Ukraine is Open for Business

Last month, Kwayga, an online matching platform for national and international B2B buyers and suppliers within the food and beverage industry, hosted a webinar that outlined the current projection of Ukraine's food supply chain and a 6-month outlook that included opportunities for buyers and suppliers in the European food and beverage sector. Find here the key points discussed and main takeaways from this event.

Political View + Six month Review

The Kwayga event was opened by Ms. Larysa Gerasko, Ambassador of Ukraine to Ireland, who set the sobering scene that Ukraine's total losses from Russian aggression thus far has exceeded $1 trillion, due to direct infrastructure damage, lost commercial profits and investment plus losses incurred as a result of declining GDP in the run up to pre-war actions. However, Mr. Taras Kachka, Deputy Minister of Trade Representative at the Ministry of Economy of Ukraine added an interesting insight that while trade and exports decreased significantly due to circumstances, these activities did not collapse entirely (which is the perception across the globe). This continuation of trade and productivity was referenced throughout the webinar and it is important to note that Ukraine is a massive country and the majority of regions were unaffected by Russia’s invasion since February 2022. Derek Mc Guinness, Logistics Officer at the World Food Programme (United Nations) added that “obviously those areas that are under occupation and under direct threat from the ongoing conflict will be slower to bounce back, but people are very, very resilient and adapt very quickly. Speaking to colleagues working in the North and the West of Ukraine, life is pretty much normal as it was prior to the invasion”.

Supply-Chain Recovery

During Kwayga’s webinar we learned of the rebuilding of Ukraine supply-chains to support inbound and outbound commercial freight activities, as unfortunately many of the roads into Ukraine were occupied by Humanitarian and Military traffic in the past 6 months. However, due to programs like the Black Sea Grain Initiative, and improvements to rail connections across Eastern Europe, export trade from Ukraine is beginning to flow as normal on some supply lines into Europe. Specifically, the restoration of exports from Ukraine was ensured by the Istanbul Grain Agreements, which unblocked the export of grain cargo from three seaports in the Odessa region in August. In terms of value, Ukrainian exports in August increased in value by 13.9% to $3.3bn with the majority of exports going to the EU ($2.3bn) with neighbouring states such as Poland and Romania the leading destinations.

Mr. Taras Kachka defined this progress further by stating that “we do not depend 100% totally on trade through the Black Sea ports but of course, it is the most efficient way to export from Ukraine. Last year we exported 3/4 of our exports by sea but now we have many viable alternatives by railway, road, and river port; these are all useful, efficient and attractive modes into Europe”.?

Recent Export Trade

Wholesale, food service and supermarket buyers on Kwayga’s webinar were provided with further trade insights from Ukraine, and it was no surprise that agricultural products remain one of the key exports for Ukraine despite the fact that the conflict with Russia has cost over €4 billion worth of damage to the country’s agricultural sector. However, since the lifting of blockades on Ukrainian ports on the Black Sea in July, 90 ships carrying 200 million tonnes of Ukrainian agricultural products have left ports with destinations of 18 countries worldwide. Positively, expectations of the grain harvest have increased in Ukraine compared to the forecasts at the time of sowing. The Ministry of Agricultural Policy and Food Exports expect that the harvest of grain and oil seeds will amount to 67 million tons (instead of 60 million ton estimates).

Ukraine remains the world’s leading exporter of sunflower oil. Over the past year, they produced 6.45m tonnes of sunflower oil, which was 30.5% of the world’s total sunflower production with the volume of exports at 5.75m tonnes, which is almost half (47.26%) of global sales of the product. They are also producing value-added products that may not naturally be associated with the country including vegetarian meat-free goods, plant based milk and mineral water.

Ukrainian Food + Drinks Sector

Mariia Dehtiarova, Export Promotion Manager at U-Food Association delivered a very insightful presentation demonstrating the capabilities and innovations within Ukrainian food and drinks producers. Andrii Sheveliev, Ukraine Export Lead for USAID Economic Resilience Activity supported this presentation by reminding the esteemed gathering of International Food buyers that ‘it is important to remember that Ukraine is not only producing grain and cooking oil. Our food sector has numerous modern manufacturers with great added value, cost and other advantages.``

Ms.Dehtiarova outlined that while agricultural products are the key current exports for Ukraine, the fishing industry has actively developed since 2017 with the value of exports in this sector growing by 21%. The rationale for this is that Ukrainian companies now have their own fishing boats, which are equipped with freezing and cooling facilities which results in higher quality fish delivered onshore. In terms of trading between Ukraine and the EU from 2017 to 2021, there was double digit increases across the board in the value of exports of all major food products including fruits and nut (+51%), sugar and sugar confectionary (+49%) and chocolate confectionary (+49%).

Like most advanced food and drinks sectors, Ukraine has many trending and emerging categories too such as meatless meat, healthy confectionery, low calorie/sugar/salt produce, non-alcoholic drinks, all packaged within sustainable environmentally friendly packaging.

Six-month Outlook

Food producers in Ukraine have faced a number of challenges including difficulties in logistics and a lack of working capital but despite this they are completing the 2022 harvest, developed alternative logistic routes and restored the production and exportation of food and drink products. Edible products still dominate Ukraine’s export market and exceeded 44% in the first half of 2022.

We have learnt on Kwayga’s webinar that this strong export activity is going to continue to grow, especially as Ms.Dehtiarova highlighted that “it is worth saying that since the start of the full scale war, a lot of Ukrainians had to move to the European Union, and they are creating the demand for Ukrainian products now”. This topic has triggered Kwayga’s next webinar which will be online in mid-November - visit www.kwayga.com for more information.

Ms. Thérèse Healy, Ambassador of Ireland to Ukraine spoke about the importance of economic independence, as a necessary prerequisite for the security and prosperity of any country, while mentioning examples such as CRH, a cement producer, Ireland's largest company, and Kingspan, which makes a range of insulation products, as both have invested heavily in Ukraine, with the latter announcing a €200 million R&D campus investment. Mr. Kachka invited further companies to participate in the development of infrastructure along the Western borders, to support the impending surge in Ukrainian exports.

A consistent message throughout the webinar was that about 80% of Ukrainian territory is free from Russia, with one expert going as far to say that life is pretty much normal as it was prior to the invasion in the North and the West of Ukraine, which bodes well for future trade from Ukraine. Considering Ukraine’s role in global food supply chains, and with this clear resumption of exports, we can expect cereal and edible-oil prices to stabilise in the months ahead, which will provide some comfort to European buyers and consumers of related products.

Bringing Kwayga’s webinar to a close, Thérèse Healy, Irish Ambassador to Ukraine stated that “Ukraine is renowned for its wide selection of high quality foods, for a customer-oriented service and good distribution systems. Despite the challenges that war has brought, Ukraine has invested heavily in reinforcing its supply chains and in getting food and other products out smoothly to the European and other markets. Ukraine is open for business and is a reliable partner.”

[Link to Webinar Recording]

About Kwayga

Kwayga is an online platform operating in the food and beverage industry that matches buyers and suppliers 24/7. It allows food and drink companies to trade with anyone, anywhere as they provide message translations and live interpretation on screen to support multilingual conversations. Kwayga is a subscription based platform that operates in 37 countries across the UK and EU and helps suppliers and buyers build relationships with the right people. Right Buyer, Right Supplier, Right Time.

See www.kwayga.com for more information