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Ukraine should prove to be an agricultural superpower in a post-COVID world

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The COVID-19 pandemic has changed the world drastically. On the one hand, the immediate targets of reducing the sky-rocketing rates of infection, increasing the capacity of intensive care and vaccination programmes require the urgent attention of all nations. On the other hand, state leaders  must also review their supply policies, in particular global delivery chains to keep essential goods and services flowing, writes Vadym Ivchenko.

Worldwide Food Insecurity

People have been always in  need of food and basic resources to survive even before  the spread of this pandemic. Last April, the United Nations projected that the number of people facing severe food insecurity worldwide could double to 265 million due to the impact of COVID-19. We are now faced with the herculean task of rescuing as many of them as humanly possible from starvation.

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Agriculture’s silver lining

If there is a silver lining in this unfolding crisis, it is that agriculture has proved to be more resilient to the impact of COVID-19 than manufacturing industry. While it is true that there have still been significant slowdowns, particularly in situations where outbreaks were discovered, the agriculture sector has never been forced to fully shut down. Irrespective of a global pandemic, people still need to eat, leaving the market demand for agricultural products virtually unchanged. The main factor brought into focus by the pandemic has been the issue of food safety.

Ukraine Can Help

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My firm stance is that Ukraine has every chance to play a central role in the forthcoming effort of obtaining  global food security in the face of the COVID-19 pandemic. My country has often been referred to as the breadbasket of Central Europe, and with global food insecurity set to increase dramatically, coupled with Ukraine's large agricultural yields, it can soon become a breadbasket for the whole world. In a nutshell, Ukraine is an agricultural goldmine. Already Ukrainian farmers feed the world, supplying food products to 205 countries. The country is home to around 25% of the world's black earth soil, renowned for its high level of fertility. Although it does not yet have the same level of crop yields as countries with modern agricultural production, Ukraine already has the potential to feed more than 600 million people. To put this into perspective, Ukraine only needs one-fifteenth of its current production to feed its domestic population, leaving the rest available for export.

Ukraine ranks as the world’s largest exporter of sunflower oil, second in nuts, third in honey, barley, and rapeseed, fourth in corn, fifth in wheat, seventh in soy, eighth in chicken, tenth in chicken eggs, and eleventh in flour. Agricultural products are the primary basis of Ukraine's foreign trade. Agricultural products and foodstuffs represent about 40% of the nation’s overall exports value, a valuable share of foreign currency revenues for the country.

Global partnerships have an important part to play

One thing that’s clear is that leading companies around the world are starting to take notice. Large multinationals, such as John Deere, Syngenta, NCH Capital, NCH Agroprosperis, Monsanto Company, and Cargill have all started actively working and developing their production in Ukraine.

As a member of the Agriculture Committee of the Verkhovna Rada (Ukrainian Parliament) I have worked with Cargill on the development of important agricultural projects. I and have personal vision and  experience of how major agricultural corporations can support the country in difficult times. Last year, for example, Cargill Financial Services International provided Ukraine a state loan of € 250 million.

Ukraine is already making strides in increasing its trade potential. The volume of trade between Ukraine and the EU has increased significantly over the last five years. Likewise, between Ukraine and the US, the figure has exceeded $5 billion per year, with poultry, sunflower oil, flour, alcohol, fruits, and vegetables being just some of the exported goods. Ukraine is capable of providing a much wider range of products, but is held back by trade barriers,  which hopefully will be scaled back shortly. The key factor for us is to become serious as a society in tackling global food insecurity.

The need for progressive technology

To update the country’s agricultural infrastructure and increase crop yields, about 15% of companies have begun actively implementing agricultural innovations by purchasing the solutions of both foreign and domestic technology startup companies. Many also develop their own in-house solutions, and according to the AgTech Ukraine Association, the number of agricultural startups in Ukraine has risen to more than 80.

All of these advancements come just in time to tackle the largest threat currently facing humanity, greater even than the COVID-19 pandemic, potentially irreversible climate change. By 2050, in just 30 short years, the world's population is projected to grow so much that it will require 70% more food to sustain it. This population explosion is aggravated by environmental changes to agriculture, as the amount of agricultural land is annually decreasing. Soil contamination with heavy metals, radioactive waste, and pesticides threaten biodiversity, reduce food quality, and have negative impacts on human health.

According to the UN, the world exhausted its yearly limit on the consumption of renewable natural resources in August 2020, meaning that the supply of natural resources for the next 4-5 months will come at the expense of future years and, beyond that, of subsequent generations. However, through agriculture, we may still be able to provide an effective solution. In situations where there is no available pathway in switching to renewable energy, the production and consumption of biofuels can serve as a life-saving stop-gap.

To achieve this solution, especially considering that the production of bioethanol in the country is actively slowing down (progress is more noticeable with biogas), Ukraine needs to reform its current system of economic incentives and start to prioritise the development of biofuels. If only around 20% of the country’s corn can be repurposed for domestic processing, rather than export, Ukraine will be able to actively improve its environmental conditions.

