Ukraine in the claws of the agroindustry

Western and Russian interests collide in Ukraine in several economic and political areas as discussed e. g. here. One economic area that has recently attracted more attention in the mass media is the Ukrainian agricultural sector which is becoming increasingly attractive for foreign investors from Russia, the West, but also Saudi-Arabia.

The fertile Ukrainian soil (Chernozem) creates excellent yields and is the main reason why Ukraine was and still is considered as Europe’s “bread basket”. The Ukrainian agricultural products also play an important role for the countries of North Africa and the Middle East. In fact Ukraine’s temporary export stop of agricultural goods is considered as partly  responsible for the world food price crisis from 2007 and 2008 in these countries as an very interesting article from German ZEIT-magazine on this whole topic tells.

No wonder that big international corporations and often highly criticized companies like Monsanto, Cargill and DuPont and also investors from Russia and other countries are keen to invest in the Ukrainian agricultural sector. The ZEIT magazine’s article even suggests that there is a fight between the West and the East for fertile Ukrainian soil. A point of view that does not necessarily grant good prospects for the Ukrainian people and their environment as  other examples of investment rivalry between the “West” and the “East” in countries with an unstable/difficult political situation seem to show.

Currently Ukrainian law does not allow foreign companies to buy land in Ukraine, but they can lease it for up to 49 years. Several foreign investors have leased huge amounts of farm land, the largest around 500,000 hectare as this site shows.

But this law might be about to change and the purchase of Ukrainian land by foreign investors could be made possible sooner or later. Reuters writes that the Ukraine crisis could even speed up the process of internationalization and privatization of Ukrainian farm land (one third is currently owned by the Ukrainian state). Many observers and scientists fear that the losers of this process might be small and medium sized Ukrainian farmers and agricultural companies that already struggle with the low course of the Ukrainian currency hryvnia which has brought many of them in economic hardships. Their chances against big global players in the agricultural business are very low.

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