Ukraine exports ¾ of produced corn, as this crop is not popular inside the country and isn’t used for the production purposes. Ukraine is the third world’s largest exporter of the corn, though the opportunities for the expansion of areas planted with corn are practically exhausted – the next increase in production will require fundamental changes in the industry which are impossible without investments.
Favorable weather conditions ensured record yield as well as export volume
In 2016-2017 Ukrainian agricultural companies and farmers produced 28 million tons of corn due to favorable weather conditions. This is 7% increase compared to last year. Such productivity allowed Ukraine to become the 6th largest producer of corn in the world: we are outpaced by the USA, China, Brazil, and EU only. Mexico, India, South Africa and Russia are right behind us.
Internal Ukrainian market has no demand for such big amount of corn and thus the majority of produced product goes for export. In 2016-2017 we’ve exported 21,5 million tons of corn and were ranked third world’s largest exporter of this crop being outperformed by USA and Argentina only. In terms of money, the export produced 3 207, 1 million of income for our country. Egypt, Spain, and the Netherlands became the largest importers of Ukrainian corn with $522,8 million, $377 million, $ 375,1 million worth of import respectively.
This is the record volume of corn export for Ukraine both in terms of increase of supplies to traditional markets as well as the expansion of our presence at new ones. For instance, we exported 2,2 million tons of corn to Iran, which is 3 times more than in 2015-2016, as well as increased the export to South Korea by 6 times – up to 400 thousand tons.
Corn is the the third most popular crop in Ukraine in terms of planted area
4,3 million hectares of arable lands are planted with corn in Ukraine. Only sunflower (6,1 million hectares) and wheat (6,2 million hectares) occupy larger areas.
Global production of corn will continue to increase
Currently, there is a global trend for increase of corn production – within last 16 years, it almost doubled – from 600 million tons to 1100 million tons.
Increase of corn production in Ukraine requires improvement of existing and introduction of new technologies
Nowadays Ukraine achieved the peak of its corn production capacity – during last 15 years, our farmers have been steadily improving technologies of corn production which resulted in the two-fold increase of yield – up to 66 hundred kilograms per 1 hectare. Though, this figure is still low if to compare with European yield index of 120 hundred kilograms per 1 hectare. Yield increase can be achieved with the help of further improvement of cultivation technologies which require substantial investments.
The aforementioned is supported with the forecast of the US Department of Agriculture. According to the report, Ukraine will produce around 27,5 million tons of corn in 2017/2018 which is 0,5 million tons less than in 2016/2017.
Some experts say that the opportunities for a quantitative increase of corn production are exhausted in Ukraine. The key regions of this crop cultivation are Chernihiv, Sumy, Kharkiv, Dnipro, Kirovograd, Cherkasy, Poltava, Kyiv, and Vinnitsa oblasts. These regions are the most suitable for corn cultivation, though there are no arable lands left for this crop there. Further increase of land areas planted with corn foresees expansion to the south where the humidity level is low. The development of irrigation systems might be a solution but it requires investments which will be unprofitable without a state support of corn prices. That’s why it’s high time to use already cultivated corn fields more effectively.
Introduction of import fee in EU can reduce profit
An import fee introduced by the EU for the first time in three years may become an obstacle on the way to the increase of export profit in 2017/2018. Until August 2017 there was a 0 import fee for corn, but now it constitutes 5,16 EUR per 1 ton. This is the EU reaction to the situation on the world market of corn where the 2016/2017 record yield caused excessive offer and decrease in prices.
The production of corn is at its peak in Ukraine and even such barriers as import fees can only reduce the revenues of our farmers and agricultural companies. The global demand for corn will continue to increase and thus Ukraine has to figure out ways of ensuring its further success on the market already today through the introduction of systematic measures. Without such approach, we won’t be able to catch up with Argentina and can be easily outpaced by Brazil.
