registered for sale in the European Union – five of them are certified for organic, of which one is in progress.Country networkWhen talking about company turnover, Yakovenko said that biologicals consultancy DunhamTrimmer estimates that 75 percent of the industry have a turnover of less than USD$10 million. Yakovenko indicates that BTU-Center would be in the other 25 percent.
In terms of sales by sector, 70 percent would be to agriculture, often directly to farmers through the company’s extensive network of regional partners. Around 10 percent of sales are to the hobby market while 20 percent of sales are for export. Of those sales, 90 percent are concentrated on conventional agriculture, with 10 percent on organic.Organic area accounts for one percent of Ukraine’s arable land, according to Yakovenko, or roughly 450,000 ha.Regarding market share in Ukraine, BTU-Center supplies around 28 percent of the agrarian market, and 25 percent of the organic market. “We still have ambitions to get up to 50-60 percent of the agrarian market,” says Yakovenko.When building its network in the early days, Yakovenko says the company conducted trials around the country, working with many academic institutions. The company also works with Kernel, one of the largest agribusiness companies in Ukraine with around 500,000 ha under its management.Production and researchBTU-Center has four production lines in Ukraine. “Many products are in liquid formulation and need cold storage,” says Yakovenko. The company has cooling warehouses, as well as a fleet of trucks with refrigeration.With large customers, the company will deliver directly to field. The company is also set up to do contract production.In 2019, the company opened the Institute of Applied Biotechnology as a separate business unit, with 20 scientists including 10 PhDs. The institute houses the strains collection and various laboratories, and works closely with other independent agricultural research centres throughout Ukraine.The company is active to raise awareness of biotechnology. Yakovenko says the company typically holds around 60-80 events each year in Ukraine to provide education on biological products. As part of this effort, the company has also commissioned a short lecture series on YouTube called Simply about Microbes with senior microbiologist Volodymyr Krut.One presentation includes an overview of biocontrol, such as how Coniothyrium minitans – a hyperparasite fungus – can fight the plant pathogenic fungus Sclerotinia sclerotiorum.In the pipelineDeveloping international business is a core part of the company’s strategy, says Yakovenko. And development has been rapid so far. Going back only four years, it was Yakovenko on his own, now it is a team of eight.
The company has a representative office in Germany, and a partnership network of 25 countries.In terms of future product developments, Yakovenko cannot elaborate too much but says the company is reviewing different market requests. “Farmers require from biological products maximum stability, ever improved formulations, including dry ones, steady and proven effectiveness, ease-of-use and solving of traditional problems, with biostimulants and biocontrol, and new problems in the field, such as bioherbicides and bionematicides, with an optimal price,” he elaborated.“One of the latest developments is a line of so-called biological destructors, used for decomposition of plant residues and soil recovery. This year BTU-Center has launched five different varieties of Ecostern biodestructor, developed to show maximum efficiency in a number of different field conditions, such as in drought and in heat, in no-till technology and on polluted lands.”The company continues to gather statistics on its products. With Groundfix, for example, this potassium/phosphorus mobilizer is applied to around 100,000 ha in Ukraine. The company is continually building its data on the product, and says it is able to demonstrate that the extra yield exceeds the cost of application. This one product alone has been tested 67 times on various crops. It is typically used with an application rate of three to five litres per hectare.
And finally, BTU-Center is also actively involved in precision agriculture. The company is using drones to monitor fields, and Yakovenko says some of its customers are using drones to apply their products. BTU-Center has its own drones used by agronomists for field surveillance, which they also combine with satellite images, confirms Yakovenko. ●
BTU-Center’s Head of International Sales Dmytro Yakovenko in Kyiv office.
Regional Report - Ukraine continues in the next section.
BTU-Center is using drones to monitor fields, and some customers are using drones to apply the company’s products.
Agriculture is particularly important to Ukraine when it comes to foreign trade, forming around 44 percent of exports by value in 2019.
The Ukraine is routinely the number one exporter of sunflower oil.
Following independence in 1991, ‘Land for those who work it’ was the slogan at the time for land reform.
Plum orchard, Ukraine
Legislation in March 2020 paved the way for a land market in Ukraine.
The area for cherries has declined but production is holding level.
Main crops grown in regions (2020 Ukraine stats)
Sunflower production has increased significantly in the last decade, from 6.8 million t in 2010 to 13.1 million in 2020
Odessa is the largest peach producing area with around 6,000 t out of a national total of 17,000 t in 2020
Table 7 provides a selection of companies active in the biological space in Ukraine. The table includes both domestic manufacturers and importers.
Sugar beet harvest. Ukraine
The company’s facilities have a capacity of 10,000 t/year of microbial products
One of the latest developments is a line of so-called biological destructors, used for decomposition of plant residues and soil recovery.