Unfortunately, for all of their bluster, the state’s current agricultural development programs are declarative, but lack the necessary specifics, making the creation of a large scale bioethanol market difficult.

Ukraine as theworld’s breadbasket"

Citing  the famous 19th-century Ukrainian scientist, Serhiy Podolynsky, “Of the many types of human activity, agriculture is of the highest priority, the most productive and useful work, which dozens of times increases the product made by nature”.  I do agree with Serhiy’s ideas which are very relevant to our times; agriculture is indeed essential in providing humanity with food, medicine, renewable energy, clothing, and other much-needed resources.

Ukraine has long been a regional breadbasket, but must seize its chance now and make strides in becoming a breadbasket for the whole world. While the country has already made significant contributions to overcoming world hunger, by incorporating global technologies into production and integrating itself into international supply chains, Ukraine can become a reliable agricultural trading partner to any country in need.

The Author, Vadym Ivchenko, is a Member of the Verkhovna Rada of Ukraine (Ukrainian Parliament), elected in 2014.

Energy

Continuing on Ukraine's path to a green energy future

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Green finance continues to develop at pace in leading economies and emerging markets. However, the climate emergency is also rapidly developing, with wildfires ravaging the globe and torrential flooding sweeping across our neighbours in central Europe, writes Kyrylo Shevchenko, governor of the National Bank of Ukraine.

Rising global food and energy prices, the recovery of the global economy from the COVID-19 crisis, the effects of poorer harvests, and further growth in consumer demand through higher wages are all pushing prices up for both businesses and consumers.

While the pressures of global warming and climate change remain high on the agenda of major global players such as the United States, China, and the UK, this does not mean those in the emerging markets have made reducing their own carbon emissions and reaching their own goals any less of a priority. With COP26 fast approaching, governments are strengthening their commitments to slash carbon emissions in order to protect the environment and ensure that we leave the planet a healthier, more livable place for future generations.

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On the plus side, climate investments also have enormous potential. Indeed, the IFC estimates this potential at USD 23 trillion in emerging markets for the period up to 2030.

The National Bank of Ukraine (NBU) clearly understands that financial market regulators can make an urgent and important contribution to building a better future. Therefore, to send a powerful message to our stakeholders, and to build confidence in our commitment to developing a sustainable economy, we have included the promotion of sustainable finance as one of the key strategic goals in our Strategy 2025. Moreover, for the first time in the history of the NBU we have insisted on inclusion of environmental, social and governance (ESG) considerations in our 2022 Monetary Policy Guidelines.

To fulfil our commitments, in April, the NBU signed a Cooperation Agreement with the World Bank’s International Finance Corporation (IFC), taking what I believe to be the first steps towards a green future for our country.

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Ahead of the signing, we both agreed on the drafting of strategies and standards for sustainable finance in Ukraine, committed to integrating ESG requirements in the corporate governance of banks, and promised to share expertise to build the central bank’s capacity for raising awareness about ESG issues.

In just five months, the NBU has taken major steps towards this goal, developing the basis of a roadmap to expand ESG, as well as the Sustainable Funding Strategy. The strategy, which will launch next month, will encourage those operating in Ukraine’s financial markets to incorporate the NBU’s vision of sustainable funding and ESG best practices in their plans for the years ahead, and to make preparations for regulatory changes.

Complimentary to this, between September and October next year the NBU will introduce new mechanisms in the supervisory and management boards of commercial banks to ensure ESG is a significant element in their strategies.

This will be fundamental to assessing the footprint of financial transactions and the effect of each banks’ operations on the environment and on society.

Perhaps the most important step the NBU is taking from the first half of 2023 will be to require commercial banks to consider ESG risks when deciding whether to provide financing to a potential client.

To bolster this requirement, the NBU will also require ESG reporting from banks, disclosing information to stakeholders about portfolios and operations, including corporate governance.

This move will put Ukraine in the vanguard of transparency when comes to reporting standards. Businesses and the general public will, for the first time, be able to compare the environmental ratings of Ukraine’s banks, allowing them to make more informed decisions, based on their own personal preferences. Environmental protection and greater sustainability can only be achieved if countries, their businesses, and their people work together – and we intend to give this power to Ukrainian citizens.

Whilst regulating the banking sector is the basis of what we do at the NBU, our sustainable development team will also be exploring ways to incorporate and build on green finance practices in the nonbank financial sector.

Our wholehearted commitment to greening Ukraine’s entire financial system has thus never been stronger, and the steps we are taking prove this.

At the same time, the NBU is under no illusions: The climate crisis continues to rapidly affect our planet and our way of life.

We understand that we are still at the very beginning of a long journey towards a sustainable global economy. But by continuing carefully along this path, and learning from our partners, we firmly believe that we can be a leader in the emerging markets space in ESG best practices, which will benefit both Ukraine and the planet.

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Ukraine

EU-Ukraine summit: Moving forward together

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On 12 October, at the 23rd EU-Ukraine Summit in Kyiv, the European Union and Ukraine reaffirmed their strong partnership and commitment to strengthening the political association and economic integration of Ukraine with the European Union.

