Main advantages of Ukrainian agricultural sector: read the full report

Exceptionally fertile soil and favorable weather conditions for crops production

Ukraine has the largest area of agricultural land in Europe with approximately 43 m ha of land out of which 32.5 m ha are used for crop production. Fertile soil (Ukraine accounts for c.25% of global black soil, known as “chernozem”) and moderate climate give Ukrainian agriculture producers strong competitive advantages.

Export opportunities

Currently Ukraine is a world market leader in exports of sunflower oil and barley. In recent years Ukraine has been producing around 40-50 m t of grain per year and has regained its status of a major supplier of grains to world markets. Ukraine’s agricultural export propensity is supported by additional geographic advantages.

High profitability of Ukrainian agriculture companies

Ukrainian agricultural holdings have higher efficiency than world peers mainly due to low production costs (inexpensive labor force and low land rent rates). On the other hand, fertile soils allow reaching comparatively high crop productivity at a low fertilizer usage.

Political risk

Agricultural markets and agricultural production generally are subject to production and selling restrictions and limitations in the form of quotas, tariffs and other mechanisms to protect national producers both at international and domestic levels.

Weather risk

Weather risk is typical for the industry, but weather conditions in Ukraine are generally favorable.

Prices volatility risk

Prices of agricultural commodities are influenced by a variety of unpredictable factors that are out of control of local agri companies, among them weather conditions and changes in global supply and demand.

Opportunities for investments
Infrastructure opportunities

To ensure 100% of harvested grains can be safely stored in Ukraine, investments in the construction of 15-20 m t of storage capacity are needed.

Significant potential to increase yields; relatively inexpensive labor and land lease costs

Ukraine has the capacity to produce much greater volumes of grains, oilseeds and livestock products than its shrinking population can be expected to consume. Productivity of fertilizers in Ukraine is 1.7 higher than the world average in 2010.

Market niche in meat & dairy sector

Meat supply in Ukraine is limited, as the livestock headcount has decreased by 82% since 1987. Dairy market is unconsolidated. Meat and dairy markets have good prospects for quick growth.

Egg market shows growth

In spite of high market concentration, a large percent of household egg production (c.42%) in Ukraine could be occupied by industrial producers. Ukrainian egg sector has good export opportunities for shell eggs and egg products.

Industry consolidation underway

With large vertically integrated agriculture businesses currently operating on 10-15% of total arable land in Ukraine, industry consolidation in the long run is expected, especially in view of the expected land trade liberalization. There are small farms in Ukraine as well as successfully working agriculture businesses that could be acquired.

No special requirements of licensing; favorable tax regime for agriculture producers

No special requirements of licensing are imposed on participants of agricultural sector in Ukraine. Ukrainian tax legislation allows agricultural producers to choose between special tax regimes and the general system of taxation.