General analysis of the agribusiness sector based on the results of the Conference “Agribusiness 2025: Challenges and Opportunities in the New Realities”, held as part of the implementation of the Economic Growth Strategy of Ukraine, developed by Boston Consulting Group in cooperation with the analytical center “We Build Ukraine”.
The analytical center “We Build Ukraine” aims to develop effective mechanisms for the development of the agricultural sector in the short and medium term, as well as to prepare an action plan and recommendations to strengthen cooperation with foreign partners and create favorable conditions for attracting investment.
Introduction
Despite direct losses and losses of more than $80 billion due to a full-scale invasion, Ukraine's agribusiness sector remains a key driver of the economy. In 2024, it accounted for 59.3% ($24.7 billion) of foreign exchange earnings from commodity exports, while in 2021 this figure amounted to 40.7% ($27.7 billion).
Today, the agricultural sector is one of the key and priority sectors for reform and attracting public and private investment. At the same time, the sector is dealing with a number of challenges that may hinder its development.
In addition to the damage from the war, there is the Free Trade Agreement with the EU, which expires on June 5 this year. The industry scenario may depend on its continuation. The market is also facing a number of unresolved issues, including logistical challenges, the need to de-monopolize rail transportation and demining of territories, the issue of lack of qualified personnel, domestic grain trade without VAT, lack of clear solutions for electronic TTNs, and the need to actively implement artificial intelligence (AI). Due to these challenges, agro-producers incur financial losses, so new approaches should be sought to improve efficiency.
EU Trade agreements
In recent years, the share of the EU in exports of agro-industrial products has not been lower than 50%, which indicates the critical importance of the European market not only for Ukrainian producers, but also for the Ukrainian economy as a whole.
Ukraine sees several possible options for the continuation of the Free Trade Agreement and is already working on some areas, including in the EU. The strategic areas of work in this matter to date are:
Protecting the interests of the Ukrainian agricultural sector
Proof that there is no critical threat to the EU market from Ukrainian exports.
Finding compromises on “sensitive” goods (honey, corn, bran, cereals, eggs, poultry meat, sugar).
Use of export licensing and quota mechanisms to maintain access to the EU market.
Modernization of infrastructure and logistics
Improving transport infrastructure by expanding and modernizing the railway network, port facilities and roads for efficient exports.
Reducing logistical constraints and providing access to key European logistics centers, optimization of customs procedures, digitalization of transportation (e-TTN).
Investments in alternative logistics routes for the development of multimodal transportation and expansion of export routes through the Black Sea and Danube region.
Development of the processing industry and introduction of innovations
Creation of conditions for the development of agro-processing and attraction of investments in the construction of new processing enterprises, support for technological start-ups in the agro-sector.
Expanding the production of value-added products: development of ready-to-eat food products and biofuels to improve competitiveness.
Integration of digital technologies and artificial intelligence (AI) in agriculture, in particular the application of precision farming, automation of production processes to increase efficiency.
Harmonization of regulations and adaptation to EU requirements
Synchronization of Ukrainian legislation with EU norms: introduction of product quality standards, certification requirements and environmental norms.
Supporting the system of state control of product quality: ensuring compliance of Ukrainian goods with the requirements of the European market.
Adaptation of the system of subsidies and state support of the agrarian sector: development of financing programs for agrarians that meet EU norms.
Effective management of export quotas
Introduction of transparent quota allocation mechanisms through equal distribution of quotas between producers and exporters to avoid market oversaturation.
Optimization of self-regulatory mechanisms to introduce flexible approaches to exports of certain products (e.g. in the poultry sector).
Ensuring uniformity of exports throughout the year to implement control mechanisms to avoid seasonal spikes.
Political dialog and defense of national interests
To successfully extend the agreement, it is important to actively involve Ukrainian officials and business associations in negotiations with the EU. Strategies should also be developed to avoid political manipulation around trade restrictions and to ensure that Ukraine remains competitive in the European market. In addition, work should be done to gain the support of European industrial consumers of Ukrainian imports.
The implementation of the above-mentioned areas is aimed at helping Ukraine to maintain duty-free access to the EU market, strengthen its competitive advantages and integrate into the European economy on favorable terms. The key task of the Ukrainian side today is to ensure predictability of trade conditions with the EU so that Ukrainian agrarians can plan their activities and maintain a competitive position in the European market.
Internal challenges of Ukraine's agricultural sector: logistics, human capital and technological innovation
The agricultural sector of Ukraine continues to demonstrate resilience and adaptability in the face of instability. However, a number of unresolved internal problems that require immediate attention stand in the way of the sector's development. In particular, logistics issues, insufficient human capital, as well as the need to introduce innovative technologies, in particular, artificial intelligence, to reduce costs and increase efficiency.
Logistics as a factor of competitiveness
As the practice of recent years shows, the state of logistics and its efficiency has a direct impact on the cost of production and the ability to maintain a competitive position in global markets. Restoration of infrastructure damaged during military operations is a priority for the development of the industry.
In the field of road transportation, the most critical are the restoration of war-damaged roads and the implementation of infrastructure projects that were started before the war.
Rail transportation is also an important area for agribusiness. The problems of Ukrzaliznytsia, in particular the monopoly and lack of transparency in tariff policy, limit the efficiency of transportation. Therefore, in order to reduce transportation costs, it is necessary to radically change the rules of operation in the rail transportation market and ensure real competition.
Seaports, although they have excess capacity for transshipment, also face problems. Many ports, especially in southern Ukraine, were damaged by the war. Restoring port operations, particularly in the Mykolaiv and Kherson regions, requires not only financial investment but also security for cargo. Restoring navigation on inland waterways is also a priority, as it will reduce the burden on road and rail transportation.
Human capital and innovative technologies
In the context of war and labor migration, agrarians face a serious shortage of skilled workers. This problem can be largely solved through automation and the introduction of innovative technologies, in particular artificial intelligence.
In parallel, agrarians should work to develop localized incentive systems for workers to keep them engaged and increase productivity. Taking into account demographic changes and adapting to new conditions, in particular by recruiting workers to previously male positions, is an important part of a sustainable agribusiness development strategy.
Need for tax and customs reforms
Equally important is the issue of tax and customs reform, especially in the context of changes related to export operations. One of the major challenges is the introduction of new mechanisms for registering tax invoices before exports, which improves control over tax payment. However, despite the positive changes, problems remain with the lack of interaction between tax and customs authorities, which makes it difficult to do business.
Conclusions
The agricultural sector of Ukraine, despite all the difficulties, demonstrates the ability to adapt to new realities. Introducing innovations, developing infrastructure and attracting investments in modernization are the main directions for increasing efficiency and competitiveness. Only an integrated approach to problem solving - from improving logistics to investing in human capital and digital technologies - will allow the agricultural sector to regain its stability and ensure long-term development even in conditions of constant uncertainty.
