Agro dialogues: European integration, subsidies, production and prospects for new markets

05/ 04/ 2024

Yesterday, the European Business Association held a meeting on agriculture to discuss opportunities and challenges in the industry. The Minister of Agrarian Policy Mykola Solsky joined the dialog. First of all, the situation on the Ukrainian-Polish border was discussed. Mr. Solsky emphasized that the situation with the import of products across this border depends on the products themselves. In particular, there is an agreement not to import grain through the territory of Poland, the decision on raspberries and concentrates should be made today, etc. The issue of transit remains relevant. It is estimated that it amounts to 200 thousand tons of grain and meal. This is about 1 day of the ports work in Odesa. So, in fact, the question is how this can affect the world price. The issue of assistance to agribusiness was also raised. Mr. Minister emphasized that when it comes to subsidies, in particular, there will be no such subsidies in Ukraine until the end of the war, but if and when Ukraine becomes part of the EU, such opportunities will open up. In general, the process of Ukraines accession to the EU will be accompanied by a complex internal discussion. And, yes, there are questions about who Ukraine is a partner for in agriculture, who is a competitor, and with whom there will be the biggest discussions. In addition, a large number of documents will need to be adapted/developed in the agricultural sector - about 40% of all documents are related to agriculture. Taras Vysotskyi, Deputy Minister of Agrarian Policy, focused on the war risk insurance program. Thus, within the framework of the Ukraine facility (8 billion euros), there is talk of fully launching war risk insurance in Ukraine (by June). In general, in the context of EU integration, he emphasized that Ukraine has a good position in the context of negotiations on agriculture. But we need to understand that there will be no concessions. And there will definitely be a question of whether the EU is ready to accept such a large player in the agricultural sector. Regarding demining, Mr. Vysotsky noted that, as of today, about 480 thousand hectares have been de-occupied (not all of them need demining, about 15% have been cleared). In general, the budget has UAH 2 million + UAH 1 million of a special fund for demining agricultural land, and the Ministry of Agrarian Policy has a special algorithm to compensate 80% of the cost of demining; there is no upper limit on the cost. Therefore, he suggested that companies study this mechanism. In addition, he informed that the Center for Humanitarian Demining at the Ministry of Economy has recently been established, but it is still in the process of launching. Philipp Von Michaelis, CEO of Global Clearance Solutions, presented his company, which deals with demining issues, has its roots in Switzerland and started working in Ukraine after the outbreak of full-scale war. He confirmed that there are indeed some difficulties in the work. In particular, there are legislative imperfections to take commercial orders. In addition, there are funding issues, and the issue of operator qualifications. In addition, based on the experience of working in other countries (Iraq, for example), there is still competition with humanitarian missions dealing with such issues. Nevertheless, he sees great prospects for working in Ukraine and invited other companies not to delay their decisions to start working in the country! Oleksandr Samokhvalov, CEO of Lusdorf, Chairman of the EBA Dairy Committee, focused on the dairy industry. Yes, the company is engaged in milk processing. With the outbreak of the war, export opportunities were disrupted (because before that, a lot of products went through ports), and logistics were disrupted. It was good that Europe had abolished duties and quotas at that time - many businesses switched and changed their product portfolio to sell milk powder, butter, etc. on foreign markets (as demand in the domestic market fell sharply). So far, domestic consumption has not returned to 2021 (last years consumption was 14% lower than in 2021). It is difficult, in particular, because of problems at the border - logistics costs have increased (before, 1 ton cost 100 euros, now the price is 200-250 euros). In general, unfortunately, milk production is declining every year. Compared to Poland, which produces 14 million tons of milk, Ukraine produces 14 million tons, and yes, this covers domestic needs, but the volumes are not sufficient for export. Vadym Chaikovskyi, Deputy Head of the State Service of Ukraine for Food Safety and Consumer Protection, emphasized that Ukraine is currently actively working and opening up new markets. Thus, last year 15 export certificates were opened, this year - 4 certificates (Canada, Kuwait, etc.) - all products of animal origin. The plans include the EU in the context of aquaculture, the markets of Colombia and Indonesia, etc. Although he also summarized the prospects for integration into the EU are great, it will also lead to stricter supervision and control, in particular, currently in Ukraine it is possible to conduct no more than 7 inspections per year, after integration this number will be at least 7. We thank all the speakers for their interesting insights and sincerely hope that together we will be able to actively develop the agricultural sector in the country, adapt all the rules and regulations for European integration and bring the agricultural sector in the country to an even higher level.

