Ukraine: potential that ought to be exploited

Picture: European-Ukraine exchange of experience. Photo Karin Heinze

Ukraine is an important source of organic raw materials. Even after irregularities in recent years, some of a serious nature, nothing has changed regarding Ukraine as a sourcing country. There is potential and the new Ministry of Agriculture is working on closing gaps in the organic legislation, supporting organic farms and creating a corresponding infrastructure. However, many people feel the guidelines of the  EU Commission are a hindrance to trade. The guidelines were issued as a reaction to the scandals and apply until at least the end of this year. The two-day conference “Sourcing Organic from Ukraine” was conducive to constructive dialogue between representatives from Ukraine and representatives from politics and control organisations, importers and processors.

Picture: Toralf Richter, FiBL Switzerland was moderating the conference. Photo Karin Heinze

It is undeniable that we can hardly do without Ukraine to cover the big demand in the west for organic raw materials (especially cereals, soya). The event was  supported by the Swiss government and the German Bundesministerium für Ernährung und Landwirtschaft (BMEL). It was held at the end of October in Frankfurt. With Toralf Richter in charge, it was organised by the Swiss Forschungsinstitut für Biologischen Landbau (FiBL) in collaboration with FiBL Projekte GmbH,  AFC Consultants International, IAK and the Ukrainian organic consulting agency QueS. For almost a decade FiBL has been involved in a Switzerland - Ukraine project to develop the organic market in that eastern European country.

The fact that Olga Trofimtseva, deputy minister the Ministry of Agriculture in Kiev, found the time to attend for two days in Frankfurt and that there were more then 20 other participants from Ukraine is evidence of Ukraine's great  interest in organic. She emphasised this point several times: the development of organic farming and of the whole organic sector is a top priority in the country's strategic agricultural policy. (See also the video interview)

EU guidelines an obstacle

There are, however, challenges on both sides: not only actors in the Ukrainian organic market but also importers are struggling with delays, high expenditure and additional costs arising from the guidelines imposed by the EU at the end of 2015. The stricter control measures ordered by the EU Commission apply to exports from nine eastern European states They are the consequence of  exporting wheat and sunflower cake that did not comply with EU organic guidelines but they have also revealed fundamental problems in the structure of organic production in Ukraine. Moreover, in this process the licence of the Turkish control organisation ETKO, that controlled many exporters, was withdrawn.

The conference attendees discussed openly and in great detail the continuing lack of transparency in the case of some exports from Ukraine. It became clear that the reason for the problems was often a lack of knowledge on the part of employees and management in the huge farms. The size of farms is mostly in excess of 500 hectares but it is not uncommon to find farms grouped together, with 5000 to more than 10,000 hectares belonging to one enterprise.

Picture from the left side: Karst Kooistra, Tradin Organic importer and three Ukrainian entrpreneurs : Andriy Nikolayuk, Ethnoproduct, Ievgen Mysnyk, Golden Parmen and Oleg Maksak, Granit Agro. Photo Karin Heinze

Software and GPS-tracking

There are, however, smart solutions to keeping an overview.  Big farms are already relying on modern software and they work with, for example, GPS-tracking of machines and transport vehicles. They are also investing in modern cleaning and storage logistics (big sealed packs) to avoid contamination in general and in particular with pesticide residues.

Three exporters introduced their farms that together cover an area of almost 10,000 hectares. These farms are among the flagship organic farms and export to various  EU countries.

 - Ievgen Mysnyk from Golden Parmen (cereals, fruit): a 100% organic farm that works together with, for example,Bioland Markt (importer). 

 - Oleg Maksak from Granit Agro (wheat, soya, maize, hemp): partially converted mixed farm that can guarantee clear separation of organic from conventional by means of the latest technology (GPS- tracking).

 - Andriy Nikolayuk from Ethnoproducts (cereals, milk, meat): totally organic farm, a Ukrainian organic pioneer who both exports and is active on the domestic market with processed products.

