Ukraine, one of the world’s biggest producers and exporters of grain, faces a unique set of logistical and political problems. Producers have been hit by rising input costs, made worse by a falling currency, while turmoil in the eastern part of the country has made transport more complicated and costly.

The International Grains Council (IGC) forecasts Ukraine’s total grains production at 60.4 million tonnes in 2014-15, down from 62.5 million tonnes in 2013-14. Of that total, wheat accounts for 23 million tonnes, up from 22.3 million the year before. The maize crop is set to fall in 2014-15 to 27 million tonnes from 30.9 million the year before. Barley production is forecast to rise to 8.54 million tonnes from 7.6 million. Ukraine is also predicted to produce 600,000 tonnes of oats, up from 500,000.

The IGC puts Ukraine’s total grain exports in 2014-15 at 29.6 million tonnes, down from 32.2 million the prior year. Wheat exports are put at 9.7 million tonnes up from 9.6 million. Maize exports are put at 17 million tonnes, down from 19.9 million tonnes and barley exports are projected at 2.7 million tonnes, up from 2.5 million. The country is also slated to export 150,000 tonnes of sorghum, down from 245,000 tonnes the year before.

The USDA attaché’s annual report on the grains sector, published in April, saw the production decline coming. “Production of wheat, corn and rye in Ukraine in MY 2014-15 are forecast to decrease mainly due to lower projected yields,” it said. “A dramatic increase in input costs for agricultural producers is expected to lead to lower input use, thus negatively affecting yields and output.”

“Prices for agricultural inputs in Ukraine this season have increased significantly since most are usually imported or produced with the use of imported materials,” the attaché said in an update in July, noting a 40% devaluation in the Hryvnia between December 2013 and April 2014.

“A large share of medium and smaller-size agribusinesses as well as some larger companies in Ukraine would have experienced some sort of financial difficulties since the beginning of 2014,” the report said. “Local producers were reporting reduced levels of chemical application and switching to cheaper products while adjusting production technology to minimize costs.”

There were also weather issues. “In addition, continued frequent and sometimes excessive rains in June and in the beginning of July, especially in Central and in Western Ukraine, resulted in crop lodging in wheat, barley and rye,” the report said. “Corn, sunflower and soybeans grown in Central, Eastern and Western Ukraine have benefited from frequent rains.”

However, the grain production figures do not yet show the full effects of the ongoing conflict with Russia, the loss of the Crimea, especially its port facilities and the struggles of farming in the east, affected by the political uncertainty.

At the HGCA’s conference in London, Sergey Feofilov, Director General of UkrAgroConsult, discussed the country’s flour milling situation.

According to the United Nations, the number of enterprises in Ukraine processing grain mill products was 719 in 2011, the most recent data available, with a total output worth 6,797,600,000 hryvnias.

“Ukraine domestic consumption of milling wheat is 5 million tonnes a year,” Feofilov said. He put utilization at 35% to 40%, a a rate he described as low.

“It is quite possible for Ukraine to mill all the milling wheat produced,” he said. “Ukraine has increased flour exports every year since 2008-09,” he said. “Four or five years ago it was 15,000 to 25,000 tonnes a year. Now it is 100,000 to 150,000 tonnes a year. It gradually looks for new markets. The mills are privately owned. Some are still state, incorporated in the state food reserve.”

The overwhelming majority of Ukrainian mills are rather powerful, he said. “It was a tradition of Soviet industry to create big enterprises,” Feofilov said. “Gradually, small milling enterprises which produce a high-quality meal and bread are coming in.”

The State Food and Grain Corporation of Ukraine can process about 700,000 tonnes of grains, meeting 15% of the average annual Ukrainian consumption of mill, cereal and fodder products, according to its website. Its operations can produce 531,000 tonnes of flour and 163,000 tonnes of feed a year, among other products which include breakfast cereal and muesli.

In July, the APK Inform agency reported that Andrei Yakovenko, director of SE Novopokrovsky Bakery Products Plant, co-chairman of Flour Millers of Ukraine, said Ukrainian flour millers plan to supply between 320,000 and 350,000 tonnes of wheat flour to export markets, an increase of between 42.2% and 55.6% on the previous year.

The increase was due to growing sales to Israel, Moldova, Syria and others, and increased flour trade with the E.U. following the signing of an association agreement. The ending of a €9-per-tonne customs duty will allow Ukrainian flour producers to export nearly 30,000 tonnes of flour to the E.U. market in 2014-15. Yakovenko said that in 2013-14, Ukraine produced 2.7 million tonnes of flour and exported 225,000 to 229,000 tonnes of that total.

The attaché noted that bread consumption has been falling in recent years.

“In addition, a minor increase in consumer incomes stimulated one of the recent trends in society – switching away from purchasing ‘social’ types of bread in favor of premium bakery products and home bread making,” the report said. “While large, mostly state, bread-making enterprises have been reducing production quantities, various private specialty bread producers have been opening up small stores and delivering to regular grocery stores in larger cities, catering to the changing tastes of consumers where the majority of income increases occurred.”

