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Potential of agriculture development in Ukraine

The agricultural sector represents 37% of foreign exchange earnings from exports in Ukraine. Agriculture is #1 export industry in Ukraine, that contributes 14% of
total GDP.

60% of foreign exchange earnings, provided by agricultural industry falls into five main crops:  corn (20%), sunflower oil (20%), wheat (14%), sunflower meal (5%) and rapeseed (5%).

The greatest revenue growth is represented by products with high degree of processing, i.e., sunflower oil, wheat flour, soybean oil, and others.

Geographic structure of export shows change in trade direction to Asia (the share of export is almost 47%) and stable trade relationships with EU countries (share of 26.4%).

Exports of major crops from Ukraine,

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What could give us a confidence that agricultural sector in Ukraine would grow?

Think the following simplified approach could explain in a nutshell.

 

With an average yield of wheat (3.9 tons / ha versus European average of 6 tons / ha), the country has feasible potential for the growth of productivity in the industry.

Depreciation of different types of equipment varies from 50 to 80% in Ukrainian agrarian companies. This indicates growth potential by investing into the new equipment.

By efficient use of land resources, investments in the agricultural sector, optimization of production cost, Ukraine may increase output up to 100 million tons per year from the 40-60  million tons currently and strengthen its position in the production of major crops in the world market.

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