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Olga Trofimtseva has been Ukraine’s acting agriculture minister only since February, but she’s shown herself to be incredibly capable.
She calls herself a technocrat and absolutely “neutral” in terms of representing the interests of specific players in the agriculture sector. And she heads a ministry in a field in which she actually specializes.
“I am in office just for several months, so it’s too early to judge,” Trofimtseva said of her work during an interview with the Kyiv Post on June 18.
Trofimtseva graduated from the National Agrarian University of Ukraine, specializing in foreign economic activity management. Two decades later, she got her Ph.D. in agrarian policy from Humboldt University in Berlin. In between, she worked in various academic and research positions.
The most recent position she held before joining the ministry was working as the manager of a project funded by the German agriculture ministry that advises Ukraine on agrarian trade issues. That project came about as part of the Deep and Comprehensive Free Trade Agreement between Ukraine and the European Union, which came into force in September 2017.
“My absence here in Ukraine for a long time and absence of any kind of affiliation with business or political groups… (makes me) absolutely neutral to everybody, from the smallest farmer to every association and the largest agroholding,” Trofimtseva said. “I am defending the interests of the whole agricultural sector both here in Ukraine at the governmental level, state level and also outside (of Ukraine).”
And Trofimtseva has a lot to represent. Her ministry consists of 300 people, with nine departments with even more subdivisions. She oversees about 500 state-owned enterprises, of which only 180 are economically active.
“The majority of these enterprises should be privatized or liquidated,” she says, echoing the words of many other reform-minded ministers who joined Ukraine’s government after the 2014 EuroMaidan Revolution, which ousted former President Viktor Yanukovych.
Top goals
Trofimtseva’s top priority is to follow the ministry’s reform strategy, developed in 2015 with Ukraine’s EU partners. It consists of creating a land market; increasing governmental support for small farmers, rural development, and niche produce; creating new markets and managing the ministry’s state enterprises, the irrigation system, and food quality.
Ukraine’s Agriculture Minister Olga Trofimtseva speaks with Kyiv Post on June 18 at the ministry’s building located on Kyiv’s downtown Khreshchatyk Street. (Oleg Petrasiuk)
Land market
The multibillion-dollar issue in Ukraine is creating a land market, something which the country doesn’t have due to an almost two-decade-long agricultural land sale moratorium. The World Bank estimates that, with a land market, Ukraine’s annual gross domestic product will increase by up to 1.7 percent annually.
Trofimtseva doesn’t see the moratorium being lifted this year, but says it is possible for parliament to vote for its removal in 2020. Once the process is initiated, she says that it will take about five years to implement the major steps of creating a land market.
“We should still continue our work at the technical level for the preparation of the moratorium lifting,” Trofimtseva said. “…We should be very well prepared for how exactly we will start from scratch for the whole Ukraine.”
If not, the risks are too high, she says. “Because in such an important and sensitive issue like the land market, even a small gap can be the reason for huge turmoil…”
“I am very cautious about that… because I know about the sensitivity of this topic, I know about the complexity of this topic and that’s why, to tell the truth, this is exactly the kind of reform where we cannot allow ourselves any kind of mistakes,” Trofimtseva said. “We should be prepared perfectly here.”
One difficult task is to make sure that the sale of land is balanced, and that there are many players — both domestic and foreign — on the market instead of a few.
“What we proposed was, at least during the first stages of the land market introduction, to have constraints so that only Ukrainian citizens or Ukrainian legal entities can be eligible to buy the land,” she said.
Irrigation
Another challenge for Trofimtseva is making sure Ukraine’s irrigation system is properly managed and that Ukraine is adjusting to climate change and using natural resources more effectively.
“Everybody is talking about (Ukraine’s) great black soils, but we should be more careful with the quality of these black soils and (use) sustainable agriculture to have these beautiful and productive black soils also in 10–50 years,” she said.
Trofimtseva has to look at the macroeconomic picture of Ukrainian agriculture and make sure that decisions that are made will not only benefit one sector, but the economy as a whole. For example, making sure that biodiversity — such as bees — is not harmed because of the use of pesticides or the lack of crop rotation.
“It’s about the whole environmental system, keeping biodiversity and the health in a wider meaning,” she said.
