Land in oligarchs’ hands. Grain for export to Germany, Spain & Italy

In Ukraine, there are billionaires who own up to 800,000 hectares of land. By comparison, the largest farm in Poland covers 30,000 hectares. That’s 26 times less! And still, it is foreign. The most powerful Polish farmer owns 12,000 hectares, so 66 times less.

“In case of violation of trade law in the interest of political populism before the elections, Ukraine will be forced to turn to WTO (World Trade Organisation) arbitration to obtain compensation for violation of GATT norms” – said Ukrainian PM Denys Shmyhal. It wasn’t the first such reaction by the Ukrainian government in the international arena regarding the recently most notorious conflict over Ukrainian grain.

It was very much the same in June, when Poland was plunged into a grain crisis, provoked by the opening of our market to Ukrainian goods. When the authorities granted compensation from the budget to Polish producers, the Ukrainian Deputy Economy Minister Taras Kachka stated: “The subsidies that Poland has given to its farmers in response to a surge in grain exports from Ukraine aren’t in line with World Trade Organization (WTO) rules”.

Kyiv is said to have exercised pressure on EU Commission President Ursula von der Leyen so that she blocked € 40 million worth of damages for Polish peasants from the EU budget. The Ukrainians are fighting hard for the EU market.

Cases brought before the WTO last long but they may have a surprising effect on Polish society: our tax-payers can indeed pay damages to… Ukraine-based oligarchs.

SIGN UP TO OUR PAGE This is because the agricultural structure of our eastern Neighbour is completely different from ours. Almost half of Ukraine’s total land area may be controlled by 93 major agricultural groups. Companies owned by ex-president Petro Poroshenko alone are supposed to have controlled – and a decade ago at that – nearly 100,000 hectares of arable land. Which anyway, by local standards, is a small estate. There are billionaires who own up to 800,000 hectares of land. By comparison, the largest farm in Poland covers 30,000 hectares. That’s 26 times less! And still, it is foreign. The most powerful Polish farmer owns 12,000 hectares, so 66 times less.

Then there is massive corruption and, to put it mildly, the non-transparent way in which land is acquired.5 million hectares have been privatised in violation of the law (that’s 1/3 of all arable land in Poland). As if that were not enough, in recent years alone, 85% of the entire budget allocated to agriculture went to the oligarchs’ enterprises. The money did not go to Ukrainian farmers, but to multi-billionaires.

What’s even more interesting is that Ukraine is not mainly focused on “feeding starving Africa”. Their main recipient of agricultural produce is China. Feed is sent to Spain and Italy. And Ukrainian rapeseed is fighting for the German market with ours.

They are going to earn more in Europe

- In our country, public discourse regarding Ukraine takes on extreme narratives. Either let’s help Kyiv unconditionally and without any questions at all or let’s criticize their actions completely. Meanwhile, this is not the case when it comes to agriculture. It is a powerful business based on unimaginable money. And we should be talking about hard figures and facts, not wartime emotions, says Paweł Kuroczycki, editor-in-chief of the weekly “Poradnik Rolniczy”. – Meanwhile, it seems to me that today those who have the most to say are those who have absolutely no knowledge of agriculture and economics – he points out.
Tomato harvest near Odessa. Photo by STRINGER / Reuters / Forum
And he provides concrete data: the war caused a twofold increase in the import of Ukrainian food to the EU. This is particularly true of cereals, whose sales rose from 7.8 million tonnes in 2021 to nearly 16 million tonnes a year later. In absolute numbers, these are colossal amounts. In 2021 alone, its value was $ 27.7 billion. Over PLN 100 billion. For comparison, this is every fifth zloty in the revenues of the entire Polish budget at that time!

It is therefore not surprising that the Ukrainians are fighting like lions in the international forum for access to the European market. After all, up to 90% of their exports used to go through the Black Sea. After its closure, it turned out that much more could be earned on European markets.

However, Ukraine is not subject to specific EU requirements. Their products may be genetically modified. Plant protection products that are banned in our country can be used to produce them. Consumer safety is not as much of a priority there as it is here. Not to mention animal husbandry. Animal welfare is not a very common concept in the East. Add to that corruption…

An area the size of Slovakia has disappeared

“Prime Minister Denys Shmyhal announced that 5 million hectares of agricultural land had disappeared from state property. Thus, he confirmed the words of the head of the State Service of Ukraine for Geodesy, Cartography and Cadastre, who in a series of interviews at the end of October reported that most of the state agricultural land had been privatized illegally. After approximately 4 million hectares of land were transferred to local governments as a result of the decentralization reform in 2018–2020, instead of the declared 6.4 million hectares of agricultural land, only 750,000 hectares are in the hands of the state. The missing more than 5 million hectares (over 50,000 sq. kilometres, 8% of the country’s territory) were illegally privatized as a result of a process that had lasted for at least a dozen years” – this is an excerpt from the analysis of the Centre for Eastern Studies.

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5 million hectares is an area slightly larger than the whole of Slovakia! It is as if a small EU country was illegally handed over to private hands. Such absurd situations occurred when 5-month-old children were registered as land owners. Other areas were given to their mothers, fathers, godparents, brothers and sisters. Moreover, oil and gas deposits in the Poltava region were listed as arable land. In the Zhytomyr region, unique deposits of ilmenite, unique deposits of lithium were registered as agricultural land; the same with amber deposits from Volhynia to Polissia.

In the Vinnytsia region, since 2014 (i.e. after the Revolution of Dignity), over 80,000 hectares of land have fallen into private hands. Five interconnected families are behind the entire operation.

