VITERRA’S European managing director Christian Joerge believes the current cropping boom in the former Soviet republic of Ukraine is only the tip of the iceberg. Ukraine has shot to prominence in recent years as a large scale producer and exporter of wheat and barley.

But Mr Joerg, speaking at this week’s Australian Grains Industry Conference (AGIC), said he felt there was still untapped potential in the fertile nation in eastern Europe. “Ukraine was formerly the breadbasket of Europe, and it can do this again, and maybe fill this role for the world.”

In spite of producing close to 50 million tonnes of grain this year, Mr Joerg said yields were just 20pc of the European average, due to a combination of a lack of investment and outdated technology.

However, the nation has a huge advantage, Mr Joerg said, due to its fertile soils and good climate for cereal production. “A third of the fertile cropping soil in Europe is in Ukraine, they have incredible top soil up to two metres deep in places, good water retention and generally favourable conditions.”

Currently, many cash-poor Ukrainian farmers prefer barley, because it is a cheaper crop to grow, but wheat production is on the up.

However, while Ukraine is proving a key source of lower grade, bulk wheat, Mr Joerg said he expected increased global demand to mean added Ukrainian production would not drag world wheat values down.

The nation will have more of an impact on the barley market, where it is already a key player. Mr Joerg said the end of barley subsidies in the EU meant barley acreages were down there, but Ukraine was happily picking up the slack. “Barley is an easy crop to grow, and it requires less inputs than wheat.”

Climate change is also unlikely to hurt the nation as much as areas such as Africa and Australia, due to its temperate climate.

Mr Joerg said the Ukrainian supply chain, which has been traditionally regarded as inefficient, was also on the improve. “There has been an incredible change in the past 20 years, a move from communism to an open market, all without bloodshed, which hasn’t happened before.

“To put the changes in context, when I first visited Ukraine 22 years ago, you had a security guard at your door at night to ensure you couldn’t go out at night, whereas you can now do what you want.”

He said there were still weaknesses, in terms of corruption and weak government, but said the low production costs were a key. “The GDP in Ukraine is $2800, compared to $44,000 in Australia and $42,000 in Canada.”

The infrastructure is also set up for large-scale farming, due to the communist era, in comparison to many developing nations where farming is still undertaken on small family plots.

Viterra has a strong history in the Ukraine via its ABB link. ABB, under the leadership of Michael Iwaniw, together with Soufflet, set up a joint venture accumulating grain in Ukraine in 2007.