However, the attaché also pointed out that recent economic problems may reverse this trend.


Moves to develop a system for biotechnology have been overshadowed by more pressing problems, according to the USDA attaché.

“The biotechnology regulatory system in Ukraine is still not fully developed, in part due to the focus on major political and economic issues in 2014,” the USDA said. “Domestic production of soybeans is projected to remain high in 2014 and is expected to continue to fuel the debate over GE presence in the country.

“To the best of FAS-Kyiv’s knowledge at present, Ukraine does not have any GE crops under development for commercial purposes. Though, there are reports of some experiments with existing GE plants conducted at state research institutions in Ukraine.”


Ukraine is also an important oilseeds producer. Oilseeds and products are expected to be relatively more profitable than grains for Ukraine in 2014, the attaché said. “Farmers have expanded their planting, based on this expectation, though several economic factors will temper yields. Still, this sector will provide positive support for agricultural sector development with the foreign exchange earnings it will bring in.”

The IGC has forecast rapeseed production of 2.2 million tonnes in 2014-15, down from 2.3 million the year before. Rapeseed exports are put at 1.7 million tonnes, down from 2.2 million in 2013-14. It predicts that Ukraine will export 1.8 million tonnes of soybeans, up from 1.6 million the year before. The IGC does not quote Ukraine’s soybean production separately but the attaché put the crop at 3.2 million tonnes in 2014-15, compared with 2.763 million the year before.

Sunflowers are also an important crop. “Production of sunflowerseed in Ukraine in MY 2014-15 is projected to decrease due to lower yield expectations,” the attaché’s annual report on the sector said. “A drop in production by almost 14% to about 10 million tonnes is projected for MY 2014-15, compared to 11.6 million tonnes (FAS-Kyiv estimate) harvested in fall 2013.”

Key Facts

Capital: Kyiv (Kiev)

Population: 44,291,413 (July 2014 est.)

Religions: Orthodox (includes Ukrainian Autocephalous Orthodox (UAOC), Ukrainian Orthodox - Kyiv Patriarchate (UOC-KP), Ukrainian Orthodox - Moscow Patriarchate (UOC-MP), Ukrainian Greek Catholic, Roman Catholic, Protestant, Muslim, Jewish. note: Ukraine’s population is overwhelmingly Christian; the vast majority – up to two-thirds – identify themselves as Orthodox, but many do not specify a particular branch).

Location: Eastern Europe, bordering the Black Sea, between Poland, Romania, and Moldova in the west and Russia in the east.

Government: Republic. Chief of state: President Petro Poroshenko (since June 7, 2014); head of government: Prime Minister Arseniy Yatsenyuk (since Feb. 27, 2014).

Economy: After Russia, the Ukrainian republic was the most important economic component of the former Soviet Union, producing about four times the output of the next-ranking republic. Shortly after independence in August 1991, the Ukrainian government liberalized most prices and erected a legal framework for privatization, but widespread resistance to reform within the government and the legislature soon stalled reform efforts and led to some backtracking. Output by 1999 had fallen to less than 40% of the 1991 level. Ukrainian government officials eliminated most tax and customs privileges in a March 2005 budget law, bringing more economic activity out of Ukraine’s large shadow economy, but more improvements are needed, including fighting corruption, developing capital markets, and improving the legislative framework. Ukraine’s economy was buoyant despite political turmoil between the prime minister and president until mid-2008. The economy contracted nearly 15% in 2009, among the worst economic performances in the world. In April 2010, Ukraine negotiated a price discount on Russian gas imports in exchange for extending Russia’s lease on its naval base in Crimea. Movement toward an Association Agreement with the E.U., which would commit Ukraine to economic and financial reforms in exchange for preferential access to E.U. markets, was curtailed by the November 2013 decision of President Yanukovych against signing this treaty. In response, on Dec. 17, 2013, an agreement was reached on a financial assistance package containing $15 billion in loans and lower gas prices. However, the end of the Yanukovych government in February 2014 caused Russia to halt further funding. With the formation of an interim government in late February 2014, the international community began efforts to stabilize the Ukrainian economy.

GDP per capita: $7,400 (2013 est.); inflation: 0.7% (2013 est.); unemployment: 8% (2013 est.)

Currency: Hryvnia (UAH). 12.999 Hryvnia equals 1 U.S. dollar (Oct. 17, 2014).

Exports: $71.14 billion (2013 est.): ferrous and nonferrous metals, fuel and petroleum products, chemicals, machinery and transport equipment, food products.

Imports: $87.21 billion (2013 est.): energy, machinery and equipment, chemicals.

Major crops/agricultural products: Grain, sugar beets, sunflower seeds, vegetables; beef, milk.

Agriculture: 9.9% of GDP and 5.6% of the labor force.

Internet: Code: .ua; 2.173 million (2012) hosts and 7.77 million (2009) users.

Source: CIA World Factbook