The AgriDigital team has travelled far and wide in 2017 and our final stop for the year was the capital of Ukraine, Kiev. Our CEO, Emma Weston, and Sales Executive, Henry McKay, were invited to attend the Ukraine Commodity Market Development Conference.
Wrapped in AgriDigital hats and scarves, they ventured to the Black Sea region to join 100 other participants from around the world. The event was organised by USAID and brought together a range of speakers, from government officials to major industry players. Over the three days, participants brought their expertise from many fields to focus on developing the physical, digital and regulatory aspects of the Ukrainian marketplace.
The trip was our first to Eastern Europe and an opportunity to learn about the region’s grain market, where it is headed and, in turn, share our knowledge of digitised supply chains and blockchain technology in the agricultural sector. Emma and Henry met with a number of players in the grains industry from financial exchanges to traders, all of whom provided a different insight into their vision of the future of agriculture in the Ukraine.
Snapshot: Ukraine’s Grain Market
Despite being 13 times smaller than Australia, the Ukraine is home to almost double the population. It also has roughly a third of the world’s most fertile black soil and dedicates 71% of its total country land mass to agricultural production. Historically, the Ukraine was considered the Soviet’s ‘breadbasket’ and produced a quarter of the Soviet’s agricultural produce.
The Ukraine continues to have a strong agriculture sector and it’s grain output has grown year on year. Their most dominant crop, corn, produces around 27MT annually, while wheat output has increased strongly over the last decade. In the 2017/18 season, Ukraine produced 26MT of wheat, compared to Australia who produced an estimated 21MT.
Ukraine’s grain export market, in particular, has increased due to higher yield rates and greater cost efficiencies. This saw the Ukraine grow to the sixth largest grains exporter in the world, with Australia positioned at fifth after the 2016/17 season. Currently, the Ukraine still faces a number of economic and regulatory constraints that affect supply chain efficiency, but has the potential to be a strong competitor for Australia in the coming years.
Ukraine’s key challenges
Since the end of the Soviet Era, the redistribution of land ownership has been an arduous process and even decades later, some land policies remains unclear. Another major difficulty has been the prevalence of corruption and bribery along supply chains, causing organisational issues and contention within government bodies.
The conference addressed these challenges and explored means of developing Ukraine’s supply chains. A large focus was placed on embracing new technologies and processes to overcome these existing limitations. Emma and Henry made note of the determination of the Ukrainian people to improve their current systems and advance their stake in the world market.
Emerging economies, such as the Ukraine, are often more willing to adopt new technology to overcome market hurdles. This drive to develop and invest in commodity market supply chains increases the ability for developing markets to displace their developed counterparts or even surpass them in the coming years.
“We [AgriDigital] have visited a number of developing markets,Emma recalled, and the Ukraine displayed the greatest potential to be one of Australia’s largest grain competitors in years to come.”
The AgriDigital Solution
When talking to grain industry players, Henry and Emma learnt that, similar to Australian growers, Ukrainian producers and traders also face uncertainty around on-time delivery payments, securing finance and transparency.
Emma gave a keynote speech on the AgriDigital platform and how we are using blockchain technology to create more efficient and secure payments for agricultural commodities. In doing so, we are improving financial liquidity and increasing transparency from farm to plate. Using blockchain technology AgriDigital can execute transactions in real time, offering a promising solution to some key pain points experienced in Ukraine’s grains market.
A number of US organisations also spoke throughout the conference, including the Commodity Futures Trading Commission and CME Group to discuss regulatory, legal and market practices for improving the future of Ukraine’s commodity sector.
A Taste of Ukraine
AgriDigital’s short visit to the Ukraine was a great learning experience; an opportunity to meet people in a far off yet not so dissimilar grains market.
Emma and Henry took the opportunity to embrace Ukrainian traditions; taking in the sites and trying local delicacies such as blue potato dumplings, the popular Nemiroff vodka and salo — a cured pigs fat dish.
We look forward to working with agribusinesses in the Ukraine and across Europe, as we continue expanding globally.