Is there a Dilemma in Ukraine: to remain a global leader in commodities export or fight for leading positions in value added foods markets?

Blog, Interview

Difficult roads lead to the best destinations

Overall trends of foreign trade in 2015 were characterized by a decrease in export of agricultural production. The price of wheat fell by 1/3 compared to 2014. A significant decline in exports was due to the annexation of the Crimea, the continuation of military conflict in the east of the country and the reducing of trade with Russia.

For Ukraine, the agrarian market has always been strategic and with the loss of the export for metallurgy and the coal industry in 2014-2015, agricultural exports have become even more important. According to the statistics of the Ministry of Economy, the products of the agri-industrial complex and the food industry brought the country $ 10.1 billion. Compared to 2014, the fall here was just over 15%.

It was a difficult period, but great thing never came from comfortable zones. Ukrainian companies were looking for opportunities to enter new markets and redirect export flows. According to the Ministry of Agrarian Policy, the structure of Ukrainian exports is changing rapidly: exports to the EU continue to grow in 2015. At the same time, in the agricultural export structure, 90% is plant growing and only 10% livestock.

 Fight for leading positions in value added foods markets

Exports of Ukrainian agrarian and food products reached $ 14.7 billion in the 10 months of the current year and showed an increase of 22.7% or $ 2.7 billion compared to the corresponding period of 2016.

India (11.3% of total exports), Egypt (7.5%) and the Netherlands (6.9%) formed the three leading countries among the importers of our agrarian products in January-October 2017. At the same time, the global regional breakdown of agricultural exports has not changed: to Asia we have exported more than 42% of our products, to the EU countries – 31.9% and to African countries – 14.7%

Our country continues the struggle for the European and Asian buyer. Now the biggest export destinations – Asia, Africa, Europe. Commodities (sunflower, grain, corn) continue to occupy key positions in the structure of exports. But on my opinion, to remain a global leader in commodities export is not the best way of development. New food safety technologies, green marketing trends encourage Ukrainian companies to change. Low-quality wheat, which is fed to animals abroad cannot be Ukrainian comparative advantage on global market.

Production with added value is new way of global promotion of Ukraine in the world. It is also a way to protect and saturate our domestic market with high-quality products of the Ukrainian manufacture. For example, our farmers say that export strawberry in Poland and then this Ukrainian strawberry from Poland comes back to us in a package 2 times more expensive or in processing – 3 times more expensive.

Create value for the consumers in a more sustainable way

One of the hopeful trends is that a lot of informational materials appeared in 2016 for those, who want to export, for example, «Practical guide for an agrarian exporter to the EU». The Ministry of Economic Development and Trade established an export promotion office. There are also technical and consulting support for Ukrainian farmers from such organizations like USAID and FAO. Such projects provide consulting support for those, who want to export.

Producing of organic products creates added value for consumers because of the extra care that goes into making the product in a way of sustainability. This niche can be perspective. Improving green sustainable agriculture – improving lives.

Adding value by processing food products is a difficult way, because it increases safety risks, it needs special certification and even accordance to the cultural rules of different countries. But I believe that Ukraine in few years will change the strategy of just commodities export and will be successful in value added foods markets.

Kateryna Zvierieva, SEEDs.org.ua

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