According to Ukrainian experts, it does not matter much whether Viktor Yanukovych was in power or whether there is a pro-Western team. Corruption practices have not changed.

President’s fields

In Poland, for example, it is unthinkable for the president to engage in trade in agricultural produce. In Ukraine, as we have mentioned, Petro Poroshenko already 10 years ago had just under 100,000 hectares of land, i.e. 3 times more than the largest farm in Poland.

Last year, UkrLandFarming, which is in the hands of oligarch Oleg Bakhmatyuk, controlled over 670,000 hectares.

Kernel Holding is owned by Andriy Verevsky and owns half a million hectares. It is already the largest grain exporter in Ukraine (outstripping the global giant Cargill on the Ukrainian market). It has terminals on the Black Sea with an annual transhipment capacity of 10 million tonnes, the largest grain storage network in the country and a fleet of 3,200 rail wagons.

HarvEast Holding remains the property of System Capital Management, which, in turn is controlled by the oligarch Rinat Akhmetov. Already 12 years ago the group had a surplus of approx. $ 19,5 billion.

These are only a few examples. There are certainly more such companies in Ukraine. Yet, international holdings are still doing very well. The above-mentioned Cargill purchased approximately one million tonnes of grain from Ukrainian farmers annually. At its peak, the American company had a share of around 11 per cent of exports.

- These are numbers that are unimaginable to us – argues Kuroczycki. – If we add their excellent climatic conditions and rich black soils, our grain and corn sector is losing from the start. They’ll easily outrun us without even realising it.
Ukrainian agricultural entrepreneurs near Kyiv. Photo by MURAD SEZER / Reuters / Forum
All the more so because, as the editor-in-chief of the weekly “Poradnik Rolniczy” argues, Ukrainians (contrary to what the media sometimes say) are not particularly focused on Africa. Their largest recipients, according to our interviewee, are China, Arab countries and Western Europe. They sell huge quantities of feed to Spain and Italy, of cereals to Portugal or the Benelux countries, and of rapeseed to Germany.

“Despite all the export difficulties caused by Russia’s military invasion of Ukraine, the rapeseed segment achieved record exports in 2022/23 – 3.4 million tonnes (+26% compared to 2021/22). This was primarily due to the increase in demand from EU countries, access to which remained open and deliveries to remote recipients were really complicated. In 2023/24, rapeseed supplies will continue to increase to a new record of 3.55 million tonnes (+4%)” – the Ukrainians, namely Ivan Koziritski, co-founder and broker of Atria Brokers, do not hide in their analyses.

Koziritski also states that currently the safest way to export remains by land. Demand from Germany is very important because it is one of the key end recipients of Ukrainian rapeseed, which imported 451,000 tonnes of this oilseed from Ukraine in the 2022/23 season.

Meanwhile, Germany is also a key market for Poland. According to the Agricultural Advisory Centre in Brwinów, there were periods when 95% of our exports went to our western neighbour.

Half a million chickens died

Also imports of poultry from Ukraine, according to data from the Union of Producers and Employers of the Meat Industry, increased. It’s 93% if we compare the beginning of 2022 and 2023. – We also estimate that what was previously imported under the duty-free quota is now approximately ten times larger. The whole EU buys Ukrainian meat. Of course, it also buys Polish, but we had to lower prices a lot – says Jarosław Krzyżanowski, poultry breeder and vice-president of the Union of Producers and Employers of the Meat Industry.

Paweł Podstawka, president of the National Federation of Poultry Breeders and Egg Producers, said in an interview with “Wiadomości Rolnicze Polska”: -We know perfectly well that most poultry and eggs from Ukraine do not come from local producers, but are produced by the MHP concern registered in Cyprus, listed on the London Stock Exchange and having Western capital. This company is elbowing in Europe and wants to flood the European market with its production without having to worry about the rules that the EU requires us to observe. Their company, EU Poultry, imports poultry from MHP and processes it in Slovakia, whence the meat is sent to other EU countries. The owner of this company, Dmytro Borodavka, explicitly says that his goal is to displace Polish poultry from the market – he even met with the Slovak Minister of Agriculture on this matter.

And Ukrainians have no scruples. On July 13, 2023, Ukraine issued a decision to ban the import of hatching eggs, live poultry and poultry products and raw materials from Poland. To date, this country has been the largest importer of day-old broiler chicks from Poland. As a result of the unexpected and immediate introduction of sanctions, transports of broiler chicks were stopped at the border. Even though the National Chamber of Poultry and Feed Producers (KIPDiP) warned that this could lead to a real massacre of animals that would die in suffering in terrible conditions, the Ukrainian side did not care about it.

- Broiler chicks are delivered to recipients approximately 24 hours after hatching. They are transported in special vehicles to ensure optimal conditions. Unfortunately, these cars are not designed to withstand a delay of several days. Therefore, if the situation does not change in the coming hours, the chicks will die in agony – this is what Katarzyna Gawrońska, Director of KIPDiP, said at the time.

- I can fully understand, why the Ukrainians are fighting for the European market with such determination. Russia has destroyed almost its entire economy. The restoration of metallurgical, armaments and petrochemical sectors will take years and consume inconceivable amounts of money. Meanwhile, agriculture is still a sector that fuels the economy, while, in the future it may become the key segment of the whole country – concludes Kuroczycki.

Now, we have to work out how to align our national interests.

– Karol Wasilewski

TVP WEEKLY. Editorial team and jornalists

– Translated by Dominik Szczęsny-Kostanecki
Main photo: Harvest in the Kyiv region of Ukraine in 2023. Photo by Denis Abramov / Anadolu Agency / ABACAPRESS.COM / Forum
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