Picture: Rolf Mäder, Managing director of BioC, explained the database system. Photo Karin Heinze

Transparent value chains

Databases and software solutions are available in order to create more transparency and to avoid fraud. Managing director of BioC GmbH, Rolf Mäder, presented the internet-reliant database BioC, where current certification documents (85,000) from around 70,000 farms are deposited. The initiative by organic certification organisations, launched in 2010 and to which the world umbrella organisation IFOAM - Organics International has belonged since 2014, makes it easy for retailers and processors to check the certificates of suppliers and to create certainty before buying.

Check Organic (eCert) provides a system of complete traceability from the field to the plate. The software is sold by the Munich company Organic Services in collaboration with the Austrian firm Intact. The dynamic real-time system provides, by means of a sophisticated  combination of official and company data, transparency along the whole value chain. Model example: as Managing Director Gerald Herrmann explained, in Italy the system, with over 15,000 processors and nearly 58,000 farmers taking part,  means the safety of the whole organic cereals market can be guaranteed.  The Ukrainian control organisation Organic Standard also operates with the software.

Picture: Gerald Herrmann CEO of Organic Services presented Check Organic. Photo Karin Heinze

Traders who have been in the organic business for a long time made a great effort to ensure quality before the extra conditions were imposed. Thus Karst Kooistra from Tradin Organic (Holland)  reported that there they relied on their own projects, generating 30 % of turnover. Also, internal checks on all producers are carried out and documented in the ca. 25 pages of farm details. The firm (Sunopta Group) offers a wide range of 250 organic raw materials for food and animal feed. 

Control organisations must be well equipped

The mission of the certifier Organic Standard: to guarantee high quality of organic controls even when the situation in the producer country lacks clarity and to prevent fraud. More than a quarter of organically managed land in Ukraine – 137,000 hectares from a total of 400,000 hectares – are certified by the certification organisation, founded in 2007, that also operates in neighbouring countries. Managing Director Sergiy Galashevsky belongs to the generation of young dynamic actors in the organic sector who focus on creating networks and long-term, honest cooperation.

“We value dialogue with our customers and are pleased to get tips from importers,” he said. Ksenia Gladschenko from the Ukrainian consultancy QueS helps mainly companies that want to export. She explained how difficult it is to restore the good reputation of Ukraine as a country exporting organics after the problems of the past. She said they have already done a lot from various sides to improve the system, but little appreciation is forthcoming.

Picture: Sergiy Galashevsky, CEO of the Ukrainian certification body Organic Standard. Photo Karin Heinze

A big discussion point at the conference, with a great variety of experiences, was the differing interpretations of the EU guidelines: both  EU states and and every federal state in Germany interpreted the regulations differently. That takes time and costs money and nerves, said retailers and processors. It was the prevailing opinion of exporters, importers and traders. There was still a need to put things right. Since the guidelines came in to force only minor irregularities have occurred, but the effort involved is huge. On the other side, the representatives of the authorities who justify the decision with the necessity of integrity and transparency of organic goods.

Picture: Ksenia Gladschenko, QueS, she is a consultant for exporters. Photo Karin Heinze

Continue the dialogue and look ahead

Ksenia Gladschenko (QueS) like some other participants from Ukraine said in Frankfurt that they wanted to look ahead. This is what deputy Minister of Agriculture Olga Trofimtseva had to say: “We've got some very complex homework. We've got to be self-critical and honest. But we need also the trust of the EU.” She said she expected the intensive dialogue to continue – they were very keen to see that happen. The representatives of the EU, on the other hand, demanded the precise implementation of the extra guidelines and insisted that they had to focus on the problems by applying measures. They said that this was a basic condition and it had to be recognised by all actors. The Dutch consultant and member of the Anti-Fraud-Initiative (AFI) Bo van Elzakker reminded people about the mutual responsibility of  export-import partners  and said he would like to see a responsible exchange between the trading partners. He sees Ukraine as having great potential in the organic sector and thinks it is possible that by 2015 the organic land area will reach 10%.

Picture: Bo van Elzakker, Louis Bolk Institut, Holland. Photo Karin Heinze

More information on Ukraine:

http://organic-market.info/news-in-brief-and-reports-article/organic-is-becoming-increasingly-popular-in-ukraine.html

http://organic-market.info/news-in-brief-and-reports-article/ukraine-5th-international-central-eastern-europe-and-central-asia-conference.html