Ukraine’s Minister of Agricultural Policy and Food, Oleksiy Pavlenko, once articulated, “Ukraine is a crucial country for the food security of the planet. We are not just a bread basket anymore, we are a food basket.”

Ayhan KINDAP General Manager  A.K. Agricultural Trade and Consultancy

The purpose of this report is to provide the reader of Feed Planet Magazine with the insight into the general information about Ukraine’s agricultural sector. its agricultural power worldwide and the key sectors of feed production, feed ingredient production, poultry farming, live stock production, egg production and export of these products. Although Ukraine has recently undergone dramatic events that affected the country’s safety and overall economic output, Ukraine’s agriculture sector has exhibited an impressive growth recently by finding new trading partners and routes. By this way, Ukraine agriculture sector has gained a momentum to be a global economic power and will lead Ukraine to economic prosperity.

Ukraine’s Minister of Agricultural Policy and Food, Oleksiy Pavlenko, once articulated, “Ukraine is a crucial country for the food security of the planet. We are not just a bread basket anymore, we are a food basket.”

The export demand for Ukraine grains. industry consolidation, recent investments in modernization of poultry, egg, and feed industries created export-driven growth. Grain. oil seed and by product exports of around 90 mln mt annualy, the World’s largest sunseed crushing industry and large vertically integrated poultry producers have further expansion potential to increase their market shares worldwide. Export driven growth in poultry farming will lead to growth in domestic animal feed production as well.

Agriculture is a strategically important economic sector for Ukraine, accounting for around 11 percent of GDP, 31 percent of total goods exported, and 17 percent of total employment. The poultry and egg industries play an important role in Ukraine and today Ukraine is the world’s eighth largest exporter of poultry and eighth largest producer of eggs.

It is important to note that while Ukraine is a large producer of animal feed, it imports many micro feed ingredients. Vitamins, mineral supplements, amino acids and premixes are imported from Europe and China.

COMPOUND FEED MARKET In table no.2 the feed market within the last 7 years reached the highest figure in the year 2014 with a 6,9 mlns mt according to the state statistics service. Since then we have seen a downward trend in all feed kinds except for the poultry feed. In 2019. we see around 4 % drop in the total feed production. But the poultry feed increase is around 3,2 %

The feed production figures are showing a stable trend as shown in figure no.1

Pig feed production of 1,389 thousand mt in 2013 decreased to 1,107 thousand mt in 2019 and represents 17.3 % of the market. Cattle feed production of 717 thousand mt in 2013 decreased to 566 thousand mt in 2019 and represents 8,9 %. Poultry feed production of 3,835 thousand mt in 2013 increased to 4,223 thousand mt and represents 66,1 % of the total market. Other feed kinds have also decreased from 833 thousand mt to 496 thousand mt in 2019 and represents only 7,8 % of the market.

Compared with the begining of 2000’s. when in Ukraine the feed production volumes barely exceeded one million ton. Now. 6 million ton of production is not a small figure. But the historical actual production in 1990 reached 16 millions ton of animal feed when Ukraine was one of the main meat producer for the Soviet Union

Export possibilities of chicken meat and table egg encouraged the modern industrial production and resulted in an increase in poultry feed production which reached 66 % of total compound feed production. Cattles and pig production are not industrialized yet and not fed enough by the compound feed. Investment in modern pig and cattle farms will for sure increase the demand for the compound feed usage because more efficient meat production will make cost of meat more competitive for export markets.

According to Alltech Global Feed Survey. the world’s feed production has an upward trend and the 2020 Survey results show the World’s estimated feed production is 1,126 millions tons with 30,000 feed manufacturers. Ukraine’s feed production is comparatively very low compared to the total world production and to the domestic resources of feed ingredients within the country existingly.

The domestic resources of feed ingredients presents a huge potential in the coming years to produce more and more compound feed which will be needed to produce more efficient and value added products such as poultry meat. table eggs. porc meat. red meat and milk and milk products to export to mainly European Union and Middle East markets.

Table no. 3 shows that the top 10 manufacturers of animal feed in Ukraine and these are basically large agro-industrial integrated holdings.

The above manufacturers represent almost 60 % of total country production. There are unused capacities which can easily increase the actual production to higher levels. The market has a big potential for development.

