Posts Tagged ‘Ukraine Real Estate’

Investment in Ukraine Land Makes Sense

Thursday, May 6th, 2010

Farmland in Ukraine is one of the world’s most fertile and has the potential to become one of the most productive. New technology and better farming techniques are being introduced with excellent results. The ever-increasing yields from land mean that Ukraine is now among global leaders in grain sales. In 2009, Ukraine became the market leader in Spain, Tunisia, Algeria, Egypt and Saudi, and also entered the Far Eastern markets of Japan and Korea for the first time.

Ukraine farmland has several advantages in a very competitive industry. Along with more effective farming methods, Ukraine has reduced freight prices. In addition, the devaluation of the Hryvnia currency has increased profitability.

Agricultural land in Ukraine is currently under-exploited. However, as the pressure for more food rises globally, more land in Ukraine is being farmed. Just a decade ago one million hectares were under crops. In 2009, Ukraine farmed 4.2 million hectares, a massive increase of 420%. Likewise, farms are getting bigger – the average farm size grew from just 28 hectares to 101 between 1999 and 2009. Reflecting this growth in agriculture are the production volumes from Ukraine land. These saw a year-on-year increase of 5% in January this year.

The rich and fertile soil found throughout Ukraine produces grains (corn, barley and wheat) and sunflower. Together with Argentina and Russia, Ukraine forms part of the so-called Sunflower Triangle. The increased quality of Ukraine sunflower crops plus a consistent export level of an average of 1.76 million tonnes over the last three years ensure that Ukraine is a leader in the sunflower industry.

But all this is just the tip of the iceberg. According to the US Department of Agriculture (USDA), Ukraine has huge potential in agriculture, a potential that will gradually be realised over the next ten years. The recent USDA ‘Agricultural Projections to 2019’ report finds that Ukraine along with Russia and Kazakhstan will become major agricultural players by 2020.

The report says that traditional exporters such as Australia, the EU and US will “remain important in global trade in the coming decade. But countries that are making significant investments in their agricultural sectors and increasingly pursuing policies to encourage agricultural production, including Ukraine and Kazakhstan, are expected to have an increasing presence in export markets for basic agricultural commodities”.

The report highlights corn exports from the Former Soviet Union, which are predicted to rise to 8.4 million tonnes by 2019. The bulk of these exports will come from Ukraine where “favourable resource endowments, wider use of hybrid seed, and greater investment in agriculture, stimulate corn production”.

Barley is also hugely important crop for Ukraine, which together with Russia, has an almost 50% share of the world’s barley trade. According to USDA, “Ukraine became the world’s largest barley exporter in 2009 and is projected to remain so throughout the projection period (2019)”. With farming productivity increasing annually, the future for investment in Ukraine land is very bright.