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Ukraine should prove to be an agricultural superpower in a post-COVID world

Jan 22, 2021

Ukraine should prove to be an agricultural superpower in a post-COVID world Published The COVID-19 pandemic has changed the world drastically. On the one hand, the immediate targets of reducing the sky-rocketing rates of infection, increasing the capacity of intensive care and vaccination programmes require the urgent attention of all nations. On the other hand, state leaders  must also review their supply policies, in particular global delivery chains to keep essential goods and services flowing, writes Vadym Ivchenko. Worldwide Food Insecurity People have been always in  need of food and basic resources to survive even before  the spread of this pandemic. Last April, the United Nations projected that the number of people facing severe food insecurity worldwide could double to 265 million due to the impact of COVID-19. We are now faced with the herculean task of rescuing as many of them as humanly possible from starvation. Agriculture’s silver lining If there is a silver lining in this unfolding crisis, it is that agriculture has proved to be more resilient to the impact of COVID-19 than manufacturing industry. While it is true that there have still been significant slowdowns, particularly in situations where outbreaks were discovered, the agriculture sector has never been forced to fully shut down. Irrespective of a global pandemic, people still need to eat, leaving the market demand for agricultural products virtually unchanged. The main factor brought into focus by the pandemic has been the issue of food safety. Ukraine Can Help My firm stance is that Ukraine has every chance to play a central role in the forthcoming effort of obtaining  global food security in the face of the COVID-19 pandemic. My country has often been referred to as the breadbasket of Central Europe, and with global food insecurity set to increase dramatically, coupled with Ukraine's large agricultural yields, it can soon become a breadbasket for the whole world. In a nutshell, Ukraine is an agricultural goldmine. Already Ukrainian farmers feed the world, supplying food products to 205 countries. The country is home to around 25% of the world's black earth soil, renowned for its high level of fertility. Although it does not yet have the same level of crop yields as countries with modern agricultural production, Ukraine already has the potential to feed more than 600 million people. To put this into perspective, Ukraine only needs one-fifteenth of its current production to feed its domestic population, leaving the rest available for export. Ukraine ranks as the world’s largest exporter of sunflower oil, second in nuts, third in honey, barley, and rapeseed, fourth in corn, fifth in wheat, seventh in soy, eighth in chicken, tenth in chicken eggs, and eleventh in flour. Agricultural products are the primary basis of Ukraine's foreign trade. Agricultural products and foodstuffs represent about 40% of the nation’s overall exports value, a valuable share of foreign currency revenues for the country. Global partnerships have an important part to play One thing that’s clear is that leading companies around the world are starting to take notice. Large multinationals, such as John Deere, Syngenta, NCH Capital, NCH Agroprosperis, Monsanto Company, and Cargill have all started actively working and developing their production in Ukraine. As a member of the Agriculture Committee of the Verkhovna Rada (Ukrainian Parliament) I have worked with Cargill on the development of important agricultural projects. I and have personal vision and  experience of how major agricultural corporations can support the country in difficult times. Last year, for example, Cargill Financial Services International provided Ukraine a state loan of € 250 million. Ukraine is already making strides in increasing its trade potential. The volume of trade between Ukraine and the EU has increased significantly over the last five years. Likewise, between Ukraine and the US, the figure has exceeded $5 billion per year, with poultry, sunflower oil, flour, alcohol, fruits, and vegetables being just some of the exported goods. Ukraine is capable of providing a much wider range of products, but is held back by trade barriers,  which hopefully will be scaled back shortly. The key factor for us is to become serious as a society in tackling global food insecurity. The need for progressive technology To update the country’s agricultural infrastructure and increase crop yields, about 15% of companies have begun actively implementing agricultural innovations by purchasing the solutions of both foreign and domestic technology startup companies. Many also develop their own in-house solutions, and according to the AgTech Ukraine Association, the number of agricultural startups in Ukraine has risen to more than 80. All of these advancements come just in time to tackle the largest threat currently facing humanity, greater even than the COVID-19 pandemic, potentially irreversible climate change. By 2050, in just 30 short years, the world's population is projected to grow so much that it will require 70% more food to sustain it. This population explosion is aggravated by environmental changes to agriculture, as the amount of agricultural land is annually decreasing. Soil contamination with heavy metals, radioactive waste, and pesticides threaten biodiversity, reduce food quality, and have negative impacts on human health. According to the UN, the world exhausted its yearly limit on the consumption of renewable natural resources in August 2020, meaning that the supply of natural resources for the next 4-5 months will come at the expense of future years and, beyond that, of subsequent generations. However, through