WORLD AND UKRAINE GRAIN PRODUCTION Table no.4 shows the world grain production figures. The world last season produced over 2,600 mln tons of grains. of which corn is number one with 1,100 mln mts. wheat is 731 mln mts, then rice is 500 mln mts and barley is 140 mln mt. Table no.5 shows the country rankings. China is the leading grain producer. USA and EU are following China. Ukraine’s ranking in world grain production is 8th with 72 mln mts.

Table no. 6 shows that agricultural production in Ukraine constitutes around 11 % of GDP. Out of a total 42,2 mln hectares of agricultural land. 32,6 is arable. 4,8 is unsown and 4,8 % is pastures, hayfields and others. 42,2 mln. hectares of agricultural land which is about 28 % of the world’s thick black soil or chornozem, and a moderate climate of Ukraine provide a special natural conditions for growing a wide range of crops with high yields.

UKRAINE'S GRAIN SUPPLY AND DEMAND Wheat: As seen in table no 7. Ukraine wheat production in 2019/2020 marketing year increased from 24,6 mlns mt to 28,2 mlns mt. The Export in 2019/2020 marketing year is forecasted from 15,4 mln mt to 18,9 mln mt.

Barley: Ukraine barley production. in 2019/2020 marketing year increased from 7.3 mln mt last year to 9 mln mt and the export in 2019/2020 marketing year is forecasted from 3,6 mln to 4,8 mlns mt. This year. new demand came from China. Spain, Egypt and Turkey.

Corn: Ukraine corn production in 2019/2020 marketing year decreased a little from 35,8 mlns mt to 34,6 mln mt. The Export in 2019/2020 marketing year is forecasted from 30 mln mt to 27,5 mln mt. Corn exports in 2017/2019 marketing year was just 18 mln mt. Last year huge increase in exports this year was balanced and expected as 27,5 mln mts. Corn exports are expected to remain lower due to expected increase its feed consumption because of cheaper prices this year.

Worldwide in 2018/2019 season, Ukraine corn production ranks as 6th and the export ranks as 4th. The wheat production ranks as 8th and the export ranks as 5th. The barley production ranks as 5th and the export ranks as 4th. Ukraine continues to develop closer economic ties with the European Union. This economic ties provide the increase of exports for grains which have been supported by Tariff Rate Quotas (TRQ) offered to Ukraine under the Deep and Comprehensive Free Trade Area (DCFTA).

Ukraine’s ports along the Black Sea serve as the main exit-gate for exports of agricultural products from Ukraine. Grains from Southern Ukraine are delivered to these ports by trucks, usually from short distances, up to approximately 250 kilometers. Grains from the rest of Ukraine are delivered via railroad. Therefore, railway logistics is a critical component for shipping grains to port silos. According to the National statistics in 2018, the railway shipped 32.9 MMT of grains, trucks – 12.7 MMT and riverboats – 0.4 MMT.

It is expected that grain transshipment capacity of the major ports in the Black Sea will increase in the next few years as many national and international companies are investing considerable resources in the construction of loading terminals.

WORLD AND UKRAINE OIL SEED PRODUCTUON Table no. 8 shows the world oilseed production figures. The world last season produced over 602 mln mtons of oilseeds. of which soybean is number one with 363 mln mts. then rapeseed is 73 mln mts and sunflower seed is 52 mln mt. Table no. 9 shows the country rankings. USA is the leading oil seed producer. Brazil and China are following USA.

Ukraine’s ranking in world oilseed production is 8th similar to its grain production ranking.

UKRAINE'S OIL SEED SUPLY AND DEMAND Soybean: as is seen in table no.10 Ukraine soybean production in 2019/2020 marketing year decreased from 4,7 millions mt last year to 3,7 mln mt. For 2019/20 marketing year soybean exports are forecast to drop to 1,9 mln mt. which is a 25-percent decrease compared to 2.6 mln mt of export in 2018/19. A major reason for this decrease is lower 2019/20 soybean production resulting from changes in Ukraine’s domestic tax regime. which do not allow VAT refunding for the exporting companies except for the growers. In 2020/2021. more soybean is expected to be produced after the tax regime has changed. Sunflower Seed: Ukraine sunflower seed production in 2019/2020 marketing year decreased from 15,5 mlns mt to 14,7 million mt. The Export in 2019/2020 marketing year is forecasted from 90 thousand mt to 80 thousand mt which is very small figure compared to the total production. Sunflower offers the best profitability for farmers among the various oilseeds. This resulted in a steady growth in the area under sunflower crop for the last decade. Almost all sunflower seed produced in Ukraine is crushed domestically, which has been the case over the last decade since export duties on exports of sunflower seed were introduced in 1999. According to industry sources, total oilseed crush capacity in Ukraine, at the beginning of 2018, was 18.7 mlns mt with the top ten largest oil seed crushers (both national and international)

