Restoration and integration of Ukraine's agricultural sector: challenges and opportunities
The international conference "Ukraine Recovery Conference 2024" held in Berlin on June 11-12 brought together government leaders from several countries, international organizations, businesses, and civil society to discuss the rapid recovery and long-term reconstruction of Ukraine. URC2024 continues to implement the principles set out at the first conference in Lugano, bringing together stakeholders and showcasing Ukraine's progress in internal transformations, particularly in the context of economic resilience and future EU membership.
As part of the Ukrainian delegation, Sergiy Savchuk, Chief Investment and Business Development Officer at VITAGRO Group, participated in the URC2024 panels. Together with business and agricultural sector leaders, he focused on the key aspects of restoring Ukraine's agricultural sector, specifically:
- Identifying the main needs and challenges facing the agricultural sector,
- Finding solutions for its integration into European markets.
The discussions covered important topics such as access to financing, opening European markets, and implementing risk insurance mechanisms.
"As we embark on the path of restoring Ukraine's agricultural sector, it is crucial to identify and address its core needs," said Mr. Savchuk. Here are two key demands of the agricultural sector:
- Access to financing: Ukrainian companies need external capital to expand projects and accelerate the recovery process.
- Access to European markets: Opening borders with the EU will mutually benefit Ukrainian companies, especially in sectors like biomethane. Currently, delays in integrating Ukraine into the EU's Single Database for Biomethane hinder investments and cause losses for existing businesses.
"VITAGRO Group is actively developing and building new projects in processing and green energy. We seek to attract investments and funding for these enterprises, in addition to our own capital," added Mr. Savchuk.
It is worth noting that the restoration of sectors such as agriculture, forestry, fisheries, and food production, which have been affected by prolonged Russian aggression, presents significant challenges. Currently, the cost of capital for Ukrainian investments, both foreign and domestic, is high due to substantial war-related risks. Therefore, the implementation of large-scale risk insurance mechanisms and guarantees by international organizations like the UN, international financial institutions, and global investment funds is crucial.
«Another challenge for Ukrainian producers is the annual quotas. For example, as a bioethanol producer, we have to compete within the EU's annual quota of 100,000 tons. Recently, we adopted a law on a 5% mandatory biofuel blend in gasoline. However, Ukraine's potential for bioethanol production significantly exceeds the domestic market. Therefore, increasing the EU's annual quotas to at least 500,000 tons would make the Ukrainian bioethanol market significantly more attractive to investors," noted Mr. Savchuk.
In conclusion, we believe that Ukraine's swift accession to the EU is essential, as it has unique potential to become the EU's largest partner in areas such as green energy, food, and processing. This will significantly contribute to the food, economic, and energy security of Ukraine, the EU, and the entire world.