agriculture, we may still be able to provide an effective solution. In situations where there is no available pathway in switching to renewable energy, the production and consumption of biofuels can serve as a life-saving stop-gap. To achieve this solution, especially considering that the production of bioethanol in the country is actively slowing down (progress is more noticeable with biogas), Ukraine needs to reform its current system of economic incentives and start to prioritise the development of biofuels. If only around 20% of the country’s corn can be repurposed for domestic processing, rather than export, Ukraine will be able to actively improve its environmental conditions. Unfortunately, for all of their bluster, the state’s current agricultural development programs are declarative, but lack the necessary specifics, making the creation of a large scale bioethanol market difficult. Ukraine as the “world’s breadbasket" Citing  the famous 19th-century Ukrainian scientist, Serhiy Podolynsky, “Of the many types of human activity, agriculture is of the highest priority, the most productive and useful work, which dozens of times increases the product made by nature”. I do agree with Serhiy’s ideas which are very relevant to our times; agriculture is indeed essential in providing humanity with food, medicine, renewable energy, clothing, and other much-needed resources. Ukraine has long been a regional breadbasket, but must seize its chance now and make strides in becoming a breadbasket for the whole world. While the country has already made significant contributions to overcoming world hunger, by incorporating global technologies into production and integrating itself into international supply chains, Ukraine can become a reliable agricultural trading partner to any country in need. The Author, Vadym Ivchenko, is a Member of the Verkhovna Rada of Ukraine (Ukrainian Parliament), elected in 2014. In Ukraine, on 12 December 2020, after 11 years of restoration, St. Andrew's Church was opened. The architectural monument was transferred to the Mission of Stauropegion of the Ecumenical Patriarchate in Ukraine after a co-operation agreement was signed by Patriarch Bartholomew and Petro Poroshenko on November 2, 2018, writes Andriy Pochtar, member of the Ukrainian Orthodox community, Dusseldorf, Germany. The official opening ceremony was held online on 12 December. The Minister of Culture and Information Policy of Ukraine Alexander Tkachenko and Ukraine President Vladimir Zelensky appreciated the restoration work and recovery of the historical appearance of the 18th century monument of architecture and painting. The church was opened to visitors on 15 December - the second anniversary of the Orthodox Church of Ukraine’s establishment. However, on 13 December – the day of St. Andrew the First-Called according to the Julian calendar, which is still adhered to by the majority of Orthodox Ukrainians, – the first liturgy in St. Andrew's Church was led by the representative of the Ecumenical Patriarch, Metropolitan Emmanuel (Adamakis) of France, who expressly came to the celebrations. Until the restoration work was completed, services were mostly held in the stylobate, the lower part of the church, not often , however, because of the pandemic. In the future, services should be held on weekends and holidays, and on other days the historical church will function as a museum. This was announced after the December 13 liturgy by the head of the Stauropegion and Exarch of the Ecumenical Patriarch in Kyiv, Bishop Mikhail (Anishchenko) of Koman. Meanwhile, the long-awaited completion of restoration works will not change so much in the functioning of the stauropegion as it is expected, because many issues related to the transfer of St. Andrew's Church to the Mission of the Ecumenical Patriarchate have not yet been resolved. And the celebrations in honor of the opening of the historic church for visitors highlighted issues in the relationship between the religious organization and the Ukrainian authorities. First, none of the officials of Ukraine considered it necessary to hold a meeting with the hierarch of the Mother Church, who came to the celebrations in Ukraine on behalf of Patriarch Bartholomew, and also played a major role in the creation of the Orthodox Church of Ukraine. Secondly, believers were allowed to the December 13 service only according to the lists, and many people failed to attend it. Third, the entrance to St. Andrew's Church is possible only for a fee . Although it is very small, it still takes a bite out of the poorest Ukrainians’ wallets. And, of course, this money is not collected by the Stauropegion. Finally, most outrageous of all, Bishop Mikhail (Anishchenko) of Koman, the head of Stauropegion and Exarch of the Ecumenical Patriarch in Kyiv, must always obtain permission from Ukrainian officials to hold divine services. Even on the Patron Saint’s Day of the Stauropegion! And it is up to Nelya Kukovalska – the General Director of the National Sanctuary "Sophia of Kyiv", which includes St. Andrew's Church – to provide her resolution on the possibility of holding services. How come the head of the organization, which the temple was transferred to, cannot on his own determine on which weekends he can serve and on which weekends he can not? And this is despite the fact that according to a decree of the Cabinet of Ministers of Ukraine, not only the stylobate, but the entire St. Andrew's Church was transferred to the Stauropegion. For comparison, when an architectural monument of national significance in Kyiv is shared between a cultural institution and a Catholic religious organization, everything is exactly the opposite. This year, after the February visit of President Zelensky to Pope Francis, the Ukrainian government ordered to transfer the building of the Church of