This year, the local agriculture industry will face its biggest challenge since the country’s independence. Starting in July, the government will lift the ban on farmland sales, with big limitations.
The move will effectively open some of the country’s famous fertile soil — chornozem — for sale to Ukrainian farmers, who used to lease it.
The sales will be limited to 100 hectares per individual to avoid agriculture monopoly; land will only be available to legal entities beginning in 2024; foreigners will have access to the market after 2024 if a nationwide referendum approves it.
This breakthrough reform should be implemented gradually to ensure full support from Ukrainian farmers because the land property is a historically touchy subject, Agriculture Minister Roman Leshchenko told the Kyiv Post. “Step by step,” he said.
Ukraine’s prodigious agricultural exports include billions of dollars worth of sunflower oil, corn, wheat, food waste, and rapeseed — accounting for $16.1 billion in exports in 2020.
Fertile country
Ukraine is one of the most fertile places on the planet, with 25–30% of the world’s reserves of black earth. The country boasts around 42 million hectares of agricultural land, covering 70% of the country.
At present, 32 million hectares are cultivated annually, representing an area larger than Italy.
Agriculture is Ukraine’s largest export industry, accounting for 10% of the gross domestic product in 2019; it brought over $22 billion to the country that same year.
The country is among the top three grain exporters and one of the world’s leaders in exporting barley, sunflower seed, sunflower oil, rapeseed and rye.
Ukraine shipped 57 million tons of grain to international markets in 2020, representing around 16% of the global grain exports.
Ukrainian agricultural exports enjoy a growing profile in key global markets like China, Egypt, India, Turkey and across the European Union. Looking ahead, Ukraine aims to provide food to the United Arab Emirates, with which President Volodymyr Zelensky signed a $3 billion deal in February 2021, as well as to a number of other countries in the region including Saudi Arabia and Qatar.
April’s soaking rains and a good start to the spring sowing campaign lead analysts to predict a grain crop of 75 million tons in 2021.
Ukraine ranks among the top countries in sunflower, barley, corn and wheat production.
Irrigation
Ukraine produced roughly 75 million tons of grain in 2019, but the production went down to 65 million in 2020 due to droughts at the start of the sowing season.
Climate change is a global issue that all countries need to address, but in Ukraine’s case, it is also a national economic priority. Due to the poor technical condition of engineering infrastructure, up to 40–50% of water is lost during transportation, which hurts the country’s agriculture.
That’s why the Agriculture Ministry has launched the so-called Irrigation and Drainage Strategy until 2030 alongside the land reform to encourage farmers to invest in irrigation and drainage.
The strategy addresses the modernization of systems that currently serve nearly 150,000 hectares of land. Bringing the irrigation system up-to-date will cost approximately $200 million.
However, Ukrainian farmers should own their land first to invest in irrigation, Leshchenko said. It means the strategy will likely be converted into actions only after the land reform kicks off.
“Nobody wants to irrigate something they don’t possess,” the minister said.
Foreign direct investment in Ukraine’s agricultural centra has dipped in recent years.
