Expert: Ukrainian farm companies raised almost $1.5bln in investment in two years

Ukrainian agricultural companies have attracted investments totaling nearly USD 1.5 billion, the Ukrainian Agribusiness Club (UAC) reported.
“Global demand for food in the medium term will continue to grow, driven by an increase in population and, consequently, the per capita consumption in Asia. The areas of lands suitable for agricultural production have been reducing annually, which significantly limits the agricultural offer,” UAC Director General Volodymyr Lapa said, commenting on the situation, a UKRINFORM correspondent reported. 

Against this background, Ukraine maintains a relatively high investment attractiveness, because it, says Danylo Pasko from Horizon Capital, has significant competitive advantages in costs due to the high fertility of the soil, favorable geographical location, relatively low labor costs and fuel. “Ukraine is also a leader in terms of growth of corn and soybean yields and holds leading positions in a number of global markets for agricultural products and foodstuffs (about half of world exports of sunflower oil). The most priority sectors for investors are crop production, processing (extraction of oil, potentially processing of corn, soybeans, and wheat), handling and port infrastructure,” said the expert.

In turn, the Director of Strategic Development at UkrAgroConsult, Bohdan Khomiak, while continuing the theme of investing in agriculture, focuses on the land question. “The land is rich here, but at the same time, there is a legal chaos in land laws. The law on farm land market will not operate without the land register, which the country lacks. This provision, even if the law is adopted, would generate uncertainty, which will not allow to buy and sell land, use it as a pledge in the bank,” he emphasized.

Creating a land market in general is not a stimulus for investment in the Ukrainian agricultural sector, says the analyst. On the contrary, the system that exists at the moment is optimal to invest. The presence of developed and cheap lease relations – this is the factor which allows Ukraine to be the most efficient producer of agricultural goods.

The transition to the land market can significantly reduce the amount of investment in the agricultural sector, UkrAgroConsult experts believe.

Another problem hindering investment in the Ukrainian agricultural sector is a limited number of large-scale projects. Given this factor, mergers and acquisitions in the agricultural market, which are currently taking place, is a natural and positive process. Consolidation – this is almost the only and necessary step in the given situation for the subsequent development of efficient production,” the analysts conclude.


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