March 4, 2015
Ukraine’s Agriculture Minister recently told local media that he believes that Ukraine has the ability to produce 100 million tons of grain per year by 2020, up from 62 million tons in 2014. However, to do this the country must attract $25 billion in foreign agricultural investment – not an easy task given the country’s ongoing political and social unrest that has displaced approximately 1 million people.
The World Bank and The International Monetary Fund (IMF) believe that it is this same turmoil that has intensified the need for change, and are backing a push for privatization in the sector. The UN is supporting the World Bank’s view. Dmitry Prikhodko, economist with the UN’s Food and Agriculture Organization (FAO) states, “In the long term, Ukraine should aim to open its land market to allow optimum resource allocation.”
Despite these views some are concerned, stating that local buyers in Ukraine do not have the money to buy farmland, and those with access to foreign currency would have a vast advantage in an open market. As a result they fear these reforms would cause the country’s total agricultural potential to fall under foreign control. However, with foreign currency in Kiev low, the World Bank’s $2 billion and the IMF’s $8 billion would potentially give Ukrainian officials greater policy leverage.
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