Agribusiness in Ukraine Forum, 15 - 17 March 2011, Kyiv, Ukraine

Agribusiness in Ukraine 2010 speakers included

Leonid Kozachenko President Ukrainian Agrarian Confederation

Dmitry Berezovskiy President National Agricultural Chamber of Ukraine

Mykola Pryasyzhnuk Chairman Committe on issues of agrarian policy and land affairs Verkhovna Rada

Gilles Mettetal Director for Agribusiness EBRD

Victor Ivanchyk CEO and Founding partner ASTARTA Holding

The Ukrainian Agricultural Forum 2010 in quotes:

Gilles Mettatal, Director of Agribusiness Department at EBRD put it: “I am very much impressed with the quality of this Forum. It is the best in the industry in Ukraine”.

The general mood of Agribusiness in Ukraine 2010 Forum was best described by Victor Ivanchik, Founder and CEO of Astarta Holding who said: “In my opinion we have hit the bottom and there’s no other way for us except to get up and develop. All of us are experiencing now a careful optimism. The country is getting ready to a new phase. We hope that the new Government will be able to build foundation for a healthy agrarian economy. I am confident, that we, agrarians, will be able to thoughtfully use the new opportunities!”

LEONID KOZACHENKO, President of the Ukrainian Agricultural Confederation

- “The Ukrainian agricultural sector has enormous POTENTIAL – but it is not being realised”.

- “The new government is in a difficult situation. It needs to lay down NEW FOUNDATIONS, but is having to fight fires every day”.

- "What should we be striving for? The REMOVAL OF POLITICAL RISKS. Agriculture had become a social contributor. There was practically a BAN ON MAKING PROFIT. An investor would find himself in a constant STATE OF SHOCK! The biggest obstacle to the development of the agricultural industry in Ukraine is INSTABILITY."

- "We must COMPLETE THE REFORMS: land, reforming the systems of governance, market infrastructure; there is no system for hedging risks”.

- "We need not subsidies but INVESTMENTS. Then production will rise”.

SERGEI MELNIK, Ukrainian Deputy Minister for Agriculture
"... Big business has arrived in the agricultural sector, which has the means, and the land will not be vacant. We hope that the Government will GIVE PREFERENCES to this sector of the economy. We know that the President and the Prime Minister have identified the AGRICULTURAL SECTOR AS PRIORITY. "

Yevgeny Leng, Managing Director, Agro Ukrzernoprom
- "I believe that what is missing now, in both the Ukrainian agricultural sector and government, and for foreign businessmen interested in working in Ukraine, can be expressed in one word - STABILITY. Stability in agricultural policy, in general economic policy, and in the rules of the game, as it is played in the market today. "

- "The problem of VAT should be solved! It’s possible to securitize what has been accumulated to date. The agricultural sector is a good testing ground, where one can try to observe VAT. If we approach the problem creatively, then we obtain a RAPID SPURT and a great growth in interest from traders in the industry."

Giles Mettetal, Director of the Agricultural Department of the EBRD
“The European Bank for Reconstruction and Development (EBRD) has in 2010 put EUR 200 million into the development of the Ukrainian agricultural industry. In the last year, the bank has increased its investment in the Ukrainian agricultural industry by 30%.

FORECASTS:

Sergey Melnik, Ukrainian Deputy Minister of Agriculture
"The forecast figure for Ukraine’s grain harvest in 2010 is estimated at around 48 million tonnes.”

Irina Starodubova, Partner, Horizon Capital
- "Ukraine is the world’s 3 rd largest exporter of cereals, with a 10% market share in world grain exports. If we increase yield by 25% (by 2 tonnes per hectare), then we will capture 15% of the world grain export, as Leonid Kozachenko said.

- "We are not so far away from 2nd place in the crop production ratings".

Stepan Kapshuk, CEO, Ukroliyaprom
“Ukroliyaprom predicts the production of sunflower oil in the 2009/2010 marketing year to be around 3 million tonnes."

PLANS:

IFC intends to invest UAH50 million in the Mriya agriholding. The money will be used to replenish the land bank (increasing the land area) of the company and to increase production capacity, as well as for energy efficiency programs.

Sergei Yevlanchik, Director General, Ukrproduct Group
"We are interested in a stable milk supply and are looking for partners to develop our resource base. We are ready, alongside a potential investor, to develop the dairy industry in those regions in which we currently operate (mainly the Khmelnytsky and Vinnitskaya regions.), as well as in other regions. This project requires USD160 million to implement, which is impossible to draw from share capital only. ¾ of the finance for this project will be from loan capital, taken for a period of 4-6 years.

"Astarta" intends to expand its land holdings to 200 thousand hectares.

Victoria Yatsenko, Head of Procurement, Nestle Ukraine and Moldova
"Nestle are not planning to acquire new businesses in Ukraine during the current year"

CHALLENGES:

Sergey Melnik, Ukrainian Deputy Minister of Agriculture
"We have had TO POSTPONE a large volume of work due to adverse weather conditions. As far as I am aware, only the Crimea is completing the early sowing of spring crops, while other regions are still not able to begin work, or even to fertilize the soil”.

Irina Starodubova, Partner, Horizon Capital
- "We are waiting for STABILITY from the state!"

- "We all understand that in Ukraine there is a MORAL and MENTAL restrictions on the sale of land. We must FOSTER A CULTURE OF OWNERSHIP, as in Central Europe. How long will this take? About 20 years ".

- "If the STATE helped BUY the TECHNOLOGY, it would increase its export capacity."

LEONID KOZACHENKO, President of the Ukrainian Agricultural Confederation
“The State Tax Administration seized the accounts of Astarta Holding.They demanded that the company change its status from a limited company to a JSC, as it has more than 50 founding members. The company changed its status, but now the tax authorities are demanding payment of taxes on all assets, although there has been no purchase of a new company, just a change of status.” Leonid Kozachenko.