Ukraine's role in agricultural trade and food security in the Mediterranean MINISTER OF AGRARIAN POLICY AND FOOD OF UKRAINE O L E KSI Y PAV L E N K O

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1 Ukraine's role in agricultural trade and food security in the Mediterranean MINISTER OF AGRARIAN POLICY AND FOOD OF UKRAINE O L E KSI Y PAV L E N K O

2 GLOBAL FOOD SAFETY from the bread basket to the food basket The world's population is expected to grow from 7bln to 9.2bln by million people suffer from chronic hunger in 2014 Global food production has to be increased by 60% by 2020 Ukraine has nearly 30% of the world s black soil Ukrainian grew its export by 3.6 times from 2005 till 2014 (from $4.7bln to $17bln) Resources: FAO, MinAgro

3 Ukraine s trade location from the bread basket to the food basket

4 *USDA report, 2015 Ukraine is a leading agricultural exporter in the world #1 #3 #4 Exporter of sunflower oil in the world 4.3 mln tons Exporter of corn in the world 18 mln tons Exporter of barley in the world 2.7 mln tons #6 #7 #8 Exporter of wheat in the world 11 mln tons Exporter of soybean in the world 2 mln tons Exporter of poultry in the world 170 k tons

5 Crops Production Dynamics in , mln t without Crimea Corn Wheat Potato Sugar beet Sunflowers Other vegetables Barley Soybean Other cereals and legumes

6 Importance of Agriculture for the country, 2014 GDP EXPORT STATE REVENUES 17% Share of GDP, % Share of total export, % Share of the State budget revenues, 2014 $31.4 bln $4.8 bln $17.0 bln

7 UKRAINE S AGRICULTURAL EXPORT LEVERAGING DIVERSITY, % ( $0.04 billion) USA EU +4.4% ( $5 billion) Africa +0.9% ( $2.6 billion) NIS CIS -30.8% ( $2.6 billion) +10.1% ( $6.6 billion) Asia Agriculture is the 1 export industry in Ukraine (31,5% share of total export)

8 Ukraine s Foreign Trade Balance, $ bln % 13% 14% 17% 25% 20% 19% 26% 27% 31.5% Agricultural products Other products ХХ the share of agricultural products in total exports

9 Ukraine s Agricultural Trade Turnover, 2014 Export Import 36% EU CIS 23 % 15 % Asia 64% 77 % 85 % LatAm 4% 96 % Africa 90 % 10% Other countries 63 % 37 % ХХ ХХ Agricultural Imports to Ukraine, $ bln Agricultural exports from Ukraine, $ bln

10 Agricultural Turnover between Ukraine and EU countries Import Export $8.2 bln 3.3 $7.7 bln 2.7 Cereals Oil and seeds Food industry remains Other products % % 36% 1 34%

11 Agrarian Receipts Pilot Project in Poltava Region Improved Access to Finance Comparative Analysis 1 Small & medium farmers: receive additional property to pledge (future crop) No Criterion 1 Out of court enforcement Promissory notes Agrarian receipts Future contracts 2 3 Local banks: receive additional security for loans to small & medium scale farmers Off-takers: receive additional security for future deliveries 2 Unconditional obligation of the debtor 3 Availability to receive payment according to the formula (not alump 4 Availability to receive a commodity as a payment 5 Possibility to eliminate FX risk 4 5 Input suppliers: receive secure instrument in return for their goods International banks: receive instrument to secure pre-export financing from growing to export 6 Possibility to get additional security without providing additional docs 7 Possibility to get bank guarantee (aval) 8 Existence of centralized state register 9 Availability of credit history

12 NEW AGRARIAN POLICY OF UKRAINE 1 From loss-making state-owned companies to privatization of hundreds of companies 2 From commodities to added value products 3 From regulation to free competition Achievements Eliminated 6 licenses Eliminated 14 authorization documents Made 50 amendments to documents Simplified and made transparent registration of agricultural land lease agreements Increased protection of investors rights Started electronic auctions est. effect $400+ mln of savings Next Steps Privatization of more than 250 enterprises Cancellation of 100 permits To launch liberalization of land market Implementation of crop receipt and agro insurance systems with IFC and NCH Harmonization of Ukrainian agricultural legislation with EU standards

13 WORKING GROUPS WITH EU COMMISSION Food safety, Sanitary and Phyto Sanitary issues 1.2 Other provisions notably covered by Resolution Abolishment of unjustified law and administrative acts 2.2. Reform of state agricultural property and state-owned agro-enterprises 2.3. Assessment of deregulation actions taken 3 Approximation Deregulation Factors of Production 3.1. Land reform 3.2. Access to finance 3.3. Upgrading and modernization of production and processing capacities 3.4. Infrastructure and logistics 4 Agriculture policy and Innovation 4.1. Research, training and advisory services 4.2. Agricultural education reform 4.3. Agro-intelligence and innovation 5 6 Production and market management State support and Taxation 7 Rural Development 8 Environmental resources management 5.1. Food security, State Food Reserve and Agrarian Fund, price regulation 5.2. Market, import and export management 5.3. Producers organization 6.1. Taxation 6.2. Assessment and simplification of the state support to agriculture 7.1. Support to small farms 7.2. Improvement of quality of life in rural areas 7.3. Local governance 8.1. Water, land, pesticides, nitrates and minimum environmental standards 8.2. Organic farming 8.3 Forestry and bioenergy 8.4. Fishery In partnership with FAO, WB, IFC, NCH and others

14 Partnership In June 2013 DUPONT PIONEER (in Ukraine from 1998) launched a new seed plant in Poltava region. Cargill is actively investing in Ukraine for more than 20 years Cargill recently invested in additional grain storage and animal nutrition company In 2010 Bunge invested $100m in construction of new terminal storage with total capacity of 140,000 t. of grain In 2012 Bunge began construction of the largest oil extraction plant In March 2014 Monsanto (in Ukraine from 1992) launched a construction of a new seed plant John Deere opened it representative office in Kyiv in 2008 and since then is actively expanding its dealer and service network AGCO has the rep. office in Kyiv since 1997; Since Ukraine s independence AGCO supplied around 1500 tractors and 600 harvesters

15 ATTRACTIVE AREAS FOR INVESTMENTS GOALS 100 mln tons of GRAIN х2 amount of export INFRASTRUCTURE LOGISTIC PRODUCTION Irrigation systems New export port terminals Deeping Dnipro and Southern Bug rivers Modernization of linear elevators Increase the number of grain trucks Financing for agricultural equipment purchases Financing of working capital for small and medium-sized farms Increase production capacity Investment into added value production $8 BLN Expected to be invested in Ukrainian agricultiral sector up to 2020

16 Thanks for your attention!