The Round Table “Export Strategy of Ukraine: Problems and Values of Logistics” was held on April 25, 2018, at 14:00 with the participation of international experts. Co-organizers of the event: Ukrainian Agrarian Confederation, Department of Business and Logistics and the Agro-Business Institute of KNEU with the support of the USAID Project “Support for Agrarian and Rural Development”. The project “GUMLog” (German-Ukrainian Master’s Program in Logistics) was also co-organizer.
The event took place at the Kyiv National Economic University named after Vadym Hetman at the address: 54/1, Peromogy Ave., Kyiv, 1st building, 3rd floor, office 353.
Ukraine holds leading positions in exports of grain and oil. How to increase agrarian potential in further perspective? Answers were sought by representatives of agribusiness, logistics companies, reforms support groups of the relevant departments, public associations, analysts, academics, educators. Representatives of state authorities, international financial and public organizations, exporting companies and logistics companies were invited to participate in the event.
During the discussion a number of important issues were discussed. Namely, isssues of Ukraine’s export potential, infrastructure development, logistics, exports of value-added products, export market diversification and business opportunities.
People’s Deputy of Ukraine, the Chairman of the Council of Entrepreneurs under the Cabinet of Ministers of Ukraine, and the President of the Ukrainian Agrarian Confederation Leonid Kozachenko welcomed a speech to the participants of the round table. Leonid Kozachenko stressed that ” Transportation costs is the weightiest component of expenses in the structure of cost. Yes, 20 thousand carriages are needed for the transportation of grain, and we have twice less. River transport is not always advantageous because of high prices. Roads are not in the best condition. It is necessary to attract investments in the conditions of public-private partnership, when the state guarantees the observance of the indicator of the internal rate of investment return. We must focus on how to reduce the logistics expenses in transportation by road, rail and river, as well as reducing the costs of servicing terminals. The realization path of agrarian policy in terms of improving agricultural infrastructure is difficult and long, but there are current positive achievements.”
Igor Kolyadin, the representative of the Support Office of the Agrarian Policy and Food Department of Ukraine, said that: “… At the moment, during the development of the Roadmap for Export Development, the logistic component has been taken into account in development of export agrarian sectoral strategy of Ukraine.”
According to Oleksandra Klytina, the director of the support group of the Ministry of Infrastructure reforms, it is worth to reduce port fees, taking into account the profitability of each port. Transportation of goods by water transport also promotes the creation of new workplaces. But, unfortunately, we can not do anything without attracting investment. She also noted that the draft law on inland water transport has already been prepared, it only remains to be adopted. But, according to grain traders, the adoption of this law is blocked by one very well-known large agrarian company, because it creates its own river infrastructure. Regarding the railways, it would also be possible to attract private investment, but, according to market participants, Ukrzaliznytsia still offers disadvantageous conditions.
Another urgent task is the modernization of carriages and locomotives. Most of them even were released in the 80’s of the last century. Yuriy Borovsky, the vice-director of “TEP Vertical” Ltd said that: “Today, only four out of twenty companies produce carriages. The factories have lost their qualification in casting production, not all locomotives are suitable for EU railways.”
Pavlo Koval, General Director of the Ukrainian Agrarian Confederation, emphasized the importance of exporting both raw materials and processed products. “We need to understand the place of export agrarian strategy in the general strategy of agroindustrial complex development and export strategy of Ukraine. Over the last 2 – 3 years, the agricultural part in export structure is 42-46%; according to the results of 2016-2017 agroindustrial complex procure about 30% of foreign exchange earnings; we have become a global leader in the number of global markets. This emphasizes the urgency of the problem of agrarian export strategy in the development strategy of Ukraine. The consumption of food products per capita over the span of past 20 years in the world in terms of energy equivalent has increased by 10%. This indicates the fact that we, agrarians, need to produce more highly qualified agricultural products and transform them to a deeper level and to export to foreign markets.” Pavlo Koval drew attention to the regions and perspective sectors of Ukraine, including Asian markets and markets of North and West Africa, as well as trend products (meat, dairy products, cereals) that gain a global importance. There are regions in which the growth rate of demand is growing as well as for the Ukrainian agro-industrial potential.
The special guest, Professor Hans-Dietrich Haasis from the University of Bremen (Germany) outlined key trends in logistics development, among which the main are: globalization of markets, digitalization of the economy and operational activities, robotics. Professor Hans-Dietrich Haasis said: “The EU is facing the issue of developing “reasonable” logistics, when the logistics process is robotized and the model of communication in the chain is car-car, port-port, gate-gate. Involving investors, let’s not forget to invest in science.”
Vasyl Vintoniak, the director of the analytical agency “Infago”, outlined the export prospects of dairy products.
Finally, Alexander Yerankin, the director of the Agribusiness Institute of KNEU, refuted some myths that are common in the mass consciousness and in media. For instance, Ukraine is a backward agrarian country that exports only raw materials, namely, corn. Concerning added value – yes, Ukraine should increase production of deep-processed products. But can we consider grain as raw material? For example, coal or iron ore lie in the ground, regardless of whether they are extracted by someone or not. They are really a raw material. And if you do not add to the ground hands, machinery, technologies, just weeds will grow there… So, according to the scientist, grain is not a raw material; it is a product of labor with a low degree of processing. Therefore, it is not necessary to complex on this subject.
The organizers have promised to convey the conclusions and recommendations made at the roundtable in a profile Ministry of Infrastructure and Ministry of Agrarian Policy.
In today’s environment, when a business is a driver of reforms, held event is a platform that will help to solve all above-mentioned problems.