- Tweeter
republish
Champion in production, export leader, the former wheat loft of the USSR has not yet unveiled its full potential (first part). While in the European Union, particularly in France, grain producers are frowning, Ukrainians would like to see the EU open more (second part). The association treaties between the EU and various countries or economic zones have increased in recent years. The one between Brussels and Kiev must be reinforced at a summit on Monday, July 8th. Is Ukraine a partner or a competitor?
From our special envoy in Kiev
Bzzzz. A huge metallic and nervous insect rises vertically. In front of him, Vladimir Kravtsov is focused on his controls and on his mobile phone which serves as a control screen: he sees what his drone flies over, fields and farm buildings essentially. The beast is sensitive to remote commands. " It can fly up to 100 km / h and 350 meters high, " marvels the pilot, who is primarily director of production AgroRegion, and addicted to Excel spreadsheets and slides.
Technologies for profitability
The subsidiary of a Swedish company - East Capital Holding, which was close to $ 6 billion in 2007 at the time of the purchase - manages close to 35,000 ha of four oblasts (regions). It is a bit of the prototype of agroholding, the name of these gigantic holdings from land-sharing at the end of the Soviet era. As much as the size, which exceeds 600 000 ha for the largest of them, it is also their operation which defines these agroholdings: they control the whole chain, from the production of the raw materials to the marketing, in through processing, a key step for the added value of the export product. They are close to 150 in total and AgroRegion is currently 44th in the standings. It employs 450 people and produces conventional cereals, maize (43% of the land), rye, wheat, soybean, sunflower, rapeseed, after abandoning breeding in 2008 (and dismissed nearly 2,000 people out of 2,500).
That same year, AgroRegion produced 3.4 tonnes per hectare (t / h) of maize; over the past four years, the average yield is 9.35 t / ha - 11 tonnes in 2018 - comparable to French production. " The explanations for this progress are many, explains Vladimir Kravtsov, land, weather, teams and equipment ... "
To produce on such vast expanses, the use of new technologies is becoming more and more widespread in Ukraine. " We are really focusing our efforts on these modern means. We test new things and measure everything, absolutely everything that is measurable : the relief, the earth, where we must sow or sow, etc. I come from finance and when I arrived, I did not understand how we could evaluate a field of 100 ha without drones. From the air, we see all the problems [see photo slideshow at the bottom of the article]. Look at the numbers : we are producing eight tonnes more per hectare today. And to undertake a quick return on investment calculation: more than 13 million euros in profits. The company today earns $ 475 / ha, all crops combined.
UAVs are the ultimate tool for these 2.0 farmers, but there are also tractors equipped with GPS trackers, which generate drastic fuel savings, those that measure the hardness of the soil to know how deep planting, or the sprayers. intelligent people who detect weeds and release phytosanitary products - which are among the most important items of expenditure for a farming business - where right, in the right place without waste. Aware of the potential profit margins, AgroRégion does not skimp on investments in machinery and technological tools. " We have about $ 100 / ha of machinery expenses," says Vladimir Kravtsov. The difference can be several thousand tons of harvest. In agribusiness, it's easy to be more efficient but it requires investment. Only 10% of farms use new technologies.
" Efficiency " also means saving labor, the framework adds itself. It reveals an umpteenth Excel table with the salary grid of the employees. Equivalent (tractor driver), these range from $ 200 to $ 1,200 " for the best of them ", with an average of $ 577. On average, the salary of a Ukrainian farmer is $ 220 a month. " We prefer to hire a guy instead of three but pay him three times more. Given this key element of the cost of production, competitiveness looks unsurprisingly on the Ukrainian side.
The example of AgroRegion allows us to grasp both the agribusiness concept conveyed by agroholdings and the development potential that still remains in Ukraine, a vast agricultural power awakening.
Producing power ...
Because in raw material agriculture, Ukraine is not born from the last rain, in every sense of the term. Considered once as the breadbasket of the USSR, as recalled by the yellow color of the flag, it has gradually regained, with its independence, the lucidity of its potential, its strengths and its weaknesses.
The climatic conditions have been favorable for several decades and especially in recent years. The impact of global warming remains difficult to predict in this country with very marked seasons. For example, a major crop such as sunflower adapts well to drought and could nibble space, but it would be detrimental to corn, greedy water.