St. Nicholas in Kyiv, which also houses the National House of Organ and Chamber Music of Ukraine, for free use to the community of the Roman Catholic Church. According to the Ministry of Culture, until the new building for the House of Music is built, "the rehearsal process and concert activities will be carried out according to the schedule." That is, the rest of the time the church can be used by the religious community. Moreover, even when the temple was not yet handed over to the church, it was open for prayer all Sunday and all the faithful could come to the service. The building of St. Andrew's Church, two years after its transfer to the free use of the Stauropegion of the Ecumenical Patriarchate, in fact, cannot be freely used for its intended purpose, although the head of the religious organization accepted all the memorial protection obligations as early as April 26, 2019, when he signed a contract with the National Sanctuary "Sophia of Kyiv". It turns out that St. Andrew's Church was transferred to the Mission of the Ecumenical Patriarchate only on paper, and in fact, the head of this church is not Bishop Mikhail, but Mrs. Kukovalska, and only with her one-time permission divine services can be held. The Exarch of the Ecumenical Patriarch can serve in the basement, if no museum events are held there – and he should be grateful to the Ukrainian authorities for this. How many loud words are spoken – both by officials and hierarchs - about gratitude to Patriarch Bartholomew, support of the Ecumenical Patriarchate, about how Ukraine appreciates its ties with the Mother Church... But in fact, all these words are worthless. There is fraud after fraud – with Filaret’s (Denysenko) withdrawal of his own candidacy for the post of Primate of the Orthodox Church of Ukraine, and with the transfer of Ukrainian parishes in the diaspora to the Ecumenical Patriarchate, and in terms of transferring the building and promoting the activities of the stauropegion. They simply pool the wool over the eyes of His All-Holiness and high-ranking hierarchs who represent him – no better than the Russians. In general, unfortunately, the oppression of the Ecumenical Patriarchate is no longer something surprising: it is happening both on behalf of Turkey and on behalf of some churches, in which ethnophyletism is dominating. However, it remains unclear why for so long Patriarch Bartholomew tolerates all this – constant distrust, discrimination, violations of promises and blatant lies. Did the departure of Archbishop Elpidophoros overseas have such a detrimental effect, and there are no people left by Patriarch Bartholomew who could advise, protect from another deception, help defend the legitimate rights of the Mother Church’s Primate? In the end, the stauropegion in Kyiv is no fee, no reciprocal gesture of Ukraine for the gracious gift of autocephaly. Historically, the Archbishop of Constantinople-New Rome had not a single, but many stauropegions in Ukraine. Not one, but all of them belonged to the Ecumenical Patriarch by right! And, in theory, they should belong now. 2020 is a year all of us will wish to forget. A global public health crisis and rolling lockdowns have brought financial difficulties to consumers and businesses in every market. In this context, governments and central banks such as that I lead, the National Bank of Ukraine, have had a particularly important duty to ensure financial stability throughout the crisis and put in place policies to bring about rapid economic recovery, writes National Bank of Ukraine Governor Kyrylo Shevchenko. I assumed my post as governor this summer, just as the scale of the global economic crisis was beginning to bite. Since then, my team has worked tirelessly to ensure the stability of Ukraine’s financial markets while continuing to pursue lasting reforms to the country’s banking sector. From challenges, must come opportunities. We work side by side with the banking sector to ensure their stability and lasting prosperity. This year, we have encouraged banks in their efforts to capitalise to weather the COVID-19 storm. We have maintained interest rates at an all-time low, ensuring stability in this challenging time. This has also boosted the lending market and assisted quality borrowers access the capital they need to invest. Meanwhile, we are proactively helping banks free themselves from crippling non-performing loan (NPL) portfolios. As we enter 2021, the Ukrainian banking sector is in good health, achieving UAH39.8bn (€1.17bn) profits from January-October 2020. This is only a 23% reduction from 2019 levels, despite a significant fall in demand for banking services in the first part of the year. To account for the possible effects of the pandemic, banks have prudently also increased their provisions by 2.5 times. Other indicators are very positive - despite lower interest rates, net interest income has risen by 5.1% year-on-year. The banking sector has also become better capitalised. The sector’s regulatory capital adequacy ratio, or the ratio of banking capital held proportional to its risk, is currently 21.76%, safely above the 10% required minimum. This has increased 2.1% in the last year, reflective of a total increase in regulatory capital by almost a fifth in 2020. We have maintained an all-time low-key policy rate of 6%, to support the economic recovery of our country amid elevated uncertainty around the COVID-19 pandemic. Combined with subdued inflation, this has paved the way for low interest rates for consumers. Today, quality borrowers can take out affordable hryvnia loans to finance their short-term needs, at less than 8.5% per annum – down from around 18% a year ago. In 2020, banks reduced their hryvnia deposit rates from around 15% to 8.6%, and rates on FX deposits are at all-time lows. We know there is room to reduce rates even