The breadbasket of not only Europe. How to live Ukrainian farmers

Житница не только Европы. Как живут украинские аграрии

2018 for farmers became in many respects a record

Ukrainian farmers are getting record crops, conquer new markets and acquire new technologies. And how is it all possible, despite the financial crisis, the war in the East and price fluctuations in the world markets?

Agriculture is one of the few industries in Ukraine, which even in a crisis, showed growth. Moreover, the agro-industrial complex was transformed over the previous five years, which was the country really a shock, writes Paul Kharlamov at No. 5 Magazine Reporter.

The share of agriculture in GDP of Ukraine has reached 18%, and total exports of Ukrainian agricultural products in 2018 amounted to $18.8 billion According to Prime Minister Vladimir Groisman, the agricultural sector brings to the country 40% of foreign exchange earnings. This is ahead of the industry — previous export locomotive.

But we cannot say that farmers ride like cheese in oil. Three years ago they took away the part of the tax benefits. Ukrainian banks ready to lend, but the stakes are such that the loans are too expensive. Budgetary support to the farmers hard, especially the smaller ones. Export? In external markets for Ukrainian products are not always welcomed with open arms. However, the rapid growth and harvest, and exports. Where’s it from?

EU OPENS DOORS

The most significant event of recent years, undoubtedly, was the signing between Ukraine and the European Union Association Agreement (AA). The first paragraphs of SA, concerning the establishment of a free trade area came into effect on 1 January 2016, and all the rest — from 1 September 2017.

The main advantage, which has received the farmers from the Ukraine, is the opportunity to export their products to the EU without duties. Yes, the agreement does not provide for immediate liberalisation, but after its entry into force, a large part of the duties on exports of Ukrainian agricultural products were removed.

In addition, there are quotas on duty-free supply of certain commodity positions in the EU. The basic annual quota for lamb is about 2 thousand tons of honey — 5.6 thousand tons, sugar — 20.1 thousand tons of beef — 12 thousand tons, pork — 40 thousand tons, wheat — 1 million tons, corn — 550 thousand tons. In addition, there are additional allowances that become effective after exhausting main.

For some types of products — sugar, honey, corn, grape and Apple juices — all farmers choose the quota in a matter of months, if not weeks. Other commodities quotas has been used for a year and half more (see table).

In the end, SA had a positive impact on exports: exports to the EU grew from $4.7 billion in 2013 to $6.3 billion in 2018. That is 1.3 times. A lot.

Farmers learn not only the EU market. Two more large region willing to eat Ukrainian food Asia and Africa. For example, in 2018, the farms sold to China goods worth $1.1 billion, Egypt — $889 million, Turkey — $801 million, Saudi Arabia $589 million Growing exports to Tunisia, Indonesia, India, Israel and United Arab Emirates.

The main products that are exported to these countries, grain and sunflower, milk and milk products, meat and meat products, sugar, vegetables and eggs.

In addition, from 2017 Ukraine exports flour to South America, and in 2019 began to put walnuts in Japan.

MEET RECORDS

Generally, 2018 for farmers became in many respects a record. Was harvested the largest in the history of independent Ukraine the grain harvest. Farmers for 2018 threshed 70.1 million tons. The previous record was fixed in 2016 — 67 million tons. For comparison: in 2012-2015 Ukraine collected 43-64 million tons of grain.

Furthermore, our country holds the first place in world production of sunflower and is among the three largest exporters of sunflower oil. According to the State statistics service, in 2018, collected 14.2 million tonnes of sunflower seeds, which is 16% more than in 2017. At the same time increasing production and other oil-bearing crops: the harvest of soybeans in 2018 rose by 14.4%, of rape — 25.1%.

Also, Ukraine is in the top ten world leaders in the production of corn. In 2018 for the gathering of this crop also set a record: 36 million tons, which is 50% more than in 2017.

