Ukrainians will not starve

Photo: Ivan Chernichkin

The food security level in Ukraine has deteriorated over the year, according to the global study published by the analytical agency Economist Intelligence Unit, which presented a report entitled Global Food Security Index. Ukraine dropped by five points to 52^nd place on the Global Food Security Index. Last year international experts gave our country 58 points out of 100, in 2014 – 56.4 points. The ranking was affected by the deterioration of affordability of food – Ukrainians spend more than 50% of their income on food. At the same time, 99.9% of the population lives below the poverty line.

Reverse side of the coin

Ukrainian experts largely agree with international connoisseurs, though they rely on a more optimistic scenario. In 2014, agricultural companies should transfer approximately UAH 50 bn in taxes and duties to the consolidated budget and export of agricultural products is expected to bring the country at least US $20 bn, according to calculations of the Ukrainian government.

Analyst at the Ukrainian Agrarian Association Marian Zablotskiy argues that to achieve such a result officials would have to declare a total moratorium on tax pressure and pressure from tax inspection bodies. “Now the government is sending out a signal: we have concerns about your industry. What will be the reaction among farmers? Probably, the obvious option would be reducing production,” predicts Zablotskiy.

General Director of the Association of Farmers and Private Landowners Vitaliy Lvov says that currently the complications in the provision of food security are associated not only with fiscal terms, but also with the situation in the Donbas region, which accounts for approximately 15% of the grain harvest. “In the current situation it is necessary to encourage replenishment of food reserves, especially in the regions affected by the military operations,” he said.

Food security, Ukrainian style

Capital was assured in the Ministry of Agrarian Policy and Food that Ukraine has no problems with food. “The domestic market is filled with food products in full. Moreover, due to ample supplies of raw materials adequate amounts of food products and beverages will be provided in the future,” the ministry replied to the formal inquiry of the publication.

With the help of food funds the state can compensate for the shortage and bring down the prices on the milk, butter, corn and sugar markets. By the end of the year, the Agrarian Fund intends to spend UAH 81.72 mn to purchase 2,300 t of powdered milk from Terra Food, Tekhmolprom, Brody Dried Skimmed Milk Plant and Halychyna. These companies are also supposed to supply 3,350 tons of butter. “Up to 90% of food products in Ukraine are of domestic production. And the output is constantly growing,” said Minister of Agrarian Policy Ihor Shvaika.

In order to maintain food security officials at the ministry are developing special measures. In particular, in order to improve product quality, according to oblast administrations, they have already introduced appropriate management systems at 574 enterprises in the food and processing industry and another 97 companies are due for their implementation. The ministry also developed 728 standards, 319 of which have been harmonized with the requirements of the European Union. Thus, the level of implementation of harmonized standards is 43.8%. The ministry plans to prevent shortages of seeds, fertilizers and machinery using the reserve fund of the state budget.

There will no hunger

Agrarian officials and ag industry experts are convinced that Ukraine will be able to provide itself with food in spite of the military operations in the east. As of September 15, approximately 1,600 t of food products and 18 t of humanitarian aid (linen, clothing, personal hygiene products, etc.) were sent to the affected residents in the Donbas region and military personnel in the ATO zone with the support of the Departments of Agricultural Development at 19 oblast administrations, according to the Ministry of Agrarian Policy. At present, as Capital was told by the department, another 60 t of food products from agrarian enterprises in the Dnipropetrovsk, Lviv, Zaporizhzhya and Sumy oblasts are being prepared for dispatch to the war ravaged region.

Problems with food products are not expected in other regions thanks to a banner harvest. “Agrarians reaped decent crops of grains and oil plants, vegetables and potatoes and even stagnation in production of meat and milk will provide for the domestic market in conditions of narrowing demand,” said General Director of the Ukrainian Grain Association Volodymyr Klymenko. In future Ukraine will feed not only itself but also Europe, since the potential of our land is not used by even half, he says.

Executive Director at the Ukrainian Agribusiness Club Association Oleksandr Zhemoida assured that a further rise in prices should not be expected. As it was previously reported by Capital, over eight months in 2014 the prices of food products in Ukraine rose by 13.9% compared to the same period last year. “The increase in prices for some food products has already been observed due to the devaluation of the hryvnia. First of all, we are talking about export and import oriented products where prices increased by up to 50%. However, the prices of products targeted at the domestic market (for example, food products used to make borshch – potatoes, cabbage, onions, carrots, beets) on the contrary, decreased compared to last year’s level,” he says. Slight price fluctuations are possible in areas neighboring with the war zone.