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2014-08-02

Kiev +22
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Agriculture

Ukraine’s farm sector generates around 10.5% of national GDP and employs a quarter of the working population. Ukraine has 42.8 million hectares of agricultural land, comprising 71.0% of the country’s total area, of which 32.5mn ha is arable, excluding pastures, grasslands, permanent plantings and so on. Ukraine has a continental climate favorable for large-scale agriculture, rich agricultural soils and access to abundant land and water resources.

Ukraine is richly endowed with chornozem, the highest-quality black soil worldwide because it contains a very high percentage of humus—7% to 15%—, along with phosphoric acids, phosphorus and ammonia. Chornozem covers 41% of Ukraine’s total area and even more, 54%, of its farmland, and 58% of land suitable for plowing.

Some 30% of the world’s blackest topsoil is in Ukraine, and 42.8mn of the country's 60mn hectares or 231,660 square miles is agricultural land where wheat, barley, rapeseed and sunflowers grow in abundance. Cereal crops constitute about 55% of total agricultural output. Among the leading crops are wheat, corn, sunflower, sugar beet, tobacco, legumes, fruit, and vegetables. Livestock farming includes cattle, pigs, sheep, goats, poultry, horses, and so on.
By virtue of its unspoiled soil, Ukraine is also emerging as a major producer of organic food. Already, hundreds of thousands of acres have been dedicated to organic farming. Agricultural officials and outside experts believe that Ukraine could become a major exporter and help satisfy the increasing demand in Western Europe for such products.

Annual production of wheat in Ukraine is 15-22mn t. Total grain production averages 90-100mn t. Domestic demand, even if dramatically increased, consumes 35-40mn t., leaving around 50-60mn t available for export. As a result, Ukraine is sixth in the world grain export market.

Most of the exported grain is destined for the Middle East and North Africa. The Ministry of Economy requires export contracts for certain groups of agricultural products to be registered. Key items exported from Ukraine are subject to licensing and/or quotas where applicable and must be registered prior the export.

The production of cereal and industrial crops tends to be the focal point for agricultural enterprises. Major cereal crops in Ukraine include winter wheat, spring barley and maize. Winter wheat is the core crop for both private farmsteads and agricultural enterprises.

Wheat

Wheat is grown all across the country, but the central and south-central regions are the key growing areas of Ukraine. Wheat is planted in the fall and harvested throughout July or August of the following year. About 95% of it is winter wheat.

Оnce known as the breadbasket of Europe, Ukraine is about to regain that place as harvests soar. Ukraine produces mostly the hard red winter wheat used to make bread flour. Normally, some 80% of domestic wheat crops are considered of milling quality according to national standards. In 2013, Ukraine produced 23.01mn t of wheat, which was 59.18% more than in 2012.

Wheat is widely used to make bread and other baked goods. Ukraine’s baked goods play a substantial strategic role in the domestic economy and account for 15% of the national food industry. Moreover, with prices tops among grains in Ukraine, wheat is the most expensive grain.

Barley

Barley has been the main forage grain in Ukraine for most of the past 10 years in terms of consumption. Spring barley accounts for over 90% of the barley crop. It is typically planted in April and harvested in August in the main barley growing region, eastern Ukraine. It is the commonly used crop for spring reseeding of damaged or killed winter harvests. The area is inversely related, to some degree, to the area of winter wheat. Winter barley is the least cold-tolerant of the winter grains and its production is restricted to the extreme south. In the 2013/2014 marketing year, the barley crop was 7mn t or -7,41% less than 2012/2013.

Maize

Maize is the third most important feed cereal in Ukraine. The planting zone has increased despite a number of constraints, such as obsolete and insufficient harvesting equipment, the high cost of production, especially post-harvest drying costs, and pilferage. The main growing region is eastern and southern Ukraine, although rainfall in some oblasts in the far south is too low to support this crop. Maize is usually planted in late April or early May. Harvesting starts in mid-September and is nearing complete by early November. Only 25-50% of the overall maize area is harvested for grain, the remainder being cut for silage, normally throughout August. In 2013, maize production went up to 30.9mn t, an increase of 47.69% over 2012.

Industrial crops include sugar beet, sunflower and rapeseed. Numerous farms in Kherson, Donetsk and Poltava Oblasts specialize in growing the first two crops.


Sugar beet

Sugar beet is primarily grown in central and western oblasts. The beet is planted at the end April-beginning of May and harvested from mid-September until the end of October. Production has been declining since the early 1990s, mainly due to the low profitability of this crop relative grain and sunflower. Between 1994 and 2009, planted areas were cut back by 40% in Ukraine, to less than 3,200 sq km and crops plunged from 28.1mn t to 10mn t. In 2013, sugar beet production was about 9.2mn t, 8.2mn t or 47% less than in 2012.

Sugar beet production is highly labor intensive and remains a vital option for small household farms with limited access to farm machinery.

As most cereal and industrial crops are produced by agricultural enterprises, private farmsteads tend to focus on growing fruit and vegetables. The main reasons for focusing on vegetables include the many options for selling produce, either fresh or for processing, and the availability of manual labor in the absence of industrial equipment.

In recent years, the traditional zonal pattern for growing major agricultural crops has shifted. For instance, sugar beet, a crop grown principally in the forest-steppe zone, has progressed further south and is now grown by Kherson farmers. However, the areas sown in these crops are not significant and the yields are much lower than in the traditional growing areas. In 2010, the sugar beet planting area continued to shrink, with the exception of Rivne, Vinnytsia and Khmelnytskiy Oblasts, where a slight expansion was seen. In southern oblasts, by contrast, no sugar beet production was reported.

The production of grain and oilseed crops is dominated by large agricultural enterprises that were established when Ukraine’s farm sector was restructured in April 2000. At this point, nearly 90% of the country’s vegetables and virtually all the potatoes are grown on private household plots. State and communal farms were dismantled and farm property was distributed among the farm employees in the form of land shares. Many of these new shareholders leased their land back to newly-formed private agricultural associations, under the guidance of a manager who was frequently, but not always, the director of the former collective farm. Expanding associations of small farms into larger and more viable enterprises has been the main trend in Ukraine, similar to what took place in Russia few years ago.

Fertilizer

Ukraine is one of the world leaders in fertilizers production, specializing in nitrogen-based fertilizers. Ukraine’s share of the global mineral fertilizer market is 8%. There are 8 big mineral fertilizer producers in Ukraine. Six of them specialize in nitrogen fertilizers and form the foundation of Ukrainian chemical exports: Horlivka and Odesa plants produce around 24% of the products, Cherkasy and Dniprodzerzinsk about 22%, and Severodonetsk up to 10%. Annually, they produce only 3.6mn t of urea, some of which is sold on Ukraine’s domestic market. Currently, Ukraine exports about 280,000 t of urea and 130,000 t of ammonium nitrate per month. It is estimated that the projected volume of domestic mineral fertilizers market will double by 2017.

As demand greatly exceeds supply, these fertilizers are relatively expensive and all manufacturers require a full advance payment. It is highly advised to hire a professional local agent to get a contract with a plant fertilizer. Ukraine encourages potential fertilizer customers to visit the plant they want to work with, meet the people in person and sign a contract.