Do Europeans need food from Ukraine? There are enough European farmers producing goods which are often of much better quality than Ukrainian products. There is another question, not less interesting: do local agricultural producers really need European market? The Landlord editor’s interlocutor, James Bright dared to express an unpopular point of view.
Waiting for the EU markets to open for Ukrainian goods and endless joy of little victories such as quota receiving or a new quality approval by Euro controllers, divert local business from truly attractive projects and opportunities. James Bright considers China, South-East Asia and Africa to be a real opportunity and money source. Being an experienced trader and a commodity market expert, now James Bright is a senior partner and the head of global commerce practice in the international company Korn Ferry, which provides services in the sphere of human capital management. He successfully combines great experience in business, investment banking and management consulting. His colleague and the head of agricultural practice in Ukraine invited James to meet with the largest Ukrainian exporters. We met James Bright in a cozy Kiev cafe one shivery November morning. Even during one hour interview we managed to take down rather unexpected responses.
LL: The previous year Ukraine received export quota for certain agricultural products. Many Ukrainian companies try to enter European market, however usually they face difficulties in terms of registration, marketing promotion, obtaining licenses, sanitary regulations certification. At present a lot of enterprises upgrade their production facilities in order to meet EU norms. Do you believe these efforts will be fulfilled?
James Bright: Take a look at world markets: oil prices are low as never before, Chinese economy is slowing down, the prices on the metal and iron ore markets are stagnating, whereas agriculture is booming, and people are investing in it. Nowadays Ukraine is very attractive as a supplier of agricultural products, having an excellent location among Europe, China and Africa.
If you ask me what the future of Ukrainian business is and if it is necessary to focus on Europe I will say no. Business should follow the area where the biggest demand is. And it is not Europe. The core demand is concentrated in China, South-East Asia and Africa. Surely it is important to be integrated into Europe, but other areas with real demand are worth focusing on too.
LL: What should our agrarians expect entering the world market? The rules are very strict there, aren’t they?
James Bright: First of all, they ought to realize what exactly their customers need and if their companies are able to fully satisfy all these needs. In addition, point out the ways of running a business. For instance, world business expects to see high level financial managers in Ukrainian companies and international standards of financial accounting. In order to create trustful relationships, foreign companies want to deal with decent partners. Thus they will be able to deal with Ukrainian business without opening their representative offices in the country.
LL: Not only the consumers of agrarian products are careful about having business with Ukraine, investors are cautious too.
James Bright: But not those investors, who focus on agricultural business. Ukraine has everything necessary for running a successful agricultural business: a fantastically fertile land, necessary raw materials, a good transport infrastructure and deep-water ports. All these factors make Ukraine very attractive. Your country is also well-known as a powerful producer of grain crops. Nevertheless Ukrainian international prospects mostly depend upon solving current difficulties in the East of the country.
LL: In fact, besides the war, there are lots of other aspects which interfere with civilized business development in Ukraine. Could you give the example of those countries which had the same issues, but managed to overcome difficulties and achieve economic growth?
James Bright: There are lots of them. In particular, the countries of Latin America went through tough times, but they are considered to be more stable producers than the countries of the Black Sea region.
On the other hand the countries of Africa are less stable than Ukraine, but the investors are interested in that region too. Despite the fact that there is a great gap between those countries and Ukraine, the countries of Africa have great potential. By the way, Ukrainian weak point is in the fact that Africa is able to develop and can become the largest exporter, despite the fact that they are importing products now. Therefore today is a very important and favorable moment for Ukrainian agribusiness. The country has to accelerate in order not to lose its position.
LL: Do you help international companies work with Ukrainian business?
James Bright: Our main specialization is management consulting. We deal with recruitment, build a team. We can find an executive general manager in Argentina and a financial manager in China owing to our global agricultural practice with the Centre for Expertise in Brazil. Ukraine is still the focus of our attention, taking into account its agrarian capacity. That is why the agricultural practice in terms of WE Partners Company was launched here three years ago.
Ukrainian companies have to earn the trust: to create a structure, which foreign countries could rely on. At the current stage companies need to open offices abroad, for instance. If to speak about Europe I would recommend to do this in Switzerland, it is much easier to carry out bank transactions there. And after you work for some period in Switzerland you will gain certain turnover and have an international level financial manager in your staff, you will be eligible for credit lines. In general, with an office in this country you will be treated much better in the business world.
There are lots of agricultural enterprises in Ukraine which traditionally sell their products to international traders. For many of them it would be more profitable to set up their own trading units abroad.
I had the experience of opening such offices in Switzerland for Ukrainian companies and helping them entering the world market. There are definitely some difficulties for East European companies but my experience shows that they can be successfully overcome.
LL: What about meeting the demands? Up to now, the main export crops have been corn, wheat, sunflower seeds, and soybeans. But trends are changing. What products are in greater demand on the importing countries’ markets now?
James Bright: The world population has exceeded 7billion and will reach10 billion by 2050. The middle class is developing in Asia. The welfare of people in India and Africa is improving. In India and China people are spending more money on food, adding to their diets more meat etc. Therefore it is good for Ukraine to focus on demand, coming from China, South-East Asia, Africa and to some extent India. What crops do the people from these regions prefer, what do the markets of these countries need?
The second point which is worth attention is the products processing and packaging.
Historically crops were in favor. But besides crops there is a strong demand for sugar nowadays. With the population life improvement it is beginning to play a significant role.
LL: Ukrainian companies have been paying a lot of attention to organic production recently. There are several producers which underwent definite certification. The demand for the products is growing. Could you comment on this trend?
James Bright: Adding to what I have already said, we can see the people`s welfare growing in China, India and Africa. At the same time in the West people tend to healthy eating. They prefer organic products which are grown without chemicals.
LL: Are we coming back to our talk about Europe?
James Bright: I do not have statistics on the difference between raw materials and premium-products supply. Ukraine has to focus on another point: developing effective supply chains and providing appropriate packaging and logistics. It is time to change an old system of raw materials supply to a new one – export of value-added products and direct delivery to consumers.
LL: Is it possible that rapid development of agricultural complex in Ukraine will make our country an agrarian adjunct of Europe? Are we going to face the competition with Africa? Does the world consider Ukraine to be an industrial country or an agrarian one only?
James Bright: Ukraine has a range of undoubted advantages. A well educated population is your definite advantage over Africa. Your country has a developed transport infrastructure, which requires only local modernization. In Africa they need to build it from scratch. Ukraine is an important player on the world market. Africa is developing its agrarian production, fruit cultivation first of all.
If to think about the future of commodities market, it will be more and more influenced by the problems with fresh water. A lot of countries have such difficulties, in particular 400 million people in the Middle East. The climate is becoming hotter, there is less fresh water, the demand for irrigation is growing. Fresh water itself will probably become the best-selling product. Famous for its innovations in seeds production, Ukraine can continue developing them in water storage and transportation.Підписуйся на наш Telegram. Стеж за новинами у зручному форматі!