Live from the CAC: Ukraine Explodes with Double-digit Growth
6 March 2012 Ukraine has the possibility to more than double yields of small grains, especially wheat, according to Andrey Kuftarkov, chairman of Himangromarketing, a trading company based in Kiev, Ukraine.
Since the fall of the Soviet Union, former Soviet states experienced a lack of agriculture technology and infrastructure, but the CIS is rebounding, and Ukraine is reclaiming its status as the bread basket for the Black Sea Region.
Despite its renewed success, the limited access and adoption of crop protection technologies is hampering a potential explosion for Ukraine. Farmers are investing just a fraction of its high-producing counterparts. For example, farmers in France invest about $150 per hectare in crop protection. Ukraine farmers spend about $20 per hectare, which means vast productivity lies latent in some of the most fertile fields in the region.
Crop protection companies are beginning to stake their claim in the region as knowledge and adoption of crop inputs rise: up 10% per year since 1998. The number of registrations in the past three years has tripled, Kuftarkov says. In the beginning of 2011, Ukraine had 1220 registered products based on 174 active substances.
Despite the emerging product offerings, pesticide storage is an issue, especially for fungicides, which are needed rather quickly as unforeseen weather events often promulgate disease outbreaks. Ukraine’s agrochemical storage capacity is about half of what is needed, making timely distribution difficult, Kuftarkov says.
“Our own production of crop protection is in its infancy today, and we have a great need to produce more products in Ukraine,” he told attendees at CAC.
This year, about 30% of the country’s winter crops need to be replanted due to weather and disease occurrences, and drought in recent years has hampered yields.
In 2011, Ukraine produced 22.3 million tons of wheat, 22.5 million tons of corn, 9.1 million tons of barley, 8.66 million tons of sunflowers, 18.7 million tons of sugarbeets, 24.25 tons of potatoes and almost 10 million tons of vegetables.
Total area under cultivation of Ukraine’s main cash crops led by wheat at 6.8 million hectares, followed by sunflowers at 4.6 million hectares, barley at 3.8 million hectares and corn at 3.6 million hectares. A significant amount of arable land is fallow, allowing one of the fastest growing crop protection markets to flourish under the right conditions.
Between 2005 and 2010, crop protection sales rose more than 30%, more than any other country (using local currency, not adjusted for inflation). The result is a market that spends about $120 million on crop protection for grains, $80 million on sunflowers, almost $80 million on corn, and about $75 million on rapeseed cultivation.
Unlike the global average, generic companies own 43% of the market share in Ukraine, leaving just more than half to multinational companies. Syngenta is the largest company with about 17% of market share.
In all, Ukraine has 76 importers (including 5 multinationals), 534 distributors and 1,856 retail licensees.
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