Ukraines agriculture: potential for expanding grain supply. Economic and institutional challenges

Ukraine is one of the few countries in the world that is in a position to significantly increase grain net exports, due to its strategic location and agro-ecological potential of its soils. The grain production potential of Ukraine depends on the two main factors: land area cultivated and yield. This report analyses possibility of increasing both of these factors, highlighting the unstable character of land area under grain and defining the causes of such fluctuations including extreme weather conditions, absence of crop insurance system, lack of environmental measures and unsustainable mid- and long-term state policy in grain production and trade. The rapid emergency of large intensive agricultural enterprises and agro-holdings in the last decade is widely promoted by policy makers due to their effectiveness; however in terms of operational efficiency, environmental footprint and monetary productivity, peasant farms often have better results, as we have shown in this report. In terms of economic and institutional challenges, we have analysed issues with logistics and trade infrastructure, rule of law, transparency of grain markets and financial support to the farmers. As a result of the analysis, we can conclude that by liberalizing its markets, improving the rule of law and providing more state support for sustainable agricultural practices and infrastructure development, Ukraine shall be able to increase its grain production and exports, attract more investment into the sector and improve producer profitability.