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14 April 2024

News

16.03.2023

Ukrainian agriculture on the way to the EU

Ukrainian Agribusiness Club together with UCABevent agency organized the webinar “Ukrainian agriculture on the way to the EU” on the 15-th of March during which speakers shared their thoughts about main opportunities and of challenges integration of the Ukrainian agricultural sector into the European.

 

Key speakers:

Roman Slaston, CEO of UCAB;

Denys Bashlyk, Deputy Minister of Agrarian Policy and Food of Ukraine;

Dr. Heinz Strubenhoff,  the agricultural policy consultant;

Alfons Balmann, Professor and Director of IAMO Institute (Halle (Saale), Germany);

Alex Lissitsa, CEO of IMC (ag company in Ukraine);

Gerard de la Sal, Farmer in Poland and owner of ALFAGRO company in Ukraine;

Oleg Nivievskiy, Professor at Kyiv School of Economics (Ukraine).

 

On 23 June 2022, the European Council granted candidate status to Ukraine. The official negotiations may start in the autumn of 2023. One of the most difficult parts of sectoral discussions will be agriculture and rural development.

The government developed the Plan of Preparation for the negotiations of EU acquisition. There are four stages of this plan. The first one was receiving recommendations from the European Commission. The second stage going on right now is called self-screening. The third stage is negotiations, and the fourth is joining the EU. Currently, the overall status of the implementation of the Action Plan for the Association Agreement is 72%. The Ministry of Agrarian Policy is responsible for 697 tasks, which is about 30% of the total number.  Now Ukraine has progressed in the sphere of agriculture is about 63%. And in the phytosanitary measures, it's about 72%. If we compare it to 2021, we had such progress: in agriculture plus 12%, and phytosanitary measures it is about plus 8%.

According to the words of Roman Slaston, CEO of UCAB “Ukraine's membership in the EU would have both opportunities and challenges for both parties. What could potentially be an opportunity for Ukraine is a challenge for the European Union, and vice versa. It is very important for the Ukrainian Agribusiness Club to be in charge of the EU integration process to better prepare for changes and challenges but also to catch the opportunities for our members”.

“As a Ministry, we are also clearly aware that joining the European Union is not only an opportunity but also a challenge. This stage is an important lever for continuing the struggle for our European choice,  democratic values and freedom, as well as for the reconstruction and development of the Ukrainian economy after the war. Therefore, together with business representatives and the public, we will make the integration process as correct and comfortable as possible”, – mentioned Denys Bashlyk, Deputy Minister of Agrarian Policy and Food of Ukraine.

Heinz Strubenhoff, the agricultural policy consultant, offers three important aspects that the Ukrainian agricultural sector needs to consider when working on integration into the EU:

  • communication strategy: it is about telling stories not only to the Ukrainian public, to Ukrainian farmers, but also telling stories to European farmers, to our partners. There's a lot of support for Ukraine because of the war situation. But there is less support for the Ukrainian products that will come to the European market, there is a lot of anxiety in this matter. So that's why it's so important to tell the right story. A good story that Ukraine could tell looks like this: "Dear Europeans, Ukraine and Europe together will become the biggest global supplier of cereals and oil seeds in the world. It will strengthen the EU. We will play a decisive role in the world and we will feed the world. And of course we have heard about the Green deal. We will implement everything as soon as possible so that your farmers and your investors who will welcome in Ukraine to invest after the war, find the same framework conditions as they have in the EU”.
  • improvement institutional effectiveness: there is not enough capacity in Ukraine at the moment to implement the new Common Agricultural Policy. For this, Ukraine needs to train a few thousand people not only in the Ministry of Agrarian Policy, but in a broader sense in the ecosystem of agriculture policy. Ukraine and the EU have to think collegially about how to improve the capacity, how to find a mechanism to have institutional readiness in the Ministry.
  • to assume realistic time horizons: it is the illusion that the EU accession will be very fast, like the political decision to make Ukraine an accession candidate country. People in the EU expect certain things from Ukraine. They will not accept that the EU standards would be reduced because of the difficult situation in Ukraine.

 

“That's also my recommendation to sequence the dialogue, the negotiations in a way that you start with the simpler areas. In the EU sensitive products are, for example, beef, sugar and ethanol. So if you put that on top of your agenda and say that you would like to have access to the beef, sugar and the ethanol markets, then, I think, it will be difficult”, – added Heinz Strubenhoff.

At the same time Alfons BalmannProfessor and Director of IAMO Institute, thinks that the EU can learn a lot from Ukraine and that Ukraine, together with some other EU countries, may improve or increase the speed of the necessary reform process. Also, he stressed the importance of readiness for change: “Looking from a Ukrainian perspective, there are surely certain issues on the EU policy agenda which will anyway come up to Ukrainian agriculture, such as to take care of environmental issues. And this is something that has been neglected in previous years, but it will come anyway and there is a need to adapt to it. A second important point relates to infrastructure. And there are huge needs to improve the agricultural innovation and knowledge system”.

Oleg Nivievskiy, Professor at Kyiv School of Economics, highlights three benefits for agriculture from integration into the EU:

  • big market: potentially, this is a big benefit for Ukraine to export products and to benefit from this market;
  • development: this is a really important challenge for Ukraine because it's difficult for Ukraine to improve its governance and reforms without external pressure;
  • The European Union will be the biggest source of help for Ukraine. 

 

But now there are cases when European farmers protest against Ukrainian products. Gerard de la Sal, Farmer in Poland and owner of ALFAGRO company in Ukraine, comments on this situation as follows: “Now we see some problems even in the western part of Poland with prices, but I'm not sure that those prices are in league with UA integration process. But on the other hand, a lot of UA commodities are indeed coming into Poland. Some of them were supposed to be re-exported to Asia, but we can see that they're left in Poland, they are transformed in Poland and that's the problem because we know that some of those commodities are produced with low standards. But as soon as the war ends, export logistics will resume their work in Ukraine. I'm not sure that so many commodities will come into the European market. But even then, competition between Ukrainian and European farmers will be difficult. Because Ukrainian farms are bigger, the landscape is better, there are opportunities to produce for lower prices”. Oleg Nivievskiy also agrees that this will be an interesting experience of competition: "I think Ukraine can teach European Union farmers how to work in a competitive environment, sharing our own experience".

Finally, Alex Lissitsa, CEO of IMC, drew prospects for Ukraine's partnership with the EU: “ I think in the first place would actually be bioenergy, especially biomethane. That's a kind of very attractive projection for business in Ukraine. Ukraine can deliver gas from bioproducts to the European Union and that would be kind of a really interesting start. The second issue is carbon certificates.

And the third one is processing. I would start with different types of processing projects. For example, not only based on the food but also based on the fodder for the animals, because in Europe there is a kind of lack of fodder”.

 




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