further, and we will continue to work towards this as we work into 2021. This has also contributed to the quick recovery of the lending market following lockdown restrictions in the first half of 2020. In Q3 alone, the hryvnia net corporate loan portfolio increased by 3%, while the FX net corporate loan portfolio rose by 1.1%. We witnessed a significant increase in loans to electricity suppliers and trading companies. Naturally, we also saw an increase in loans to SMEs, as they borrowed to restructure their business operations and recapitalise in the light of the pandemic. Thanks to pent up demand following lockdown, retail lending rose by 4% in Q3. Real estate loans grew even faster, up 6.9% over the same time period. This trend was assisted by government programs and interest rate cuts to stimulate the economy. Furthermore - and perhaps most significantly - we have made great strides in reducing NPLs. Ukraine had the world’s highest proportion of NPLs- more than half of all loans in 2017. In 2020 we have taken proactive steps to accelerate our NPL reduction. In Q3 alone, the ratio of NPLs declined by 2.9 percentage points to 45.6%, a trend that has continued in Q4. As of the 1st of November, the ratio was 43.4%. Much of this progress can be attributed to the efforts of state-owned banks, who wrote off UAH111 billion (€3.3bn) in fully provisioned loans between June-November this year. The NPL ratio for state owned banks now stands below 60%. Our efforts across all sectors have been evidenced by growing consumer confidence in the banking sector. In 2020, hryvnia retail deposits have risen by 29% since last year, while FX retail deposits are up 5.5%. Hryvnia and FX corporate deposits are up 38% and 24% respectively. This comes in spite of the coronavirus pandemic and low interest rates. This year, in a time of significant economic turbulence and potential financial distress, we have continued to support the development of a resilient, stable and healthy banking sector in our country. We look forward to building on these developments in 2021. There are 251 Ukrainian citizens held captive in the separatist regions of Donbass, according to the Human Rights Ombudsman of the Verkhovna Rada of Ukraine Lyudmila Denisova, writes Willy Fautré of Human Rights Without Frontiers (HRWF). During a meeting with Melinda Simmons, the British Ambassador Extraordinary and Plenipotentiary to Ukraine, Denisova announced: “It is still impossible to monitor the observance of their rights and conditions in places of detention.” Denisova petitioned the Ambassador to contact the International Committee of the Red Cross to strengthen their efforts to get access to the Ukrainian detainees in the Donbass regions outside the control of the Kiyv government. Additionally, she asked Melinda Simmons to ask the representatives of her country to support the UN General Assembly resolution "The human rights situation in the Autonomous Republic of Crimea and the city of Sevastopol, Ukraine" during the 16 December vote and to request the immediate release of all Kremlin prisoners. The priority for Commissioner Denisova is to pressure the Russian Federation to abide by the Vienna Convention on Consular Relations, to which Moscow is a party. This convention provides Ukrainian officials such as The Verkhovna Rada's Commissioner for Human Rights, the possibility of visiting all Ukrainian citizens, including political prisoners in the temporarily occupied Crimea and the Russian Federation. On 7 December, Ambassador Silvio Gonzato, Delegation of the European Union to the United Nations, made a statement on behalf of the EU and its Member States at the 75th United Nations General Assembly ruling on the resolution on the Problem of the militarization of the Autonomous Republic of Crimea and the city of Sevastopol, Ukraine, as well as parts of the Black Sea and the Sea of Azov [Item 34 a) – Prevention of armed conflict]. He was notably quoted as saying: “The EU does not and will not recognise the illegal annexation of Ukraine’s Autonomous Republic of Crimea and the City of Sevastopol by the Russian Federation. The European Union remains steadfast in its commitment to Ukraine's sovereignty and territorial integrity within its internationally recognized borders.” And he urged: “The Russian Federation to ensure safe, secure, unconditional and unimpeded access of all international monitoring mechanisms, including the OSCE SMM, to the illegally annexed Autonomous Republic of Crimea and the city of Sevastopol.”

Cargill Financial Services International Investments

2 Investments

Cargill Financial Services International has made 2 investments. Their latest investment was in Wildtype as part of their Series B on February 2, 2022.

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Cargill Financial Services International Investments Activity

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Date

Round

Company

Amount

New?

Co-Investors

Sources

2/11/2022

Series B

Wildtype

$100M

Yes

20

9/7/2021

Debt

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$99M

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10

Date

2/11/2022

9/7/2021

Round

Series B

Debt

Company

Wildtype

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Amount

$100M

$99M

New?

Yes

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Co-Investors

Sources

20

10

Cargill Financial Services International Portfolio Exits

1 Portfolio Exit

Cargill Financial Services International has 1 portfolio exit. Their latest portfolio exit was Local Bounti on November 22, 2021.

Date

Exit

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Acquirer

Sources

11/22/2021

Reverse Merger

$99M

5

Date

11/22/2021

Exit

Reverse Merger

Companies

Valuation

$99M

Acquirer

Sources

5

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