01/

Yesterday, the European Business Association held a meeting on agriculture to discuss opportunities and challenges in the industry.

The Minister of Agrarian Policy Mykola Solsky joined the dialog. First of all, the situation on the Ukrainian-Polish border was discussed. Mr. Solsky emphasized that the situation with the import of products across this border depends on the products themselves. In particular, there is an agreement not to import grain through the territory of Poland, the decision on raspberries and concentrates should be made today, etc. The issue of transit remains relevant. It is estimated that it amounts to 200 thousand tons of grain and meal. This is about 1 day of the port’s work in Odesa. So, in fact, the question is how this can affect the world price. The issue of assistance to agribusiness was also raised. Mr. Minister emphasized that when it comes to subsidies, in particular, there will be no such subsidies in Ukraine until the end of the war, but if and when Ukraine becomes part of the EU, such opportunities will open up. In general, the process of Ukraine’s accession to the EU will be accompanied by a complex internal discussion. And, yes, there are questions about who Ukraine is a partner for in agriculture, who is a competitor, and with whom there will be the biggest discussions. In addition, a large number of documents will need to be adapted/developed in the agricultural sector – about 40% of all documents are related to agriculture.

Taras Vysotskyi, Deputy Minister of Agrarian Policy, focused on the war risk insurance program. Thus, within the framework of the Ukraine facility (8 billion euros), there is talk of fully launching war risk insurance in Ukraine (by June). In general, in the context of EU integration, he emphasized that Ukraine has a good position in the context of negotiations on agriculture. But we need to understand that there will be no concessions. And there will definitely be a question of whether the EU is ready to accept such a large player in the agricultural sector. Regarding demining, Mr. Vysotsky noted that, as of today, about 480 thousand hectares have been de-occupied (not all of them need demining, about 15% have been cleared). In general, the budget has UAH 2 million + UAH 1 million of a special fund for demining agricultural land, and the Ministry of Agrarian Policy has a special algorithm to compensate 80% of the cost of demining; there is no upper limit on the cost. Therefore, he suggested that companies study this mechanism. In addition, he informed that the Center for Humanitarian Demining at the Ministry of Economy has recently been established, but it is still in the process of launching.

Philipp Von Michaelis, CEO of Global Clearance Solutions, presented his company, which deals with demining issues, has its roots in Switzerland and started working in Ukraine after the outbreak of full-scale war. He confirmed that there are indeed some difficulties in the work. In particular, there are legislative imperfections to take commercial orders. In addition, there are funding issues, and the issue of operator qualifications. In addition, based on the experience of working in other countries (Iraq, for example), there is still competition with humanitarian missions dealing with such issues. Nevertheless, he sees great prospects for working in Ukraine and invited other companies not to delay their decisions to start working in the country!

Oleksandr Samokhvalov, CEO of Lusdorf, Chairman of the EBA Dairy Committee, focused on the dairy industry. Yes, the company is engaged in milk processing. With the outbreak of the war, export opportunities were disrupted (because before that, a lot of products went through ports), and logistics were disrupted. It was good that Europe had abolished duties and quotas at that time – many businesses switched and changed their product portfolio to sell milk powder, butter, etc. on foreign markets (as demand in the domestic market fell sharply). So far, domestic consumption has not returned to 2021 (last year’s consumption was 14% lower than in 2021). It is difficult, in particular, because of problems at the border – logistics costs have increased (before, 1 ton cost 100 euros, now the price is 200-250 euros). In general, unfortunately, milk production is declining every year. Compared to Poland, which produces 14 million tons of milk, Ukraine produces 14 million tons, and yes, this covers domestic needs, but the volumes are not sufficient for export.

Vadym Chaikovskyi, Deputy Head of the State Service of Ukraine for Food Safety and Consumer Protection, emphasized that Ukraine is currently actively working and opening up new markets. Thus, last year 15 export certificates were opened, this year – 4 certificates (Canada, Kuwait, etc.) – all products of animal origin. The plans include the EU in the context of aquaculture, the markets of Colombia and Indonesia, etc. Although he also summarized the prospects for integration into the EU are great, it will also lead to stricter supervision and control, in particular, currently in Ukraine it is possible to conduct no more than 7 inspections per year, after integration this number will be at least 7.

We thank all the speakers for their interesting insights and sincerely hope that together we will be able to actively develop the agricultural sector in the country, adapt all the rules and regulations for European integration and bring the agricultural sector in the country to an even higher level.