Global agribusiness giant Dupont Pioneer will open a $40 million seed production facility in Poltava Oblast on June 11, a move the company’s commercial unit director for Ukraine and Russia Csaba Molnar expects will help lift Ukraine’s notoriously low yields. It also confirms the trend that agribusiness is one of the few sectors where foreign investment is still strong.
Molnar has high hopes. “Ukraine is already a global player in export markets, in the last three years Ukraine was the number three exporter of corn. Just imagine if the yields increase to European levels of 9 or 10 tons (per hectare), then Ukraine can export over 50 million tons of grain. Ukraine may challenge the U.S.,” he said.
The average corn yield in Ukraine was 5.9 tons per hectare in 2012, while recent years averaged from 4 to 6 tons per hectare. If the government’s plan to export 80 million tons is to be realized, Molnar noted, significant improvements are needed.
Analysts say Ukraine is expected to export 23 million tons in this growing season, ending on June 30.
While Dupont works with genetically modified organisms abroad, in Ukraine local rules limit it to traditional methods. Nonetheless, Molnar points to farmers that use high-quality seeds and techniques – who manage to get yields of 9 to 10 tons – as a sign of the country’s potential.
At present, Dupont’s plant has a capacity of 5,000 tons of corn, and will open a sunflower line with a capacity of 2,000 tons next year. Dupont also sells rapeseed and sorghum in Ukraine, but does not plan to work with these crops at the Poltava plant.
While foreign direct investments in Ukraine have plummeted, agribusiness is one sector bucking the trend. Among others, Dupont competitor Mosanto hopes to launch a $140 million facility in 2015.
This interest stems from droughts and poor yields globally that have raised prices, while Ukraine has a lot of room for growth by improving logistics and technology, Ihor Ostapchuk from the Ukrainian Agribusiness Club told the Kyiv Post. That said, red tape and a tough business environment are holding many back, he added.
According to Molnar, Dupont did not run into major bureaucratic problems – a rarity in Ukraine’s difficult business climate – and has good relations with local authorities, who want jobs and investment in the region. The plant will hire 70 people on a permanent basis, with an additional 200 seasonal workers.
Kyiv Post chief editor Jakub Parusinski can be reached at [email protected]