A natural asset lies in the exceptional quality of the land. The country has 42 million hectares of agricultural land, or 70% of the territory, including about 33 to 36 million arable land, a third of the cultivable area of the EU!
Nearly half of these lands are known as black or Chernozem: one of the most fertile soils in the world, due to a high concentration of humus (minerals such as phosphorus or potash). It is both able to retain moisture for longer than sandy soil and reduces the use of fertilizer. There is little of this elsewhere in the world: 25% of Chernozem is in Ukraine. Of the 35,000 ha leased by AgroRégion, 40% are. " The difference in performance is clear. In corn for example, it can go up to 2 t / h more, "says Vladimir Kravtsov.
As a result, the country has recently risen to the rank of cereal production champions and frequently beats its records: 66 million in 2016, 70 in 2018. This record comes from corn (35 million tonnes, compared to 5 ten years ago). !) and wheat (25 million). Ukraine also produces barley, rapeseed, sunflower (which it processes itself), sugar beet, but also poultry and milk, two sectors expected to emerge in the next few years. observers. " We are aiming for 100 million tonnes of grain in the next five years, " says Alex Lissitsa, president of the Ukrainian agroholdings association, himself head of IMK, one of the country's ten largest firms (136,000 ha, 22 million net profit in 2016).
In his office in a northern suburb of Kiev, Serguey Feofilov, a regional agricultural market analyst and director of UkrAgroConsult, an agency he founded 25 years ago, is more measured, although the figures remain impressive: " We will reach the 80 million tons of cereals produced in 2023 and 95 in 2030. The problem will be to find the markets and the financing. "
... and export
For now, the markets are there and pull the economy up. Aggressive and competitive, Ukraine has made a name for itself in the global grain and vegetable oil trade: agri-food products account for 56% of the country's exports; 35% of these products are sold to Europe, its second largest market after Asia; it is the leading exporter of sunflower oil (oleaginous), the fourth for maize and barley, the sixth for wheat, in the same yard as a few giants like Brazil, Russia ... The trade surplus for agri-food products was 17 billion euros in 2017 and the share of agriculture and agri-food industry in GDP climbed to 16-17% in 2017, a sharp increase compared to previous years.
The strike force comes from the size of the farms that have been emerging for only fifteen years. " The first ten agroholdings alone rent three million hectares of land. They produce between 25 and 30% of cereals and export between 40 and 45%. Their role increases considerably, "says Sergey Feofilov. Not to mention that the population is 30% rural and that there is a base of about six million small farms and a few tens of thousands larger.
" The agricultural sector, which employs nearly 15% of employees, has become the main foreign exchange supplier and the engine of an economy with signs of improvement in 2017 , thanks to exports ", write two specialists, Nicolas Perrin and Alexis Grandjean, in a note from the Center for Studies and Prospects (French Ministry of Agriculture).
Barriers to business
Still, the obstacles to development are important and structural. " The number one problem is funding, " sighs expert Serguey Feofilov. Poor agricultural policy is a big part of it. Until 2017, the farmers did not benefit from any direct aid, they enjoy a favorable tax regime, through a single very low fixed agricultural tax and a VAT refund scheme for the exported productions ( scheme removed in 2017). " According to our studies, last year, agricultural sector spending was $ 20.7 billion while government assistance was $ 240 million. It's not enough. "A figure that we could cross with the official figures. " And this money goes directly into the pockets of the oligarchs, " says a connoisseur.
On the other hand, yields remain poor: 4.2 t / ha for wheat for example in 2016 (against 5.3 for the EU) and 6.6 for maize (7.1 for the EU). But this mediocrity is also calculated: cultivating on large surfaces is expensive and it can be more profitable to produce less. " If world grain prices rise, maybe yields will rise. In addition, acknowledges Alex Lissitsa, " the level of education is one of our weak points . The more skilled people tend to go to neighboring Poland, so companies have to put their hands in their pockets to hire those who stay.
Infrastructure that is slowly modernizing, whether it is transport or storage, is another black spot for the development of the sector. But again, nature has conceded two advantages to Ukraine: its strategic access to the Black Sea and the long Dnieper River, which feeds it and can be used as a freight transport route.
