Wednesday, July 6, 2022

‘Best offer’ in the Ukraine

Temuka-based arable farmer Michael Tayler is a 2012 Nuffield scholar. He has recently returned from travels through Asia, Europe, and the US, during which time he documented his experiences in a series of emails. He sent this email after a trip through the Ukraine.  

The Ukraine was intriguing.

We travelled in a convoy of three VW Polos, passing through vast areas of some of the best farmland in the world – field after field of deep rich soils, a lot of them more than 200ha in size.

The Ukraine has 30% of the world’s black soil; in places some of it is 6m deep. Rainfall is around 600mm a year (varying across the country) with lots of irrigation. I had often heard about the huge agricultural opportunities in the Ukraine, so it was great to see it first-hand.

Saying that, there are many challenges to farming there. Temperatures can vary from minus 25degC up to 40degC. There is still a lack of good infrastructure and we were told inflation runs at around 15% – though we’re not sure how accurate that is. (During the global financial crisis their currency lost 65% of its value).

All that, plus a healthy dose of corruption, and you have Ukraine agriculture.

The largest farming business there began two years ago and is now working 540,000ha. It is owned by the president – enough said.

We visited many farms. Among them, we spent a day each on a 10,000ha operation run by an American company and a 15,000ha farm run by a Dutch partnership. They were huge businesses.

Foreign ownership of land is not allowed so renting is the only option. That in itself is a challenge. When the USSR dissolved in 1991, the farmland was divided up and distributed to the locals with parcels ranging in size from one to 5ha, depending on the quality of the land. To farm, a foreigner can register a Ukraine company and rent this land back from all these individuals after endless paperwork, but most foreign investors try to partner with local business. Crop yields are solid (six tonnes of wheat) and improving all the time. Technology transfer are the buzz-words used a lot … look out when they get it right. They feel the biggest potential for improvement here lies in dairy and grain.

With an unreliable legal system as well as no real property rights, the major hurdle is still corruption at all official levels. To succeed as a foreign farmer you would need to “think local” and learn to use the system, i.e. find out who to pay in order to be able to do business. If you are uncomfortable about regularly paying “backhanders”, then forget it. Also learning the language would be important. Still for all that there are many, many exciting opportunities – probably more than anywhere I have been – but you would need a lot of patience.

A Ukrainian carrot grower with our Ukrainian translator … 65 tonnes carrots/ha, hand-picked for fresh market.

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