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Ready to feed the world

Article - January 19, 2012
Following the unification of Avangard and Ukrlandfarming, Ukraine can play a major role in alleviating the global food crisis

In an encounter between Oleg Bakhmatyuk, chairman of Avangard Ukrlandfarming – Ukraine’s leading integrated agricultural producers – and the Prime Minister of Singapore, in which food markets were discussed, the latter said to the former: “In this world there are two incomparable weapons: no food and no water.”

And at that moment, Mr Bakhmatyuk was reaffirmed in his belief that Avangard’s merger with Ukrlandfarming had created a vehicle with global appeal. The transfer of 77.49 per cent of Avangard – the largest producer of chicken eggs in all Europe and Asia – to Ukrlandfarming, was part of the largest merger in 2011 in all Eurasia.

Mr Bakhmatyuk announced: “Due to the constant threat of food crisis, we intend to be the flagship of Ukrainian exports of food to developing countries, as well as leader of the domestic food market.”

Ukrlandfarming has positioned itself as a global player – it recently pulled off a historical US$600 million loan to optimise its production – and is currently the number one landowner in the country. 

Regarding the appeal of the sector, Mr Bakhmatyuk explains: “Investors are thirsty for security and it is a safer harbour to invest in agriculture compared to more volatile alternatives. Real markets in times of crisis become increasingly more attractive to investors. Agriculture is maybe the only sector that can substantially boost cash flow in Ukraine.”

With an agricultural past inextricably linked to its history, Ukraine boasts a strategic location – at a crossroads between Europe and Asia – and is a country of temperate continental climate with much of its terrain consisting of fertile plains and plateaus.

The country’s potential is and has always been evident to the world. When still a part of former Soviet Union, Ukraine’s fertile black soil generated more than a quarter of the entire Soviet agricultural output, and its farms provided substantial quantities of meat, milk, grain, and vegetables to other republics.

Ukraine now has the opportunity – and capability –  to capitalise on the world food crisis.  What distinguishes the country from others is that it is one of few that still have the potential to increase its agricultural production. “Argentina and Brazil have nearly reached their potential, while Ukraine’s minimum growth is estimated at three to five times, according to analysts, which makes this an extremely attractive investment opportunity,” explains Mr Bakhmatyuk.

“Ukraine is perhaps able to feed much of the world because of its potential for agricultural output and its proximity to other regions. We can fill 40 per cent of the food deficit that’s in North Africa,” he adds.

“Ukraine is estimated to be capable of producing anything from around 120 and 180 million tonnes a year. Given that Ukraine consumes domestically around 25 million tonnes, this can make Ukraine – within the next decade – a clear global leader in exporting grain, and also a global leader in the production of proteins,” says Mr Bakhmatyuk.