Ukrainian agriculture comes to world’s rescue in COVID-19 pandemic

As COVID-19’s deadly trajectory grows unpredictably around the world, people have to eat — pandemic or no pandemic. And that’s why Ukraine’s powerhouse agricultural sector is one of the least vulnerable sectors of the Ukrainian economy.

“People need food every day, unlike almost everything else,” said Andriy Yarmak, investment officer at the Food and Agriculture Organization of the United Nations.

Often viewed as a breadbasket of the world, Ukraine’s fertile black soil helps agrarians produce colossal volumes of sunflower oil, grain, fruits, poultry, and honey.

Only grain alone, Ukraine produces three times more than 25-30 million tons it consumes annually. The rest is exported, guaranteeing the inflow of foreign currency into the country.

“For a long time we have been feeding more people outside Ukraine than inside the country,” said Mykola Gorbachev, head of the Ukrainian Grain Association.

Realizing its vital role for the national economy’s survival, the Ukrainian government decided not to ban agricultural export, which accounted for nearly 40% of the country’s exports last year, worth $20.2 billion.

Amid a strict national quarantine in place until at least April 24, limiting traveling across Ukraine to the stop fast-moving COVID-19 disease, the decision not to ban agrarian export was announced by Taras Kachka, deputy minister of economic development, trade and agriculture of Ukraine, on March 20.

“Today, there is no point in imposing an export ban,” said Kachka.

Trade trends during pandemic

As people in many countries like Italy, France, or Germany stay isolated at home and rarely go out for anything but grocery shopping, experts predict a decrease in the sales of perishable products like dairy products, fresh fruit, and vegetables.

Instead, sales with a long shelf life and non-perishable products will significantly increase on a global scale. Thus, during the pandemic, grains will remain in high demand.

“It’s the product that is in highest demand all over the world,” said Yarmak.

Even despite a 10% drop for the grain harvest in 2020, forecasted by Ukraine’s national agrarian institute, the country will be able to produce over 67 million tons this year and export more than half of it.

There are no signs that Ukrainian sunflower oil will lose its global top position as well. The European Union imported 2 million tons of sunflower oil last year, and 90% was Ukraine-origin. At the same time, for Ukraine, the EU is only 30% of the country’s export market.

The rest export mainly goes to China and India.

Despite the fact that China, from where the deadly coronavirus spread around the globe, was the biggest importer of Ukrainian corn and sunflower oil, Gorbachev sees “no reasons to worry.”

“Inside China, there are difficulties with logistics, with delivery to regions, with consumers, but overall demand has not disappeared,” said Gorbachev.

Besides corn, grain and sunflower oil, Ukrainian poultry production and export can even benefit due to its lower price amid global economic slowdown caused by COVID-19 pandemic.

“With lower incomes, people refuse more expensive products, preferring simpler and cheaper ones,” said Yarmak.

In January and February this year Ukraine already increased export of poultry by 4.2%, to 66,270 tonnes, according to the State Customs Service.

Threats for fresh berries

While Ukrainian grain and sunflower oil export won’t be at high risk, fresh berries production might be under a great threat because of the COVID-19.

Last year Ukraine’s berries and nuts export reached a record of $339 million, according to Ukrainian Horticultural Association.  This year this result might be much modest.

“Instead of strawberries, Italian consumers prefer to buy more citrus, apples and other goods that can be stored for a week or more at home,” said Yarmak.

Domestically the situation doesn’t look optimistic too.

Since the Ukrainian government closed all street markets as part of the quarantine measures at least before April 24, producers see it as a sales-threatening factor since groceries account for less than 3% of all fresh berries sales in the country.

“Closing them is a disaster. And the prolongation of quarantine in Ukraine didn’t add any optimism for producers,” said Yarmak.

And even if quarantine measures won’t be extended again, many Ukrainian consumers still won’t afford to buy fresh berries, since the pandemic has already seriously affected their earnings.

“Fresh berries are definitely not cheap products,” said Kateryna Zvierieva, development director at Ukrainian Horticultural Association.

Currently, berry market players hardly can predict how this situation will develop in the nearest future.

“Our partners from France have announced that they are ready to restart cooperation in April. But, as coronavirus is spreading in the EU in general, and in France in particular, there are already some doubts if it is possible,” said Andriy Zhukov, owner of S.B. Frozen Foods.

According to Zhukov, three months in quarantine is a critical time for Ukrainian business. He complains that it is already hard to support workers and production. But he still sees the “light at the end of the tunnel” as his company specializes mostly on frozen berries, fruit, and mushrooms.

“The vast majority of partners in Europe are ready to restart cooperation,” said Zhukov.

Land market issue

Being an ardent supporter of the land market and lifting an outdated moratorium on the sale of Ukrainian agricultural land, Yarmak is not sure that it is the best time to do it since there is huge uncertainty about how the country will cope with coronavirus pandemic in Ukraine.

Instead, he believes it is extremely important today for Ukrainian farmers to invest in production rather than thinking where to find money to buy the land which they currently rent.

“Even for the information technology industry, it can be difficult times. But it is time to invest in the agro sector,” said Yarmak.