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Ukraine farm industry bids to be 'Breadbasket of Europe'

From Diana Magnay, CNN
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Ukraine's MHP is the country's leading poultry business
  • Ukraine is the world's largest exporter of sunflower oil and the third-largest exporter of grain
  • Government says modern technology needed to increase grain production
  • Some argue land reform is key to attract foreign investors

CNN's global series i-List takes you to a different country each month. In January, we visit Ukraine and look at changes shaping the country's economy, culture and social fabric.

Kiev, Ukraine (CNN) -- One-hundred-and-thirty kilometers south-east of Kiev in the Ukrainian countryside is one of Europe's largest poultry production facilities.

The Myronivka poultry farm produces 220,000 tons of chicken a year. In plain speak, that's two and a quarter million chickens killed here each week -- reared, fed, slaughtered and processed with what it says are the lowest production costs of any Ukrainian poultry business.

That's one reason why producer MHP, which runs this farm alongside a myriad of other crop-production facilities, breeder farms and fodder plants, is the country's market leader in the business of chickens.

"If you want something done right then do it yourself," says CEO Yuriy Kosiuk, sitting in an ornate meeting room decorated with porcelain cockerels at the company's swish Kiev headquarters.

Ranked eighth on the country's rich list in a December edition of the Kiev Post, Kosiuk says the agricultural sector in Ukraine is up and coming, but you need the right management.

"You have to have the right people to manage the business processes like we do," he says. "And you have to have the strength to invest a lot of money into projects because investment and our management style is very untypical."

Kosiuk has one distinct advantage over his European competitors. The black soil on which he farms is famously fertile.

It's the reason Ukraine was known as the "Breadbasket of Europe" and why it is even now the world's largest exporter of sunflower oil and the third-largest exporter of grain.

At the moment Ukraine is gathering anywhere from 38 to 50 million tons of grain and we can double that
--Borys Kolesnikov, Ukraine Deputy Prime Minister
  • Ukraine
  • Grain Markets
  • Business

For Kosiuk, that means he can feed his chicks with the grain and sunflower cake grown in the neighboring fields. And he can fertilize those fields with litter from his chicken-houses. "Outsourcing" for him is a dirty word.

The sector's potential is also attracting a host of foreign investors -- just over 1,500 as of January 2010, according to the Ministry of Agriculture.

But the government acknowledges it has to make substantial reforms to encourage further investment.

"At the moment Ukraine is gathering anywhere from 38 to 50 million tons of grain and we can double that production just by introducing modern technologies," says Ukraine's Deputy Prime Minister Borys Kolesnikov.

Part and parcel of that is reforming state agribusinesses and financial institutions to bring them in line with EU standards. There's also the issue of land ownership.

Since Ukrainian independence in 1991 there's been a moratorium on selling land. Sergiu Trygubenko, from the Ministry of Agriculture, says: "With no investment and no technology we can't do anything. And in order to have that we need to create an investment climate in the sector, which I think means opening up the land market."

The government still won't give a definitive answer as to when it will lift the moratorium. But Kosiuk says it doesn't matter to him. He rents the 300,000 hectares he farms from thousands of small landowners and plans to rent another 100,000 in the years ahead.

"I don't think it's even a problem for foreign investors," he says. "I think the key to success in this sector is the right management and only 20% is about the money."

Kosiuk is certain that at a time of global food shortages, Ukraine's black soil has a vital role to play in putting the country firmly on the map as a global food producer.