Finally, the stage of the transformation of raw materials is not yet in the firmament: " It is our objective to gain in value added on the products, explains Serguey Feofilov. We have the abilities. But importers prefer to buy the raw material and give the transformation work to their companies, it's more interesting. "
A reform of the land announced for several years
Last major speed bender, the first of them in reality: the status quo on land reform. At independence in 1991, half of Ukraine's land is fallow. During the following decade, they were largely privatized: 26 million lands were distributed to former employees of the sovkhozes and kolkhozes, and another 10 to the state and the collectivities. Since 2001, the agricultural land market has been subject to a moratorium which prohibits any sale of agricultural land. A land reform, politically very sensitive, to open the market for agricultural land, is said to be imminent but regularly postponed pending, among others, the establishment of a cadastre accepted by all. The current Ukrainian situation is unique in the world.
The distribution system represents for homeowners - often modest villagers - a safe and regular income ($ 52 / ha / year on average). Agroholdings are sometimes in competition with each other and the price of rent rises. An economic brake, but also a legal puzzle. AgroRégion has nearly 17,000 rental leases to manage. " It makes it very difficult to harmonize the organization. Everyone with his conditions, his requirements. Imagine installing an irrigation system in the middle of a field. If everyone accepts the project except one, we can not set up pipelines, "says Vladimir Kravtsov, AgroRegion.
A true political sea serpent, the reform of the land is an extremely complicated issue where multiple interests fit together. Thus, the leaders of big companies met say they expect a lot of these reforms. " It's a simple facade, restores a specialist of the issue. In reality, this status quo is cleverly maintained by the oligarchs themselves, because the purchase of land would not necessarily do their business. They would like a reform adapted to their needs. "
Two explanations for that. The first: each land share is 3 ha. It would be necessary for the company to be able to buy whole villages to have uninterrupted fields. However, among large firms, " half are heavily indebted because of their rapid growth and expansion," says Kravtsov. The purchase of additional land will cost them a lot of money again. Most, even wealthy, simply could not.
Stimulating investment in agriculture means opening the land market, say the international financial institutions, who support this change. Sometimes very risky. Established in 1992, the Mriya agroholding has continued to grow, attracting the favor of public investors like the World Bank, to exploit more than 300 000 ha in 2014. Its funds then revealed a abyss of 1.4 billion dollars. Wanted by Interpol for fraud, his former president was extradited by Switzerland to Ukraine in late 2018.
Nikolay Kaplun operates more than 10,000 ha of land but is not the owner because of a moratorium in place since 2001 on agricultural land in Ukraine.
Géraud Bosman / RFIIn his agricultural business, Nikolay Kaplun has kept a breeding party. 450 beasts all the same. Irina Tsipkaïlo is a zoological engineer. At 49, she receives less than 10,000 hryvnia a month, or 345 euros.
Géraud Bosman / RFIA Lada from a not-so-distant time that shows better than anything where Ukraine comes from and the development potential that remains to be explored.
Géraud Bosman / RFIIn its magnificence, Nikolay Kaplun has created a kind of amusement park for the village of Volodarka.
Géraud Bosman / RFIAlex Lissitsa is the CEO of IMK (or IMC in English), the 8th largest agro-holding in Ukraine. He is also the president of the association that groups these so-called "vertically integrated" farms.
Géraud Bosman / RFIAn IMK sprayer.
Géraud Bosman / RFIThe grain silos of the regional headquarters of IMK, towards Chernigiv. Storage, and agricultural logistics in general, are progressing but remain penalizing compared to competitors from developed countries, for lack of a significant agricultural policy.
Géraud Bosman / RFIVladimir Kravtsov, AgroRegion's dynamic young executive, embodies the agriculture 2.0 of large farms. Everything is studied, including consumption and speed of machines. Field tests sometimes take several years to ensure that
Géraud Bosman / RFIThe drone is one of its star tools.
Géraud Bosman / RFIAgricultural engineers study satellite images to better understand the composition of soils, as well as their hydrometric richness.
AgroRégionThis drone image shows land differences during a drought.
AgroRégionA tractor from the Soviet era.
Géraud Bosman / RFIA corn field near the airport.
Géraud Bosman / RFI
→ To follow: Ukraine, an agricultural monster on the doorstep of the EU (2/2)
A report produced with the support of the Directorate-General for Agriculture and Rural Development of the European Commission. This publication is the sole responsibility of the author and the Commission is not responsible for any use that may be made of the information contained therein.