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Agriculture and the tasty business of chocolate

Article - September 15, 2011
While the government is making plans to raise agricultural productivity and attract investment, private sector players – like Petro Poroshenko – are forging ahead with successful business pursuits

With vast tracts of extremely fertile land, it is only logical that the agricultural sector has long been Ukraine’s biggest breadwinner. Nowadays, it accounts for 16% of the GDP and employs the same percentage of the workforce. In fact, Ukraine remains a largely agrarian nation, with approximately one-third of the population still living in rural areas.

The agricultural sector has gone through several transitions through Ukraine’s history, however, and today, reforms are once again changing the industry’s profile. “The agricultural sector was very contradictory for 130 years, and that is why the population is quite confused about its development,” explains Mykola Prysyazhnyuk, Minister of Agriculture.

“Under the Tsar before the revolution, we had a system that was very much like feudalism and during the Soviet era, we had collectivization. Now we have a system that cannot be defined. It is vital for us to study our experience and new technologies to develop a model that is appropriate and effective for Ukraine’s agricultural sector today.”

The minister’s goals, he says, is to increase productivity and grain harvests. “Our index is quite low at the moment and we need investment to do this,” he adds. “My goal is to create a very friendly investment climate for international grain traders so that they can work with Ukrainian farmers to grow, harvest and process grain, and sell it.”

Petro Poroshenko, Head of the Council of the National Bank of Ukraine (NBU) and a highly successful businessman, calls his country’s agricultural sector a highly profitable “sleeping giant,” and agrees that productivity must be raised, especially in order to address food deficits both at home and throughout the world.

In addition to working with NBU since February 2007, Mr. Poroshenko has also served as Secretary of the National Security and Defense Council (2005) and Foreign Affairs Minister (2009-2010). 

Predating his political career, however, is his famous incursion into the cacao bean business, which led to his nickname as the ‘Chocolate King’. In the 1990s, he united the various businesses he’d acquired over the years into the Roshen group, today the largest confectionery manufacturer in Ukraine and market leader in the whole of Eastern Europe. 

Roshen’s sales in 2010 rose a staggering 32% from the previous year, to over $1 billion. Mr. Poroshenko attributes this success to investments in modern technology and equipment and the company’s diversification in different markets both in sales and production. He also says that the company’s strategy to “deliver the taste and quality of premium products at an affordable price has helped us achieve success and stay ahead of our competitors.”

He continues: “The third important factor is that the confectionary market is very competitive with the presence of leading Western brands, such as Kraft, Nestlé, Mars, etc. This competitiveness and transparency of the market helps us to be easily understandable, profitable and successful.”

Indeed, Roshen has been named Ukraine’s Most Reputable Company by the Global Reputation Pulse Project three years in a row. And not does Roshen satisfy the sweet tooth of millions of consumers, Roshen will soon delight children with its new tourist attraction in Vinnitsa. “This investment includes the tallest fountain in Ukraine, a theater, a large embankment and park, but most groundbreaking of all, there is a completely unique chocolate museum,” says the business mogul. “We used technology from Disneyland, so children no longer have to travel to Disneyland in Paris, Florida or California to visit their dreamland. And this is just the first stage. Our aim is to create ‘absolute happiness’ for children.”

Although he is no longer directly involved in Roshen’s management, Mr. Poroshenko does keep busy as member of the board of the UPI Group, formerly called Ukrprominvest. UPI is one of the largest national corporations with more than 30 enterprises active in a wide variety of sectors – including confectionary (Roshen is one of UPI’s most important businesses), food products, agriculture, machinery, automotive, shipping and leisure.