Reaping what’s been sown

When one ponders the vast stretches of wheat being culled from the swaths of farmland in the Ukraine the mind doesn’t quickly leap to the thought of a pastry shop in Cairo. Or a bakery in Indonesia.

Vicktor Doroshenko would like to change that. Viktor, the CEO of the Skvyrskyi Grain Processing Factory in the Kyiv region, has been directing his company to focus on Asian, North African and European markets.

Viktor’s shift in outlook was one born of necessity. Not only was there a sharp increase in the production of wheat from 2011-2016 (spurred by efforts the previous year by FAO) but there was also, simultaneously, a decline in the Ukrainian population, and with it, a diminishing demand for wheat in his own country. Facing a classic riddle of surplus of supply with decreasing in demand, Viktor smartly sought to diversify and seek out other markets.  

It is a task not without its challenges. “Unfortunately, very little is known about Ukraine today on the world food markets. Both in Europe and in Asia, buyers are often cautious about Ukrainian products and processors,” Viktor says.

“Countries in North Africa, including Egypt, have limited production opportunities due to land and water constraints. They will rely more on exporters from the Black Sea Region, such as Russia, Ukraine and Romania, for their grain imports in the future.” - Dmitry Prikhodko, FAO Economist

It would be one thing if Viktor were just exporting the surging quantities of unprocessed grain that Ukraine has produced over the last decade.  But as he points out, “Today our task is not to export grain, but to export processed products, high value products. We have a huge potential for processing and then exporting wheat flour.”

This is where FAO through its partnership with the European Bank of Reconstruction and Development (EBRD) has been instrumental. Firstly, by facilitating public-private dialogue, which has resulted in a more favorable policy environment and attracted new investment. Since 2012, the EBRD and other investment partners have provided over USD 1 billion in financing for clients in the Ukrainian agriculture sector.  FAO then provided guidance to Ukrainian milling companies like Viktor’s on how to meet European and international standards.  

FAO and EBRD, with the support from the EU4Business initiative, have also collaborated with the Union of Ukrainian Millers to help establish a unified voice for companies like Viktor’s on issues of state policies, technology, regulations and standards, while also promoting Ukrainian grain products abroad.

These efforts, and Viktor’s forward thinking, are paying off.

“We are now exporting to the European Union, China and other countries in Asia, and also countries in Africa,” Viktor says. In fact, 40 percent of his products are exported and this amount is set to grow.

Additionally, FAO has been able to successfully pair companies like Viktor’s - and their surplus of grain and grain products - with countries like Egypt that contend with rising grain demand.

Challenges still remain - stiff international competition, a persistent need to modernize, overcoming previously held assumptions about its products - but when it comes to exports, in a matter of years, companies like Viktor’s have seen a seismic shift already.  

But like the blue in the Ukrainian flag, the sky’s the limit. As Viktor says, “the export potential of the Ukrainian grain processing industry is massive.”

Viktor’s story is one of many.

FAO and EBRD have more than two decades of experience supporting investment policies, programmes and technical assistance in Ukraine, including facilitating public-private policy dialogues. The evidence is clear; countries, like Ukraine, that have consistently invested in agriculture have reaped the most benefits in boosting incomes at home whilst reducing hunger and malnutrition globally.

Investing in agriculture can transform lives, reduce hunger and malnutrition, and eliminate poverty. Working with international partners, FAO has contributed to over 2,000 agricultural and rural investment strategies, policies and programmes in more than 170 countries. FAO Investment Centre carries out the majority of this work.

Read more:

• Full Story: Milling for International Markets
• Reviving Ukraine's Breadbasket
• FAO’s work on Support to Investment
• FAO’s work in Ukraine
• European Bank of Reconstruction and Development (EBRD)
• EU4Business