The agricultural sector is one of the drivers of Ukraine’s development. Read about problems and current state of agricultural sector in Ukraine, the ways of solving problems and export prospects in the interview of the BRDO Food&Agriculture Sector Head Andriy Zablotskyi with the radio “Golos Stolycy”.
– What is a mechanism to reanimate the agriculture sector?
– One of the main ways needed to reanimate agriculture is the investing. Some experts point out that it is needed about 70 billion dollars for this.
– How much do we depend on the US in the agricultural sector?
– We don’t depend on the US in the agricultural sector, because Ukraine is a fully independent state, we are the third largest grain exporter in the world, and the world’s first sunflower oil exporter. And why the US? The point is that grain production methods in Ukraine slightly stands behind leading world standards. If we use technologies of corn production method, which are used in the US, along with French technologies of grain production, Ukraine will be able to produce up to 120 million tons of grain per year next 10-15 years. So, Ukraine will become #1 grain exporter in the world.
Our main partners are the European Union, North Africa, Middle East and Southeast Asia countries. We also export a lot of products to China.
– Where are we exporting or will export agricultural products?
– If we speak about grain, then our main partners are the European Union, North Africa, Middle East and Southeast Asia countries. We also export a lot of products to China – we have a separate agreement, including on corn exports, with China. We are the key corn exporter to China.
– Let’s start with China, and then we will speak about Europe. What are the economic agreements, requests? What terms are we working in?
– China has a very large population, that is why Ukraine is a strategic partner for them in terms of agricultural products export. Ukraine took on obligations to supply China with large amounts of corn in exchange for the credits from China. One part of these obligations is fulfilled; the second one is in the process now. Therefore, the Chinese are interested in us to be a reliable supplier, including disposing of investments to provide us with more guaranteed opportunities of food export to China.
– What is about Europe? At the beginning of the month, we have exhausted wheat quotas. But there is a special story with these quotas – there is a limit, under which we export on low tax rate, and then high special taxes are applied. In addition, there are production standards, which can’t be met by all Ukrainian manufacturers.
– Yes, if we are speaking about grain, then there is much easier – we have set limits, under which we can export duty free. Including 950 thousand tons of grain, and they were selected.
If we want to export a meat, for example, then our production must conform to requirements of the European Union.
– But is it not so much at the Ukraine’s level? If our aim is to export 120 million tons of grain, and in this case, there is even no a millionth quota.
– It is not so much, but we are speaking about grain now, and we are one of the leaders of grain export to the European Union. Speaking about agricultural products with added value or finished agricultural products, then in this field we also have certain quotas established by the Association Agreement, under which we can export without customs duties (e.g., apple juice, honey, tomato paste, flax, etc. ). But let us suppose, if we want to export the meat, then our production must conform to requirements of the European Union, including HACCP and other requirements. These sanitary and phytosanitary regulations are a key to market access.
– These quotas are related to the most popular Ukrainian goods, aren’t they?
– Of course. But Europe has its own manufacturers, and no one is interested in providing market access for a rather strong competitor with low cost prices, who can drive out European manufacturers.
– As for the scheme of entering the European market – how difficult is it? Getting licenses, warrants, documents of compliance to all these standards, etc. It is clear, that it is not so easy and takes years.
– In the context of bureaucracy, everything is transparently and easy in Europe, it is openly and clearly written: what is needed to do and how, the main thing is to make your “homework” – introduced new technologies, provided production requirements, got certificates…
– Let’s speak again about Europe. What European requirements are difficult for us to meet, and in what way are our meat products different from the European one?
– Here I should say that Ukrainian products including meat are based on the Soviet GOST. It is basically suitable for the Eurasian Customs Union. In Europe, there are other requirements that need the modernization of production, and certain capital investments, time and so on. That is why not all companies chose this way. Many of them built new plants, which conform to these requirements, lots of companies try or tried to launch a modernization process somehow – something worked, and something failed. However, we must obtain the appropriate certification and be inspected by the EU agencies that will issue permits for export. So, starting from January 2016, 10 dairy products manufacturers have been inspected. They had been working at it more than a year and a half, and now have the opportunity to export to the European Union market.