Rape Seed: 2019/20 production of rapeseed is forecast to reach over 3.3 mlns mt, a 18-percent increase compared to the 2.8 mlns mt produced in MY2018/19. Ukraine exports of around 2.5 mlns mt of rapeseed in 2018/19 is forecastedto be 2,9 mln mt in 2019/20. In general, oilseed area stabilized at the level of eight million hectares (ha) over the last five years. Dnipro river

With 15 mln mt. Ukraine is number one producer of sunflower seed world wide. Almost all the seed is crushed within the country. Sunflower seed export ranking in the world is 7th. Ukraine is the 8th biggest soybean producer worldwide and it is 7th biggest soybean exporter. Rapeseed production ranking is 5th but it the 2nd biggest exporter.

EXPORTS SHARES OF CROPS AND PROCESSED PRODUCTS While we are talking about self-sufficiency percentage of a country in agricultural production, for Ukraine as shown in table no. 11 we can talk about the export shares in total production. Soyoil and sunoil and rapeseed oil export shares in total production are above 90%. Corn, Sunmeal, Rapeseed, rapeseed meal export share are above 80%. Wheat. Soybean export shares are above 60 %. Soybean and barley export shares are around 50%. One striking figure is the sunseed export which is 0.5%. That is because of the huge crushing capacity and export duty on sunseed.

LIVESTOCK PRODUCTS Table no. 12 shows that the poultry meat production in 2018 reached 1,259 thousand mt. Porc meat production was realized as 604 thousand mt. Beef and veal production decreased to 287 thousand mts. Table no. 13 shows production, import, export, consumption and per capita consumption of meat in Ukraine. Ukraine is continuing its massive chicken production and export expansion. Ukrainian industrial chicken production continued to grow in 2019. New large facilities became operational in 2019. Industrial broiler production dominates with 88 percent of the total chicken market share. Broiler meat production is highly concentrated with one big company – MHP SE is responsible for over 60 percent of the total volume and the top six companies responsible for over 90 percent. Ukraine exports premium parts to Europe, Middle East, Central Asia and Africa. The EU market has the largest share in chicken meat exports.

Both cattle and pig production continued to be depressed in Ukraine in 2018-19, and production levels are not expected to increase soon in the following years.

Consumers continue to substitute red meats with poultry meat in their diets. Cattle production remains largely a function of Ukraine’s dairy production.

Total meat consumption of 46 kg per capita is a little above the the world average of 43 kgs excluding the fish meat.

Table no. 14 shows production, import, export, consumption and per capita consumption of milk and eggs in Ukraine.

During the last years, industrially-produced eggs continued to gain market share over household-produced eggs. Today, large agricultural enterprises account for more than half of production versus households. In terms of egg production, Ukraine’s industry leaders are Avangard, Inter-Zaporizhzhya, and Ovostar. Around 73 % of milk is produced by small households and the total production is around 10 mln mt in 2019 as well. Fluid milk production in Ukraine decreased in 2018-19, following a decrease in domestic demand and the lack of major export markets.

Fish production in 2019 recently dropped to 60 thousand mt levels from 220 thousand mt in 2008.

Table no. 15 shows production, import, export, consumption and per capita consumption of fish meat in Ukraine. Although fish production is very low in recent years. Ukrainian people like to eat fish meat. So the imports are necessary to meet a total demand of 400 thousand mt with a per capita consumption of 10 kg.

UKRAINE AS A STRATEGICAL SUPPLIER FOR TURKEY Table no. 16 shows Turkey’s agricultural imports from Ukraine in 2019. We can not help mentioning about Turkey’s import from Ukraine. Turkey produced around 25 mln tons of compound feed in 2019. On the other hand, Turkish Feed industry imported around 12 mlns tons of feed raw materials in 2019. The above table also includes wheat imports which are mainly for milling industry. The total feed raw materials imported from Ukraine is around 4,3 mln mts and this corresponds to 36% of feed raw material imports. In another words, Ukraine is Turkey’s number one feed raw material supplier. Russia comes as the second feed raw material supplier with 2,3 mln mts of imports also in 2019.

