Oleg Bakhmatyuk Foresees Further Growth Of Ukraine In Case The Black Sea Is Secured

As Russia decided to end its contribution to the Black Sea Grain Initiative, the United States is seeing other viable routes to keep exporting Ukrainian grain. According to the U.S. State Department’s Office of Sanctions Coordination, viable routes include Ukraine’s territorial waters and overland.

Despite Russia’s attempt to hijack Ukrainian industries, the agricultural sector has still shown successful rates in the past two years of war. For Oleg Bakhmatyuk, founder and CEO of Urklandfarming, a group of major agricultural companies in Ukraine and globally, the good news only exists due to the countries’ defense and the resilience of the national producers.

For Bakhmatyuk, such an achievement is not only important for Ukraine, but for the world as the country is a major provider of grains that, consequently, safeguard global food security. Moreover, granting stability to the Ukrainian economy could be a way to also provide predictability for global markets. “Ukraine has largely retained its export potential and has a tendency to increase it further”, he adds.

Since then, the country has secured long-term support from partners which are now pushing the Ukrainian economy. In 2023, the country grew 5% despite the Russian interventions. “Ukraine has demonstrated resilience and predictability, which means it is attractive for investors in a market as dynamic as the European”, explains Oleg Bakhmatyuk.

Such adaptability has, on the other hand, caused a backlash in other countries. Recently, Polish farmers have blocked the roads on the country’s border with Ukraine. According to reports, the blockage was a form of protest against the EU Green Aid program, which tackles policies on climate change and the end of the wave of customs duties.

Consequently, Russia has acquired an advantage: more than 12,000 tonnes of grain were exported from Russia to Poland between January 2022 and May 2023. That goes against Bakhmatyuk’s reading of the situation, which points out that the EU’s economic security policies should aim to replace Russian supplies with Ukrainian ones. “For some reason, blockades are being imposed against Ukraine, but Polish agricultural producers have complaints about the EU’s economic policy, not Ukraine”, he says.

For the founder of Urklandfarming, there is a “rather primitive” concern that Ukraine could join the European Union. “The future of the European Union, including Ukraine, lies in joining forces and strengthening the EU’s competitiveness in global food markets”, he explains. “Such a consolidation of efforts will create a single large and independent player, which is the way to significantly increase the economic capacity of the European Union.”

Bakhmatyuk brings up the case of the Ukraine-Bulgaria partnership in the production of sunflowers. In 2022, Ukraine has exported almost 3 million tonnes of the plant, a significant increase in the average yearly production of 15,000 tonnes. However, the country was facing serious problems with processing facilities that were destroyed and/or paused due to the war. Bulgarian farmers, however, had a less successful harvest. In the case of Bulgaria though, farmers could not meet the same values in their harvest, thus causing a scenario that could find a way out through diplomatic ways.

“In the case of Bulgaria, it was not a conflict, but a synergy: we did not export sunflower for a certain period of the season until the local farmers sold the crop”, explains the founder of Urklandfarming. “Then, we helped local crushers to a great extent and, thanks to the export of Ukrainian sunflower, they have loaded their processing plants and are successfully selling their products. Everybody benefited.”

Another example cited by Bakhmatyuk is Romania. The country has significantly strengthened its position as an exporter thanks to Ukrainian grain. It is reported that the Romanian Constanta port reached historic exporting volumes in 2023.

However, unlike the agricultural sector, the metallurgical industry in Ukraine has been more heavily impacted by the war. With the destruction of facilities, production has declined significantly in the country.

Bakhmatyuk mentions that the share of metallurgical production in the composition of industrial sales decreased by 7.9 percentage points compared to 2021, amounting to 9.1%. “To get figures back to normal though, the security in the Black Sea must be maintained”, says the CEO.

Still, the entrepreneur is optimistic about the future and the forecasts. “If the current level of safety of navigation in the Black Sea is maintained (which is quite realistic, given Ukraine’s experience in ensuring the functioning of the corridor, we will have a steady trend towards further gradual growth in maritime exports”, suggests Bakhmatyuk.

As global markets respond positively to this, it is expected that investments grow by almost 30% in 2024 compared to last year. “This means that we are becoming a more modern and interesting economy for investors”, says the founder of Urklandfarming. For him, despite the war, the forecasts are still positive and promising.

Image sourced from Shutterstock

This post was authored by an external contributor and does not represent Benzinga’s opinions and has not been edited for content. This contains sponsored content and is for informational purposes only and not intended to be investing advice.