AMBASSADOR'S BLOG - UKRAINE'S NEARLY BONANZA

Kyiv
21.09.10




If you want a reminder of how prosperous Ukraine could be and of some of the reasons why that desirable state has not yet been reached, try visiting some of the nation's fabulously rich farming country.  

Farming in Ukraine is a paradox.  One the one hand there is the rich black earth stretching off into the distance, legendary for its fertility, often organised into high-producing commercial farms.  On the other there are the small villages and farms to be found in every corner of the country where women hold cows on pieces of string by the side of the road and dozens of workers perform back-breaking labour in strip-fields.  In between are agricultural businesses arguing that better business conditions would allow them easily to double Ukrainian agricultural production within a few years.  

I'm reminded of all this when I visit a commercial farm 200 km outside Kyiv.  It's my second visit  in two years, so I'm keen to see what has changed and what has stayed the same.  What I see is generally encouraging.  While since 2008 the world has dipped into a profound financial crisis, huge 100-hectare fields still stretch into the distance, loaded with rich crops of maize or sunflowers (in the UK, the average size of a farm is 59 hectares).  And although conditions this year have been challenging, with a shortage of capital and dry weather, yields should be reasonable.  At the farm canteen, the table groans with delicious borsch and home-grown fruit and vegetables.  

The agriculture sector has seen profound changes snce 1991, incuding the privatisation of most agricultural land.  But much still needs to be done.  There is still a moratorium on agricultural land sales (unlike in Russia).  And there is confusion about who has the right to lease their land to whom and under what conditions.  This summer, uncertainty about whether export controls would be imposed and allegations that administrative methods were being used simply to delay exports have hit hard Ukraine's reputation as a potential agricultural superpower.  This threatens to turn what should, with high agricultural prices, have been a bonanza year for Ukraine, into a PR disaster.

Agriculture, like the energy sector is an area where Ukraine could be a world-beater, with the potential to enrich the country and its people immensely.  Again as with the energy sector, the best way to maximise the chances of that happening will be to create a busiess environment which is predictable and transparent.  Lifting the moratorium on the sale of agricultural land sooner rather than later would be a great first step. 
Leigh Turner
British Ambassador to Ukraine


NOTE:  You can read all of Ambassador Turner's blogs by visiting: http://blogs.fco.gov/roller/turner 






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