We would like to draw attention of our subscribers to the most recent interview with Oleg Bahmatyuk, owner on Ukrlandfaming (largest agro holding in Europe and Asia) and Avangard (largest egg producer in Europe). There were several main points we would like to highlight from the most recent interview conducted by “Kommentarii” magazine with Mr. Bahmatyuk.

First focal point was the opinion that he expressed regarding national politics of Ukrainian government. When asked about government’s role in the agrarian sector, he stated that it would be beneficial for the sector if there would be less regulation in the sector and more support in terms of investments and lobbying of Ukrainian producers in the international scene. Brazil and Argentina were set as examples of countries, where direct support of the agrarian sector gave significant benefits to the countries.

Second, it was mentioned that Ukraine is marked with great potential for production of grain cultures, as during the most recent decade production of grain cultures grew by 2 times, from 25 to 50 million tons. Mr. Bahmatyuk stated that country’s potential is measured at 100-120 million tons, in case investments are actively involved to Ukraine. Unfortunately, during 2011 there were no major investments made, thus the growth remains a potential. He also named a number, USD 20-25 billion: this is the amount needed to reach 100-120 million tons production volumes in the next 4-5 years.

Third, Mr. Bahmatyuk suggested that the structure of the agricultural sector should remain the following: 40-45% of the agricultural land should belong to households, which would provide healthy employment in the sector. 20-30% would belong to small-medium companies, which would completely satisfy national demand. Finally, remaining 30% would belong to large corporations, holdings, which would export their production and would ensure food security for the country. Thus, limitation of land ownership which is set in the future land law in Ukraine is not understood by Mr. Bahmatyuk.

Fourth, Oleg Bahmatyuk mentioned China as the major partner for Ukraine in the nearest future. Being one of the largest world consumers, China actively looks for investment potential, mainly for securing food supply for the country. The most recent deal of Ukrlandfarming and Avangard with Chinese CAMC Engineering Co. for opening a credit line for USD 4 billion is an example of the potential for Ukrainian companies and Ukrainian agricultural sector.

Fifth and final, use of agricultural commodities as an energy source is a great opportunity for Ukraine to gain more independence from major energy suppliers (read: Russia) and gain weight on the international scene, where alternative energy sources remains a hot topic. It is clear that with the most recent plan of Ukrainian government to use 7% of biofuel in gasoline by 2014 will boost this branch.

AgroInvest comment: The development of Ukrainian agricultural sector is becoming the focal point in the development of the country. Day by day more and more entrepreneurs come to understanding of the importance of agricultural sector as main supplier of food. Political risks of Ukraine are currently the main obstacles in the way of rapid development for this sector. In the world where staying competitive is vital we can only hope that long-term perspective will overcome short-term interests and according measures are taken.

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