Ukraine: time to rethink dependency on China
April 23, 2020 at 8:31 AM ,
Der AUDITOR
Mundus Agri: Does the current pandemic have negative or even positive effects on trading activities between Germany and the Ukraine?
Zhaburovskyi: The pandemic may strenghten the global trade with the Ukraine, naturally also with Germany. Now is the time for many Eurasian countries to rethink their dependence on China in many industrial sectors. This also offers a unique opportunity for the Ukraine to become an important Eurasian hub in technology and infrastructure, manufacturing and agriculture. As much as 43% of all exports from the Ukraine are already destined to the EU. Automotive suppliers and the textile industry excepting, the country is hardly integrated into international supply chains. We hope that this will change.
Regardless of the pandemic, the new EU directives may, however, have an adverse impact on trading activties with the Ukraine. Reduced maximum residue limits for chlorpyrifos and chlorpyrifos methyl will apply for food and feed imports for the EU as of October. These pesticides are, however, still in use in the Ukraine, although we do of course need to adapt to regulations.
Mundus Agri: Are further export bans to be expected for food?
Zhaburovskyi: So far only the export of buckwheat has been temporarily suspended. Cereals are, after all, a staple food here. The export quota for wheat is 20.2 million metric tonnes for the season, which lasts until 30 June. Around 18 million metric tonnes have, however, already been shipped. If the quotas should already be exhausted by the end of April or mid-May, wheat exports will be discontinued until the new season. No further restrictions are intended so far.
Mundus Agri: Which soft commodities are mainly traded between Germany and the Ukraine and where is the greatest potential for growth?
Zhaburovskyi: We see potential for growth in exporting various Ukrainian agricultural products. The focus is on fruit, vegetables and nuts. The Ukraine is the world's largest producer of blueberries and one of the most important producing countries for watermelons. The cultivation of walnuts has also been subsidised since 2017 to encourage production.
Mundus Agri: Which requirements must be complied to?
Zhaburovskyi: In how far the potential can be tapped depends on various different factors. Quality must be improved and supply volumes raised. Since large shares of production are supplied by small farmers and households, the help of intermediary market players is required. Larger companies must be supported in improving production, marketing and business processes. And smaller producers need to be encouraged to unite in cooperatives with the same objectives. German buyers must also be convinced that it is worthwhile to buy directly in the Ukraine. Bilingual standard supply contracts, an EU-based complaints procedure and bilingual company web pages with English/German speaking contact persons, etc. can help. Information on customs clearance, the regular use of Incoterms and, where appropriate, certificates and reference customers etc. would also be helpful.
Mundus Agri: What projects is the AHK Ukraine currently working on?
Zhaburovskyi: At the moment, we as the AHK Ukraine are working on a charity project - we want to collect and offer funds, protective gear and special services (i.e. driving doctors to work and back to home again) with which we intend to help Ukrainian hospitals together with non-governmental organisations.
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