UKRAINE’S POTENTIAL AND IMPROVEMENTS NEEDED FOR FURTHER DEVELOPMENTS Ukraine’s agriculture is not a new story. Its 42 million hectares of farm land were a bread basket for the soviet union in the past. But the geopolitical situation is new. Ukraine is an independent country for 25 years. Total grain and oil seed production existingly are around 90 mln tons annually. It s not a dream to produce more than 100 mln. mts in the coming years.

Ukraine needs further two serious developments to become a food giant in the future. The land moratorium is one and another is logistics.

To enable the country to produce more than 100 mln tons of grain and oil seed annually some serious investments are necessary in high ways and inter city roads, railways and Dnipro river waterway which is Ukraine’s Mississippi. The Dnipro River is the fourth-longest in Europe. Ukraine’s bread basket lies in both sides of it. Actually Investments have already started coming from China. the European Bank for Reconstruction and Development (EBRD) and private enterprises. Investing in logistics and and infrastructure will certainly improve the Ukraine’s agriculture.

Very recently Ukrainian parliament abolished the moratorium on agricultural land that had been imposed as a temporary measure during the last 19 years. On March 30, the Parliament passed the bill on agricultural land, launching the farmland market from July 1, 2021. The bill limits sales to 100 hectares per buyer and only Ukrainians can acquire the farmland. At the same time, legal entities registered in Ukraine will be Dnipro river locks

allowed to buy up to 10,000 hectares of farmland from January 2024, and only if their shareholders own Ukrainian citizenship. The foreigners and companies with foreign capital are banned from buying agricultural land, however, the restriction may be lifted after the nationwide referendum. Now foreign investors have more hopes to be the owner of lands after the legislation approval for the land market. The legislation waited long years in the parliament because of sensitivity and protests against selling lands to foreigners.

Largest multinational players in Ukraine’s agriculture never stopped investing in the country, even during the 2014 crisis because they think the country’s potential to grow crops and the richness of the land is a longer term advantage than wars and crises.

Grain shortage areas like North Africa. The Middle-east and Asia are the markets and main destinations for Ukraine’s grain exports.But between land and Sea. logistics problem still persists. Grain production can be increased. But Ukraine’s capacity to move truckloads and trainloads to the black sea ports is near its limit.

Roads have very big holes which makes the driving very slow. narrow and unsuited for constant flows of heavy trucks. There is shortage of rail cars, lack of grain silos and sea port elevators. Currently only 5% of Ukraine’s total grain export is carried by the barges. If the locks on Dnipro river is repaired. river transportation will increase logistics contribution to Ukraine.

Ukraine is 4th largest of corn exporter and 5th of wheat exporter. Sunflower meal and oil as processed products are one of the biggest export income generators. But for food it is 24th largest of food exporter. Investments are needed to shift agriculture from Volume to Value Foreign investors can help Ukraine add value in organic food, meat processing, wheat flour, beef production, semi-processed meat products.

State Railroad needs to continue investing to get grains to Ports. The majority of Ukraine’s cargo which is 82 % is carried by Ukrainian railways. Trucking is economical if a farm is less than 200 km from the black Sea port. River transportation only works if a farm is less than 100 kms from a river port.

Countries which perceive the importance of food security in the future have already invested billions to modernize Ukraine’s ports and highways. China, USA and their giant agri-trading companies are already important players in establishing the Ukraine ‘s export infrastructure.

Sources: -USDA Gain reports for Ukraine - Ukrainian Agri Business by Latifundist.com and Credit Agricoll -The Ukranian Business Journal issue no.1 -Alltech 2020 Global Feed Survey -Prozerno Grain Conferance, Krasnaya Polyana, Krasnodarskiy Krai 26-29 January 2019 -DEIK Ukrayna Bilgi Notu Ağustos 2019 -World Grain Magazin May 2019 -Feed International Magazines -UkrAgroConsult. Ukrainian Oil Seed Market Outlook. -Ukranian Poultry. Egg & Feed Industry.2016 US Commercial Service Kiev -Pictures from The Ukranian Business Journal issue no.1

The new Cofco sea port facilities in Yuzhny loading even larger Panamaxship