For Swedish-Ukrainian farm operator Grain Alliance, sustainability starts with little changes that can make a big difference in slowing climate change — as long as everyone does their part.
While it’s hard to control what’s happening on the other side of the world, the Grain Alliance is reducing its carbon footprint and adopting environmentally friendly agricultural practices here in Ukraine.
The 23-year-old Swedish-owned enterprise was among the first farm operators in Ukraine to build grain storage facilities that use heat generated from biofuels to dry and maintain the crops until they are shipped elsewhere.
In contrast, the majority of grain elevators in Ukraine use natural gas to dry their crops. In 2021, Grain Alliance expects to reduce greenhouse gas emissions by 7,000 tons of CO2 equivalents thanks to their eco-friendly grain elevators.
“If everyone is doing what they can to make even a small difference or smaller changes in the area of their presence, then the whole country will be better,” Tahir Musayev, company vice president, told the Kyiv Post.
Grain Alliance also curbs CO2 emissions by using 3-in-1 field machinery that plows, plants and sprays fertilizers. This innovative technology allows the company to cut fossil fuel consumption by three times while also retaining soil moisture better by using the machinery less frequently, according to Musayev.
Leading by example, earning more
Despite the ban on cultivating genetically modified crops in Ukraine without the approval of the state, they are being grown “all over the place,” Musayev said.
According to a study on Ukrainian soybean fields conducted by Romanian environmental organization Agent Green in 2018, genetically modified soybeans were detected in 48% of the samples collected from six different regions.
The scientists involved in the study estimated that genetically modified soybeans are being cultivated in approximately 600,000 hectares of fields in Ukraine.
Amid growing concern regarding the unknown consequences of genetically modified food, buyers in major soybean importing countries like China, South Korea and Japan specifically ask for non-GMO products, according to Musayev.
Grain Alliance’s “constant non-GMO production policy” allows the company to earn more by gaining customer trust all over the world, said the vice president.
Farming to processing
Farm operators can increase profitability by entering the processing arena — turning agricultural products into food products adds significant value. Today, selling processed goods instead of commodities is still a distant goal for Grain Alliance.
Musayev said in order to grab investors’ interest in opening agricultural facilities in Ukraine, there needs to be a huge demand. If Ukraine’s grain and oilseed harvest reaches a new record of 100 million tons in 2021, he believes this would be enough to stimulate such demand in the country.
In 2019, Ukraine reached a record of 74.7 million tons of harvest but it fell short the following year with 65.4 million tons instead. However, Ukraine is still one of the world’s top agricultural exporters and the expectations for 2021 are especially high due to favorable weather conditions.
Most importantly, Musayev says that the government should make it easier to get the approval needed to build a processing plant in Ukraine. It takes at least a year to get the approval and by that time, “global demand can change” and their business ideas may no longer be relevant, Musayeb explained.
Grain Alliance currently has 60,000 hectares of agricultural land but the Vice President said “the next step for us will be processing (our agricultural crops)” once it is able to expand the field to 100,000 hectares.
Long-awaited land reform
Ukraine remains one of the six countries in the world where there is still a ban imposed on the sale of private farmland.
The landmark law finally allowing the owners to sell their property goes into effect on July 1, but legal entities including local agricultural companies will still be prohibited from making the purchase at least until 2024.
The longstanding ban on farmland sales from 2001 has been discouraging agricultural companies from committing to long-term investment in technology and higher value products.
Like most other farm operators in Ukraine, Grain Alliance mostly uses rented land for agricultural production. Musayev said the company relies on leases for land from 28,000 private individuals who could easily refuse to extend the contract if they feel like it.
The new land reform law, however, still bans companies like Grain Alliance with foreign beneficiaries from claiming ownership of agricultural land. Once the ban is lifted, Musayev said all eligible companies will run towards purchasing land instead of new technology because it’s the “initial source of business.”
While “it is a certain disadvantage” for the Swedish-owned enterprise, Musayev said this will not stop the company from investing more in Ukraine. During the last 12 years, Grain Alliance has made a total investment of more than Hr 1.5 billion ($18 million).
Socially responsible
Grain Alliance may not be the largest nor the most profitable agricultural company working in Ukraine, but it has a much bigger goal in mind.
It wants to create a meaningful relationship with the local people in villages where their fields are located and has launched a charitable foundation mainly to develop healthcare, education and sports there.
The company has contributed a total of Hr 2.2 million (about $80,000) just on healthcare and educational projects across Ukraine. Though “we cannot change everyone, we can make a difference to some individuals in small villages,” the Vice President said.
“We start from where we are,” he said.
