Prerequisites of post-war rebuilding of Ukraine’s agricultural sector

Prerequisites of post-war rebuilding of Ukraine’s agricultural sector

russia’s war against Ukraine has heavily disrupted Ukrainian agricultural supply chains and production, and there is now a global imperative to preserve levels of production and secure the supply chain.

Agriculture is important for Ukraine’s economy with 12.2% direct contribution to GDP, and up to 20-22% when including upstream and downstream sectors. In terms of global food security, Ukraine is a top 5 global exporter of wheat, sunflower oil, corn and barley.

Notably, infrastructure (especially road and railway logistics) is a key for ensuring that Ukraine’s agricultural output circulates internally and internationally, especially in times of partial blockades on ports. In general, transformation is a priority task for rebuilding Ukrainian agricultural sector.

Therefore, apart from rebuilding logistics infrastructure, wider systemic priorities include the introduction of new ICT technologies, the development of agriprocessing and organic agriculture sectors.

ICT technologies introduction

The technological solution is to develop and deploy precision farming tools that would help decrease water and pesticide use, in line with EU Farm to Fork Strategy targeting a 50% reduction in pesticide use. The most promising precision agriculture technologies are variable-rate nutrient application (VRNT), machine guidance (MG), variable-rate irrigation (VRI) and controlled traffic farming (CTF).

According to UNEP, the application of modern ICT over 10 million hectares of agricultural land in Ukraine could result in 20% savings in the use of fertilizers (through variable rate application technologies, without productivity losses), increased fuel efficiency of 10-15% per hectare of land cultivated (through GPS trackers), and the control of land use practices – including land use changes that increase GHGs emissions (through satellite and aerial images analysis). Thus, implementing ICT technologies could significantly decrease input costs and emissions.

Agro processing

Ukraine’s agricultural system is heavily geared towards exports: 40% of export revenues are generated from agriculture. Most major productions are exported without processing (55-60% of maize, wheat and barley), resulting in part of the value being captured by importing countries. The Recovery Plan envisages large investment packages aimed at building Ukraine’s agriprocessing industry (e.g. $10.2bn destined to the crops processing industry alone). In addition, many private investors are already interested to develop agriprocessing projects in Ukraine. Therefore, recovery process will entail the transformation of Ukraine’s agricultural model from extensive to a new large-scale intensive model.

Organic agriculture

russia’s war against Ukraine has had a devastating effect on the performance of Ukrainian organic sector. In 2020, according to “Organic Info Ukraine” there were 445,000 km2 of organic agricultural land in Ukraine. However, almost 20% of these lands are located in areas of hostilities or in occupied regions. For example, the Kherson region being by far the largest organic producer, is currently almost completely occupied by Russian troops. Before the war, Ukraine was one of the world’s leading producers of organic crops. According to the European Commission (2019), Ukraine is the largest supplier of organic products to the EU and the second supplier in the world. The major organic products include organic grains, oilseeds, oilcakes, medicinal herbs, aromatic plants and honey. The EU Green Deal adopted in 2019 provides for at least 25% of EU agricultural land under organic farming. Therefore, for Ukraine not to lose its world major organic producer status, there is a need to set higher targets for organic farming than the initially planned 3% according to National Economic Strategy for 2030.

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