by Lynda Kiernan, editor, GAI Media

GAI News has been running a new feature called “Question of the Month”. Below are the expanded results of the first month’s responses, along with commentary from GAI News Editor Lynda Kiernan.

Question:

Given the development and integration of new technologies and the adoption of land reforms, together with Ukraine’s advantageous geographic location, superior soils, large labor pool, and low cost per unit of production, in your opinion, is this enough to outweigh the political, administrative, and regulatory landscape currently faced in-country by ag investors?

Wrap-Up:

Ukraine is a conundrum. The country is a nebulous web of positive factors that make for successful agricultural production, wrapped within a veil of socio-political factors that can be challenging to agribusiness at best, and threatening at their worst.

However, when taken as a whole, it appears that the negative outweighs that positive for nearly half of our respondents. The socio-political unease and regulatory uncertainty in-country vastly outweigh the positives of investing in agribusiness in Ukraine for 47.6 percent of our survey readers.

The remaining half of our respondents are closely split.

Caution is the key word for 28.6 percent of our respondents, who state that although Ukraine’s soil quality, geographical location, and production gaps are indeed desirable from an ag production viewpoint, the uncontrollable political factors that exist in-country require extreme caution on the part of investors.

Meanwhile, 23.8 percent of our survey takers are mavericks, stating that the positive aspects Ukraine has to offer represent the basis for successful agricultural investment and production, and all other challenges can be handled at-hand.

Among the mavericks is U.S.-based Horizon Capital and its backers, which in the first month of this year, closed its third Ukraine fund, the Emerging Europe Growth Fund III (EEGF III), at its hard cap of $200 million, exceeding its target of $150 million. It is interesting to note that this announcement represents the largest private equity closing targeting investment in Ukraine in 10 years. Does this portent change?

Nothing is static, and perhaps EEGF III reflects the beginnings of a shift. It may be that as greater foreign capital and foreign investors step onto the Ukrainian stage, greater domestic stability will follow. It will be interesting to see, with the deployment of funds such as EEGF III, if Ukraine begins a transformation into a market that more ag investors will see as a valid and relatively safe means for return on investment.

~ Lynda Kiernan