21/09/2012 

Ukraine’s Economic Development To Stem from Villages

Speaking at a roundtable in the village of Synkiv attended by the Prime-minister of Ukraine Mr. Nikolay Azarov, Governors of Lviv and Ternopil regions and over 20 owners and senior executives of major local agribusinesses, Mr. Dmitry Firtash, President of the Federation of Employers of Ukraine stated that corporations and the government must work out a comprehensive approach to foster the development of agriculture and of rural communities. “We ought to pursue a complex approach to secure the development of the national agricultural sector,” stressed Mr. Firtash.
 
According to the FEU President, such a vision is an imperative dictated by the current market situation. The prices to food products will continue to grow for quite a while and Ukraine should capitalize on this trend. “This is something beyond the scope of our national interests. We are talking about the international food security,” emphasized Mr. Firtash.
 
The FEU President argues that the agricultural sector growth depends on sustainable rules for businesses’ operation. “Companies have to have clear rules of the game for at least 5 years ahead. After all, systemic investments in agriculture involve long-term projects with 5 – 10-year timeline,” said Mr. Firtash.
 
The list of top priorities of agriculture advancement includes introduction of high technologies into the production, deeper processing of the produce and development of rural infrastructures and entrepreneurship.
 
“We must focus on deep processing which is non-existent today. Agricultural produce must undergo the maximum degree of reprocessing exactly where it is produced. There no other way to address our key problem: low labor productivity. If we compare the EU’s average added value index per one worker with our statistics, in Ukraine it is 6 times lower, while the same comparison with France shows that we are 20 times inferior,” explained Mr. Firtash. The technological and technical backwardness of Ukraine’s agro-industrial sector is the key cause of such low productivity. “In Germany, there are 90 tractors to work on a thousand-hectare plot, while in Ukraine there will be just ten out in the same size field. Most of the equipment is outdated morally and physically,” noted Mr. Firtash.
 
The FEU President also explained that investments into agriculture are impeded by the low level of infrastructure development: many regions lack quality roads, no water supply and sewage are connected to industrial sites. “Investments become disadvantageous as long as companies have to invest not only into business operation but also into infrastructure. A decision needs to be found to provide incentives for business to develop the agro-industrial complex thereby modernizing rural areas. We have to devise a joint action plan for the village promotion to engage both private and public sectors,” added Mr. Firtash.
 
Activating entrepreneurship in rural areas must be the next priority for the government. “Private enterprise in the village is way to scarce today: every other village has no private entrepreneur at all. As a result, the youth employment level barely reaches 30 %,” stressed Mr. Firtash.
 
The Prime-minister Azarov assured the audience that the agro-industrial complex development and rural life quality improvement refer to the government’s top priorities. “We are contemplating different approaches to attracting investment in agriculture. It looks like we are the first government maintaining an ongoing dialog with employers,” said Mr. Azarov. He also argued that companies have to be more active in improving rural life quality. “Villages like Synkiv are not too many in Ukraine, unfortunately. We have to use every effort to make sure that each village in Ukraine can boast kindergartens and hospitals like the ones in Synkiv,” concluded the Prime-minister.