Ukrainian exports look towards Asia

After two badyears, caused by the conflict in the east of the country, the investmentclimate in Ukraine has been pulling up again recently. Frederique Vogel ofHolland Rosetta, sees the investments in horticulture increasing again. Thecountry has a lot of potential for fruit and vegetable cultivation, saysthe representative. And a lot of investors are aiming for export with theirproduction.

Sjaak Walraven ofFleuren Fruittrees from Baarlo talking to Ukrainian growers.

We have had twouncertain years due to the war. Now we see that the parties that have money arestarting to invest again,” says Frederique. “Like Europe, Ukraine is locked outof Russia and wants to enter the world market. The European Union is close butthere is already a lot of supply there. Yet we are seeking contacts in theEuropean network.”

Demo garden with Dutch crops

Holland Rosetta startedin 2005 as a company that introduced farmers and horticulturalists who wantedto go to Ukraine to the country. Soon after founding, this was moved to arepresentation of five Dutch companies and one Italian company in Ukraine. Theassortment consists of blueberries, strawberry and asparagus plants. Seedsand hail nets and fruit trees are also brought onto the Ukrainian market byHolland Rosetta. “We have a demo garden in Ukraine where we show the variousvarieties,” says Frederique. “We also organise field days and training.”

Blueberries in aUkrainian supermarket (week 32) in an open tray the fruit costs 5,50 Euro/kg andin a small closed tray 6,50 euro/kg. (Exchange rate 27 UAH for a Euro).

The demo garden hasanother advantage. The idea that Dutch crops don’t fare well in the Ukrainianclimate persists in the country. “We can prove the opposite with the garden.”Ukraine has a lot of potential for horticulture. The association treaty thatthe country signed with the UK gave Ukraine better trading conditions withEurope. “It is favourable for us,” explains Frederique. “The import taxes arelower, which means our products are cheaper.” The competition in the Ukrainianagriculture is tough and the Dutch plants are on the higher end of the marketwhere prices are concerned. The treaty also has advantages for Ukrainiancompanies. “For Ukrainian companies the treaty means easier access to theEuropean market.”

Granary for Asia

Large investmentsare being made within top and soft fruit. “We see the number of nurseriesincreasing,” says Frederique. “The companies aren’t relatively big and you needa lot of your own capital for investment.” Taking out a loan with twentypercent interest isn’t attractive. The expansions are partially meant to supplythe domestic market. We are certainly seeing more blueberries and other softfruit in the supermarkets this year. That’s good, because it gets the consumerused to it.” The domestic market is relatively small, so a lot of companiesalso look over the border to the international opportunities. The country, knownas the granary of communist Europe, during the Soviet Era, still has thatpotential. Frederique doesn’t recommend those countries to look towards Europe.“Local-for-local is becoming increasingly popular in Western Europe, so thereis less space for import.”

The Ukrainiangrowers also can’t compete with the EU subsidised cultivation in the memberstates. “Some growers in Eastern Europe receive seventy percent subsidy andgrow on bad soil. Ukraine can't compete with this, despite the soil being muchmore fertile. ”A look at the Far East is therefore necessary for export. “Wesee a lot of possibilities in China and India. It is also striking how manyChinese people can be found in Kiev these days.” Four years ago Frederiquehardly came across any Chinese people in the Ukrainian capital, nowadays thereare many more Asian business people to be found in Kiev.

Frederique Vogel speakingto Technical Director Valery Lyashynskyy during the demo day last year.

These investorshave the cheap agricultural land in Ukraine in sight. At the moment it isn’t possible to buy the ground and only lease contracts can be signed for 49years. However, there is legislation in the pipeline that will make the sale ofagricultural land possible. And there is plenty of it. Ukraine has almost580,000 square kilometres of land, of which 70 percent is used for agriculture.Combined with the good characteristics of this land, this could initiate a runon agricultural land over the coming years. There is a lot going on in theUkrainian agriculture.”