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Ukraine land market offers 'great opportunity'

Agrimoney | 1st March, 2010


"Producing enough maize to feed such a plant, even with most of it bought in, would require Landkom farming some 240,000-250,000 hectares, Mr Skotsyk said". Photo: mefrg.org
The collapse in Ukraine's land prices presents a "great opportunity" for buyers, Landkom's chief executive said, as he revealed an acquisition plan aimed at part into getting the group into biofuels refining.

Vitaliy Skotsyk, the Landkom chief executive, said that investors had a window of a year to snap up land at cheap prices, of $120-200 per hectare, compared with $1,000-1,500 per hectare during the early-2008 boom.

"I truly believe growth will come back, not later than mid-2011," he told Agrimoney.com, likening the current period to 2005-06, before the strong bull market driven by growing global interest in the farm investments.

Land in Ukraine, once termed the breadbasket of the Soviet Union, is viewed as of particularly high potential, although much of it has lain fallow for years, since the bloc's break up prompted huge cuts to agriculture subsidies.

However, while many Western land markets have been supported by a clamour for so-called safe haven investments, Ukraine's has been held back by tight credit and the collapse of some farm operations as grain prices tumbled, as well as a complex acquisition process.

'Great potential'

Landkom was, "providing we have enough operational capital", itself poised to start reviving land purchases after more than a year of shrinkage prompted by the need for cost savings.
"There is great potential for growth during the remainder of the year," Mr Skotsyk said.
Besides bringing greater operational efficiencies, by allowing costs to be spread over a greater acreage, this move would also foster the company's entrance into biofuels refining.
Ukrainian laws mandating at least a mix of 1% of biofuels in forecourt fuels, a proportion set to increase by 1.5 percentage points a year, had create a "niche" market.
But there was "no sense", on financial grounds, in running a refinery processing less than 1m tonnes of corn a year.

However, producing enough maize to feed such a plant, even with most of it bought in, would require Landkom farming some 240,000-250,000 hectares, Mr Skotsyk said.
    Posted by: Ianis Peybernes
  • Icon-world  Agrimoney
  • 01 Mar 2010

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