Rapidly developing in Ukraine berry and nut business. In 2015 the production of berries has increased more than 2.5 times. Berry is strawberry, black currant, strawberry, raspberry and BlackBerry. The export of berries in four years has grown almost in 20 times. At the same time in 2018 compared to 2017 shipments of frozen berries outside Ukraine increased by 30%. Walnut production in 2018 increased by 30% — to 120 thousand tons, and exports of nuts, according to the Ministry of agrarian policy and food, in 2018 increased by more than 80%.

You can be proud of their achievements and Ukrainian beekeepers. Ukraine — the largest producer of honey in Europe and the fifth in the world. As calculated in the Cabinet, annually produces over 100 thousand tons of honey, which is about 6% of world sales of this product. And the scale of exports of honey Ukraine is in the top three, behind only Argentina and China.

There are successes even in the most challenging industry in livestock. The poultry producers have set in 2018, double the record volume of production, which increased by 12.2%, and the volume of its exports, which grew by 17.5%. Increased production of pork and beef — 4.8% and 1.9% respectively, although the number of cattle in 2018 decreased by 4.3%, pigs — 2%. But the number of poultry rose by 2.9%. How so, the number is almost not growing, but the growth of meat production tangible? It is obvious that increasing production efficiency, especially in poultry.

Although pork production is still very difficult — a few years ago across the Russian-Ukrainian border in the East of the country in Ukraine came atypical swine fever (ASF). The disease is not dangerous to humans but fatal to pigs.

It hurt a pig-breeding business and not only. And forcing the government to allocate significant amounts to combat the spread of ASF.

Житница не только Европы. Как живут украинские аграрии

 

NOT QUANTITY, BUT QUALITY

The conquest of other markets is not without difficulties. The main obstacle for Ukrainian farmers on the way to the European Union — quality standards. And with this many manufacturers of the problem.

The fact that by signing the SA, Ukraine agreed to certain conditions. Namely, agricultural enterprises will have to bring the quality of their products to the requirements applicable in the EU. Through the introduction of management systems to food safety through harmonization of various technical regulations on the hygiene of foodstuffs, the labelling of organic products, and on packaging and packaging waste.

In Ukraine is very lame the effectiveness of the system of sanitary-epidemic control in the food industry. Therefore, our country is obliged to implement in their legislation provisions 250 legal acts of the EU in the veterinary and phytosanitary fields, to introduce new standards.

For example, from 1 January 2019 in force the ISO 3662: 2019, raw Milk cow’s. Specifications. It provides that in food production in 2020 will only be used extra, higher and first grade milk.

Will be strengthened requirements on the concentration of pesticides and agrochemicals in plant foods, to the contents of mycotoxins (the waste products of microscopic fungi resulting from the storage of food products), phytosanitary measures that affect plant health, to the contents of different flavors and enzymes.

To follow all these requirements required a considerable investment in upgrading of production, purchase new equipment, introduction of advanced technologies. And not all companies have the money. Here and there incidents.

In January 2016, the EU suspended imports of honey from Ukraine. It happened after the Ukrainian honey, which was exported to the Czech Republic, has been found antibiotics, the use of which in the EU is prohibited. And in December 2016, the EU has suspended deliveries of Ukrainian poultry meat due to avian influenza outbreaks in the Kherson region.

However, stringent requirements for agricultural products makes not only the EU. High-quality and safe products everyone wants and Saudi Arabia, and Japan, and Malaysia, and Singapore.

COMPETITION BUDGETS

Agriculture is not enough state support. The EU is actively subsidizes domestic producers. This gives them a margin for competition in both domestic and foreign markets. A simple example: Poland after EU accession in just two years (2004 and 2006) received approximately 166 million Euro investment in the development of agriculture, the lion’s share of which were directed to modernization and development of the dairy industry. In result, today Poland is in the top 5 largest milk producers in Europe.