“We are working on concrete instrument mechanisms: how from the state, the ministry side can we have an impact and give the proper impulses to the producers to be more responsible, to be more sustainable?” Trofimtseva said. “That is why we are trying to keep an eye on the whole chain.”
More diversification
One way to achieve this is to make sure that the economy is more diversified and more competitive.
“We do have our competitive advantages in the production of cereals or oil seeds or cash crops, but I would also like to have strong horticulture, a strong organic sector in Ukraine, organic berry production,” she said.
Some of the most undervalued sectors in Ukrainian agriculture include wine and grape production, agricultural machinery, and aquaculture.
Ukraine could learn from various other countrie how to become more productive and efficient in all of these sectors.
For example, Ukraine can take lessons from Turkey on how to process raw materials, from Germany on how to implement land market reform, and from Israel when it comes to agricultural technology, the minister says.
“The Netherlands, for instance, is one of the perfect examples when there is such a tiny country, but (it is) the second top agricultural exporter worldwide in the sense of the value of agricultural exports. How did they do it? Its about the know-how, technologies, high value-added.”
Ukraine’s Agriculture Minister Olga Trofimtseva believes Ukraine should diversify its agricultural production to niche products such as berries instead of strictly producing grain. (Volodymyr Petrov)
Value-added
Ukraine’s agricultural exports reached a record value of $18.8 billion in 2018. But Trofimtseva says there’s no time to celebrate: most of the exports are still raw materials.
What she wants to see more of is processed products or niche ingredients and tech products. She also wants to see a “diversification of players” who export.
“If you compare the structure of the companies who are involved in agri-food exports in Ukraine and other countries, you will find that, in Ukraine, the share of small and medium-sized companies (SMEs) is not so high… as in Germany,” she told the Kyiv Post. “So we would like to involve more SMEs in direct export activities in Ukraine.”
One example the minister cites is a company in Poltava Oblast that produces single-use honey sticks, which can then be sold to airline companies and hotels.
She emphasizes that SMEs should also work on tech solutions for farmers, such as providing land bank management, meteorological services, and resource efficiency management.
“We would like to export not only grains, oil seeds, and sunflower but also drones and ag tech solutions worldwide.”
Small players, big economy
Overall, Ukraine has about 43,000 farmers, of whom 33,000 are active.
“Out of the 33,000 private farmers, we have more than 80 percent, if I’m not mistaken, small farmers with 500 hectares or less…,” Trofimtseva said. “So the share of SMEs in Ukraine is quite large in the agricultural sector.”
But there are many challenges the ministry faces with SME players, including the need to educate them on land management.
For example, “bringing them to the civilized value-added chains” would allow farmers to sell their products at higher prices and also have the opportunity to export directly.
But the level of economic and legal education in Ukraine is still lacking. “In general, I think it is quite low, unfortunately,” Trofimtseva said.
What the ministry can do is extend consulting services to the regions for small producers.
“We discussed just today in the ministry how it should work and how we can make it more effective,” she said. “Agri-business is like every other business — you should be able to calculate what is more profitable and sustainable for you… You should be able to have a business plan.”
Some countries start educating farmers from a very young age. For example, the United States has a special program called the Future Farmers of America where high school students learn agricultural management and can continue building their career through specialized and hands-on programs.
Ukraine doesn’t have anything similar — yet.
“(We don’t have) such great programs like that, but we started last year to support young farmers,” Trofimtseva said. “And we just had during our annual agro exhibition here in Kyiv… a meeting with young farmers, and we discussed with them how we can make this state support for them more systematic, something like Future Farmers of America.”
But there is another problem: many of the smaller players are still in the shadow economy, according to the minister.
“Often times, there will be individuals or families operating a farm and not registered as a legal entity,” she said.
The ministry is trying to establish more incentives for farmers to be part of the official economy, such as various state support instruments available only to producers who come out of the shadows.
Once the farmers join the official economy, there will be a “chain reaction” as the they pay taxes and, in turn, receive state or private support from international donors in the form of financial or technical assistance, Trofimtseva says. This will allow them to invest in new technology and equipment.
Despite the challenges, Trofimtseva remains an optimist. She says she personally sees more people who are not only engaged in farming, but also in less traditional agricultural production: producing craft cheese, growing organic produce, or cultivating unusual crops like asparagus and arugula.
“They are (trying out) very new subsectors,” she said. “So we should support them not only with informational support but also with financial support.”
