This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/6/2019

Overview

Data in USD thousands

 

2016

2017

2018

2019 (estimated)

Total Local Production

300,384

348,271

327,007

360,000

Total Exports

104,514

132,052

104,350

150,000

Total Imports

1,397,273

1,748,210

1,555,428

1,700,000

Imports from the US

323,694

381,975

293,407

350,000

Total Market Size

1,593,143

1,964,429

1,778,085

1,910,000

Exchange Rates

25.55 UAH

26.60 UAH

27.20 UAH

29.4 UAH

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources:
Total Local Production:
State Statistics Service of Ukraine  

Total Exports: Global Trade Atlas
Total Imports: Global Trade Atlas

Demand for agricultural machinery is directly tied to the health of Ukraine's agribusiness sector, which remains the most promising sector of the economy.  With 41.5 million hectares of agricultural land covering 70 percent of the country, agriculture is Ukraine’s largest export industry.  In the context of a total export volume decrease, the share of agricultural exports is increasing. During the last five years, the share of agriculture in export revenues for Ukraine increased from 26 percent in 2012 to 42 percent in 2016. In 2017, compared to 2016, agricultural products exports grew by 16 percent amounting to $17.8 billion.  In 2018, the total value, $18.6 billion, beat the historic 2012 record of $17.9 billion.  However, the basis of agricultural exports is still exports of raw materials, namely products of plant origin, including wheat, corn, barley and soybeans. In 2018, Ukraine’s agriculture sector, including the processing industry, generated approximately 17% of GDP.  

Crop farming, which accounts for 73 percent of agricultural output, dominates Ukrainian agriculture.  Leading this sector is grain production.  Ukraine’s major grains crops are wheat, corn, barley, and rye.  Ukraine is the fourth largest exporter of corn and barley, and the sixth largest exporter of wheat.  For six consecutive years (2013-2018), Ukraine harvested over 60 million tons of grain annually.  According to Food and Agriculture Organization of the United Nations statistics, by 2020, Ukraine’s cereals and soybean output is estimated to reach 70 million tons and reach 78 million tons by 2024.  With significant improvements in yields, many experts estimate that Ukraine’s total grain output potential is 140 million tons.

Oilseed is the second most important subsector in Ukrainian crop farming.  The major oil crops are sunflower, soy, and rapeseed.  In the mid-2000s, after implementation of export tariffs for unprocessed sunflower seed, Ukraine developed a leading sunflower oil industry and became the number one exporter of sunflower oil in the world.

Ukraine is the seventh largest exporter of soybeans.  It also produces significant volumes of poultry, forage and feed crops, potatoes, sugar beets, and a variety of fruit and vegetables.  

Production is primarily divided between two groups - agricultural enterprises and households.  The former produces 55 percent of gross output and consists of 45,000 enterprises.  The second group consists of more than 4 million households cultivating on average 1.23 hectares of land each, generating nearly 45 percent of gross agricultural output.

During 2016-2017, greater political stability, a stronger economy, a more stabilize hryvnia (the country’s currency) and delayed demand enabled and encouraged Ukrainian farmers to resume badly-needed capital investment, including agricultural equipment.  Farm machinery and equipment imports increased nearly 2.5 times in 2017 compared to 2015, returning to 2013 levels.  In 2018, the demand for imported machinery and equipment decreased at 11 percent due to stabilization of the situation after a high increase in 2017.   According to the Institute of Agrarian Economics of Ukraine, as of 2017, the estimated value of agricultural machinery and equipment available in Ukraine is $6 billion.  Operational need for agricultural machinery and equipment is estimated at $20 billion in 2025.  With anticipated growth of production volumes and delayed demand, Ukraine’s imports of agricultural machinery and equipment is expected to grow. 

Leading Sub-Sectors

  • Tractors

  • Harvesters

  • Tillage equipment

  • Seeding equipment

  • Sprayers and fertilizer distributors

In addition to the prospects for agricultural machinery used for plant cultivation, the following agribusiness sub-sectors are promising for U.S. companies:

  • Grain storage and handling

  • Irrigation Infrastructure

  • Agricultural chemicals, including growth enhancers and micronutrients

Opportunities

The Commercial Service in Ukraine holds a positive long-term view on sales prospects for U.S. agricultural machinery and equipment manufacturers in Ukraine.  Although Ukraine is a major global producer of crops, its agricultural sector is under-equipped and much of its existing agricultural machinery is outdated.  Overall, 30 percent of agricultural machinery needs to be replaced or upgraded.  This requirement is concentrated among 10 percent of Ukrainian companies, which need to replace around 75 percent of their machinery fleet. 

Ukrainian farmers prefer imported machinery.  All self-propelled sprayers, 98% of combine harvesters, 95% of tractors, 89% of plows, 55% of spreaders, 46% of seeders, and 25% of disk harrows sold in 2017 in Ukraine were imported.  (Source: UCAB)

Competition
U.S. agricultural machinery companies contemplating entering the Ukrainian market should also consider the competitive landscape.  U.S. brands such as John Deere, AGCO, Great Plains, and Case are widely available in the Ukrainian market, but face tough competition from European manufacturers (e.g. German, Danish, and Italian manufacturers).  Competition is particularly fierce for tractors and harvesters.  In the combine harvester segment, German manufacturers hold almost fifty percent of the market (both new and used), while U.S. manufacturers have less than ten percent.  Competition from European suppliers would likely increase should Ukraine enter into the European Union (EU).  The Deep and Comprehensive Free Trade Area (DCFTA) agreement, which is part of Ukraine’s EU Association Agreement includes the gradual removal of customs tariffs and quotas and an extensive harmonization of laws, norms, and regulations in various sectors. Additionally, Canada-Ukraine Free Trade Agreement (CUFTA) envisages improved market access, by eliminating tariffs across many export groups. 
Local agricultural machinery production is also expected to grow due to a Ukrainian Government program offering 20 percent support for the purchase of Ukrainian machinery and equipment. 

Financing
The major factor restricting agricultural development is access to credit and working capital.  Domestic loans are expensive, and Ukraine’s challenging business climate prevents local companies from attracting cheaper international funds. Therefore, the competition among suppliers of agricultural machinery in Ukraine is not only about quality, but also about a supplier's financial terms.  A major trend in agricultural banking industry is operational capital financing for the purchase of plant protection products, seeds, fertilizers, and fuels. Bankers are more willing to offer credit to agricultural commodity producers of grains, cereals, and oilseeds.

At the end of December 2018, after more than five years of suspended operations, the U.S. ExIm Bank reopened its short and medium-term programs in Ukraine for both private and public sector.  This action sends a strong signal to U.S. companies seeking to supply the Ukrainian market with U.S. agricultural equipment and services, since financing is a key factor for buyers considering equipment purchases.  For many years, Ukraine was the U.S. ExIm Bank’s most active portfolio in the region, with close to $140 million of long-term guarantees provided in 2012. 

Web Resources

Trade Events

Useful links

 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Ukraine Agribusiness Trade Development and Promotion