The Cabinet of Ministers of Ukraine in 2017, has launched a program of subsidizing farmers. But first, she replaced eliminated the preferential VAT. Agricultural enterprises had the possibility to pay VAT to a special account and then the same amount to use for their needs. In 2017 they have that opportunity taken away. Second, across the entire APK, which, we recall, generates about 18% of national GDP, the money spent by the state for farmers — a drop in the ocean.

In 2017 in the framework of the government programme was allocated UAH 5.5 billion, in 2018 — 6.4 billion UAH, in 2019 there will be about 6 billion UAH. For comparison, the total EU budget for the financing of agriculture, more than 400 billion euros. As they say, feel the difference.

In addition, the access of Ukrainian enterprises to the state support and concessional loans is very limited. The paradox, but of the government subsidies a large part of the large manufacturers, not medium and small-sized farmers who need them most. In 2019 for the financial support of development of farms painted 800 million UAH, and on their concessional lending — a total of UAH 200 million. Moreover, due to the complex and non-transparent procedures of allocation of funds, even those budgets are being developed from scratch. Of UAH 1 bn in 2018, farmers received less than 50 million UAH.

The solution? To look for investments outside of Ukraine. But here too not all is simple: investors are reluctant to invest in a country with an unstable economic and political situation. According to the Ministry of agrarian policy and food, the total cost of investment projects at the beginning of 2018 was estimated at 41.3 billion, a year earlier to 27.9 billion UAH. That is the year APK has received 13.4 billion UAH, which does not even reach $500 million.

If according to the Food and agriculture organization of the United Nations (FAO), over six years (2012 to 2018) investment in agro-industrial complex of Ukraine about 1 billion euros. And this is a total of 160-170 million euros a year.

PLOW, SOW, REAP

Domestic farmers lose heavily to the companies from other countries in terms of mechanization and automation. The percentage of manual labor in agricultural sector of Ukraine is still high. And that means that the cost of production higher. However, farmers recently started to actively develop modern and “smart” technology. To apply in their work drones, GPS-navigation, a variety of sensors to monitor crop and animal health.

But investing in smart farming can afford mainly large agricultural holdings, as small farms are concerned where to get money to buy machines and units for processing of fields and harvest.

Domestic agricultural machinery, had once been one of the largest in the former Soviet Union, almost ruined. For example, Kherson machine-building plant, which in 1997 released the first Ukrainian Slavutych combine harvester, once on the verge of ruin, in 2018 began to gather harvesters Skif from Finnish components. The story of Ukrainian harvesters over. Plant Lvovselmash, founded in 1945, were among the leaders in the production of sprayers, cultivators, rakes and selkhozinvest. In 2016, the company went bankrupt.

Was barely saved investors Kharkov tractor plant. But in the 1980s, the enterprise annually produces up to 70 thousand tractors and exported them to 36 countries. But in 2016, the production stopped. And only after the Corporation Oleksandr Iaroslavskyi has paid wages to employees and have invested in the company of UAH 150 million, and work resumed. But the production volumes have not “Soviet”. In 2017-2018, Khartsyzsk pipe plant has produced about 1,600 tractors in 2019, plans to produce 1,000 cars.

The Cabinet, by the way, in 2013, promised to launch a program to support the domestic industry (including manufacturers of agricultural machinery) and spend over 55 billion UAH, including by attracting private investment. But the practical implementation is not reached.

Yes, 680 million UAH are budgeted in 2019, nudesonline the acquisition by farmers of agricultural machinery and equipment. But this is a paltry sum when you consider that the depreciation of fixed assets in agriculture is 70-80%, and every year farmers spend on machinery up to 3 billion UAH. In addition, budget support only applies to machines in which the share of the Ukrainian component is 55-60%. If you consider that many businesses have switched to semi-knocked down Assembly of foreign models, the choice of technique will be extremely limited.

That is why many farmers are buying used tractors, combines and plows foreign production — John Deer, AGCO, Claas, Horcsh. According to farmers, even 10-20-year-old imported cars are generally more reliable than Ukrainian analogues, which, moreover, is almost there.