European Commission President Ursula von der Leyen, European Council President Charles Michel and High Representative/Vice President of the European Commission Josep Borrell represented the European Union alongside Ukraine President Volodymyr Zelenskyy. The European Union and Ukraine agreed on a Joint Statement, demonstrating the richness of the bilateral agenda.

President Ursula von der Leyen said: “The European Union attaches the utmost importance to its relations with Ukraine. Together we have built a special partnership, based on mutual solidarity and friendship. We share a commitment to strengthening the political association and economic integration of Ukraine with the European Union and progress has been made in many areas. We will continue to work together on the untapped opportunities that the EU-Ukraine Association Agreement has to offer. This, alongside continued unity on sanctions, shows the EU's commitment to Ukraine – one that remains unwavering”.

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High Representative/Vice President Josep Borrell added: “The EU is Ukraine's strongest and most reliable strategic partner. At today's summit we also reconfirm the EU's continued political support for its sovereignty and territorial integrity, as well as non-recognition policy of the illegal annexation of Crimea. The EU will continue to stand firm in its support the implementation of the Minsk agreements.”

Read the full remarks of President von der Leyen at the joint press conference here.

In the margins of the Summit, the European Union and Ukraine made progress in a number of key sectors of cooperation, with three new important agreements.

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Signing of a milestone aviation agreement

The European Union and Ukraine signed a comprehensive air transport agreement, opening the way for a ‘Common Aviation Area' between the EU and Ukraine, based on common high standards in important areas such as aviation safety, security and air traffic management. It will foster market access and offer new opportunities for consumers and airlines on both sides.

Ukraine is an increasingly important aviation market for the EU, since it was the 13th largest extra-EU market in 2019, with 9.8 million passengers. Air transport for passengers, as well as for cargo between Ukraine and the EU, has been growing steadily in recent years. This trend was only interrupted during the COVID crisis.

The agreement signed today aims to gradually open the respective aviation markets and integrate Ukraine into a wider European Common Aviation Area. Ukraine will further align its legislation with EU aviation rules and standards in areas such as aviation safety, air traffic management, security, the environment, economic regulation, competition, consumer protection and social aspects.

Today's Agreement is expected to offer new air transport opportunities, more direct connections and economic benefits to both sides:

  • All EU airlines will be able to operate direct flights from anywhere in the EU to any airport in Ukraine, and vice versa for Ukrainian airlines.
  • All limitations and restrictions on flights between Ukraine and the EU will be removed and the provisions on open and fair competition will guarantee a level playing field.

The Agreement will facilitate people-to-people contacts and expand commercial opportunities and trade between the EU and Ukraine. It will also be a valuable instrument in the implementation of the EU-Ukraine Association Agreement and, in particular, the Deep and Comprehensive Free Trade Area.

While the Agreement still needs to be ratified by both sides before formally entering into force, it will start to apply from today's signature.

Association of Ukraine to Horizon Europe

The Summit also provided the opportunity to finalise the association of Ukraine to Horizon Europe, the EU research and innovation programme for 2021-2027, as well as the Euratom Research and Training Programme for 2021-2025. Ukrainian researchers and innovators can now participate in those two programmes, with a budget of €95.5 billion and €1.38bn respectively, under the same conditions as entities from EU member states. This co-operation in science, research and innovation further strengthens the alliance between the EU and Ukraine to deliver on common priorities, such as the twin green and digital transition. Horizon Europe is one of the main tools to implement Europe's strategy for international cooperation: Europe's global approach to cooperation in research and innovation. The programme is open to researchers and innovators from around the world, who can team up with EU partners in preparing proposals.

Association of Ukraine to Creative Europe

During the Summit, the association of Ukraine to Creative Europe, the EU programme to support the cultural and creative sectors for the period for 2021-2027, was also finalised. The new Creative Europe programme continues to support and promote cultural heritage, creativity, internationalisation, professionalisation, innovation and competitiveness of the cultural and creative sectors. Ukrainian cultural and creative organizations can now participate in Europe's flagship €2.44bn programme, under the same conditions as entities from EU member states.

More information

EU-Ukraine relations factsheet

EU Delegation in Ukraine website

European Commission Support Group for Ukraine website

International aviation relations of the EU

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Ukraine

The challenge for Elon Musk

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A group of Ukrainian scientists has developed a unique bio battery with self charging capability, and successfully tested new unique bioaccumulators that have the ability to self-charge without an external energy source. In the experimental model, self-charging was repeated 20 times, with the sensational results of a successful experiment published in the international journal Batteries. 

Compared to modern electric vehicles with a range of 500-600 km, such bioaccumulators will provide the ability to travel without recharging 14,000 km. A self-recharging biobattery will be able to supply energy to an apartment building for a long time. The unique ability of the bioaccumulator to self-charge is able to make a revolutionary breakthrough in the energy market in strategic areas: shipping, railways, aviation and aerospace, namely in the programs of research of the Moon and Mars.

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