News
12.04.2013
Exports of grain crops in MY 2013/14 may break five-year record, providing predictable government policy
According to preliminary estimates, grain exports from Ukraine in MY 2013/14 will amount to 25 million tons. This figure is to exceed the largest sale volumes of grains from Ukraine to foreign markets of MY 2008/09, which amounted to 24.8 million tons, - states the Association "Ukrainian Agribusiness Club" (UCAB). Thus, experts emphasize that increasing production trends in crop production and animal husbandry may be preserved solely due to government support, the only efficient mechanism of which are tax incentives for agriculture.
UCAB informs that in Ukraine out of 6.7 million ha of sowed winter wheat about 6 million ha are in satisfactory condition, which allows to expect (in case of absence of further adverse weather conditions) about 20 million tons of gross wheat yield. Sowing of spring barley is partially delayed due to abnormally late spring in most regions. Also, considering the annual decrease in the attractiveness of barley production, we expect gross barley yield at the level of 7.5 million tons. After a sharp increase of areas under corn in 2012, this year a partial halt of this trend is expected, fixing acreage at 4.5 million ha and 23 million tons of gross yield.
"In general, taking into account the abovementioned average figures and forecasts for production of rye, millet, oats, buckwheat, sorghum, etc., one can predict the gross output of grain and pulse crops in Ukraine at the level of 52-53 million tons and exports at 25 million tons, respectively"- the President of the Association "Ukrainian Agribusiness Club" Alex Lissitsa says.
At the same time, experts warn that the gross yield increase trend may halt if the fiscal pressure on the industry strengthens. "Now there are two major factors that determine the investment attractiveness of agricultural production - a unified agricultural tax and a special VAT accumulation regime, - says the Chairman of the board of directors of the Union of Poultry Breeders of Ukraine Oleksandr Bakumenko - and in case of the tax system revision, agricultural enterprises will be left without funds to invest in technologies." In his turn, the Chairman of the Agrarian Union of Ukraine Gennadiy Novikov believes that the industry requires significant capital investment in order to reach the efficiency level of developed countries, and under current conditions, the main source of investment are funds, accumulated due to tax incentives.
"This is confirmed by the fact that when preferential tax regimes were in force, gross agricultural output increased significantly. Thus, from 1999 to 2011 the volume of agricultural production increased by 70% ", - notes Mr. Lissitsa. However, the growth potential of in the industry is far from being exhausted, i.e. the efficiency of crop production and animal husbandry is approximately twice lower, compared to developed countries. Thus, in case of preservation of tax benefits one may expect further increase of gross production output in the industry.
However, a significant number of farms even under conditions of tax incentives is on the verge of unprofitability. In particular, this refers to such fields as potato production (level of profitability in 2012, according to the State Statistics Service, is -21.4%), vegetable production (-7.4%), cattle breeding (-29.5%), poultry meat production (-6% for companies with lack of own feed production facilities) and others.
For these industries, and a number of producers that have not yet reached the optimal efficiency (in general, the number of unprofitable enterprises in recent years, ranges from 17 to 30%), the abolition of tax incentives will not reduce investment but production output, which in its turn will result in imports increase.
Association "Ukrainian Agribusiness Club"
Velyka Zhytomyrska str., 20 А, office 53, Kyiv, 01001
Phone: +380 44 201-4950
Fax: +380 44 201-4951
099 272 59 30
Tetiana Kotyk
www.agribusiness.kiev.ua
The Association "Ukrainian Agribusiness Club" (UCAB) www.agribusiness.kiev.ua was founded in 2007 to protect the economic and professional interests of players of agribusiness in Ukraine. UCAB is a unique platform in Ukraine for establishing business contacts between the leaders of agribusiness, improvement their work and dialogue with the government. UCAB actively supports Ukrainian producers in establishing and maintaining international business relations. The Association consists of the largest producers and processors of agricultural products in Ukraine.