AN INSIDE LOOK

Ruslan Kramarenko, the owner of the farm Kramarenko Garden

Every year Ukrainian agriculture significantly expanded markets and geography, and the number of enterprises that obtained the export right. But for our producers is a separate challenge and a significant investment, because the products must meet the standards. Now a well developed export of poultry meat and products, milk, meat, fodder. In relation to berries is still difficult to compete with Poland, but I see a great potential for development of this direction in Ukraine. To be medium businesses in agriculture is very difficult — a major retail doesn’t work with small suppliers and large suppliers to buy products at very low prices. And if truly to invest in care, in technology, in good people, the margin is very small. Therefore, small and family farms can only live if themselves sell their product. Someone delivers it to regular customers, someone is trading on the markets, someone is developing its own brand.

Yaroslav Movchun, co-owner of the berry farm Ozeryana

To sell in the EU they want, arguing that the desire to “sell the currency”. But a place in the sun will get not everyone. Naturally, Association is a plus, but even if we have free trade with the EU, it does not mean that Ukrainian producers will be able to hit the European market. To create a business that will produce products — not equal easy to sell the same berry in the EU. Because the requirements are more than high, and most of the manufacturers thinks that it is very simple: “Put, get certified, and buyers will not rebound”. Fact — exports is growing and fast. But we must remember that the countries where we export, will begin to defend their markets. And strikes the poles against the Ukrainian raspberry direct proof.

Maria Kolesnik, head of analytical Department of the AAA consulting company

In my opinion, most branches of agriculture in Ukraine still have good prospects. As the production of grain and oilseeds and the cultivation of fruits, nuts and berries. The question of efficiency and markets. So, if the national average barley yields 35 t/ha, and in particular farmer it some years does not exceed 16-20 kg/ha, meaning in the cultivation of the culture there. However, if we engage in the production of costly and perishable product (for example, berries), without an established marketing and it is desirable not only within the country, its development prospects are very vague. Increasing demand for products labeled “organic.” This niche is not fully occupied, the market itself is growing. So if you have a really clean and quality product the possibility of entering him in both domestic and foreign markets very good.

Olga Trofimova, acting Minister of agrarian policy and food

Since the entry into force of the Association Agreement between Ukraine and the EU, the EU immediately cancels import duties on 83% of agricultural products. The total number of tariff lines — 2.262. From immediate liberalization is at 1.848 tariffs; free trade in the framework of input prices (some vegetables and fruits) is introduced in 28 tariffs; liberalization 45 tariffs on fish products lasts from three to seven years. Another 341 the most sensitive commodity quotas. For its part Ukraine immediately simplifies trading only 35% of agricultural products, and is 866 tariff lines. At 1.279 types of products will be a transitional period from one year to seven years, and at 242, the fee will be reduced during the transitional period. Quotas relate to 73 of the most sensitive tariff lines. The EU uses three items of tariff quotas for importation to Ukraine of their products without import duties, and Ukraine — about 40 positions for the export of agricultural and food products within the quota to European markets. Therefore, imported European food products do not have a negative impact on our domestic market, while Ukrainian producers have access to a huge sales area.

Valery Yakovenko, co-owner Drone.ua

Technology smart farming, precision agriculture or IT in agriculture is a trend not only in Ukraine but all over the world. It is not some particular technology or methodology works in agriculture, a set of different tools that allow you to increase the efficiency of agricultural production, reduce the cost of processing crops, etc.

But if in Ukraine all the innovations aimed at solving the problems of security and reduce theft at enterprises, in the world of smart-farming look very different.The main capital of the farmer is the land. So when we think about the family farmer, which is the fifth generation handles the same thousands of acres, it is the preservation of this asset is paramount. In this direction the main tool — knowledge of their fields. In the last few years it also becomes a tool for monitoring fields using satellites and drones. These are the top techniques that are used all over the world.

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