Washington conference focuses on Ukraine as world's marketbasket (07/01/01)

Washington conference focuses on Ukraine as world's marketbasket

by Olenka Dobczanska

WASHINGTON - The U.S.-Ukraine Foundation and the Congressional Ukrainian Caucus co-sponsored a one-day conference, "Ukraine: From Breadbasket of Europe to Marketbasket for the World," at the Russell Senate Office Building on Capitol Hill on May 9.

The roundtable, which is the first in a series of conferences that the U.S.-Ukraine Foundation (USUF) will sponsor this year to mark its 10th anniversary as well as Ukraine's independence, focused on the challenges and successes experienced in the food-producing and food-processing sector of Ukraine's economy with the aim of positively impacting further U.S.-Ukraine economic development through greater private investment in Ukraine, as well as changes in public policy.

E. Morgan Williams of the Ukraine Market Reform Group, the moderator for all the conference panels, sounded the major theme of the day by saying, "The future of Ukraine is not in being a granary, not in being a breadbasket - the future of Ukraine lies in developing its food system."

Reps. Marcy Kaptur (D-Ohio) and Bob Schaffer (R-Colo.), co-chairpersons of the Congressional Ukrainian Caucus, were on hand to help open the proceedings. In her introduction to the conference Rep. Kaptur said that two huge hurdles block the unleashing of the tremendous untapped potential in the food-processing system in Ukraine - the policy of the United States and the policy of Ukraine.

Since 1991 through September 2000, the United States has through all of its programs given a total of $2.6 billion in aid to Ukraine. Of that amount, $240 million (or 9 percent) has been for agriculture, and only $74.3 million (less than 3 percent) has been for agricultural development. "It takes more than a lecture to bring about development," Rep. Kaptur said. "It's kind of like telling your children to a watch a film and learn how to drive a car. Then they go out and crash the car."

Rep. Schaffer also stated that it is easy for Westerners to become frustrated with Ukrainians' lack of reform. We would want Ukraine to learn now because the benefits seem so obvious to us, he said, but we tend to underestimate the devastating impact communism has had on the psyche of Ukrainians. For a more sympathetic understanding of the situation and the reluctance of Ukrainians to trust laws, he recommended reading the "Black Book of Communism."

Ukraine's ambassador to the U.S. Kostyantyn Gryshchenko talked about how Ukrainians have always been tied to the land. He also felt that Ukraine has been the victim of some negative press. "We also have to appreciate the success stories," he said.

Mary Chambliss, deputy administrator of export credits and the Foreign Agricultural Service of the U.S. Department of Agriculture, gave the opening address. She defined food systems as that part of the economy that is concerned with food products - from producing raw materials to delivering them to consumers for consumption. She noted that 23 percent of people in Ukraine are employed in the production of food. There are no reliable statistics for identifying the percentage employed by the entire food system, she explained, adding that clearly the percentage could go up as high as perhaps even a third of the workforce.

She identified a number of areas on which the Ukrainian government could focus in order to attract greater foreign investment: predictable and stable laws, clear land titles and a rural credit system. She ended her presentation by saying that the USDA is hoping to have an agricultural specialist at the U.S. Embassy in Ukraine in the very near future.

USUF President Nadia K. McConnell spoke about the U.S.-Ukraine Foundation's 10-year commitment to fostering change in Ukraine. She credited the foundation's success in part to its integrated or holistic approach to aid. Individual programs and projects cross-fertilize each other by sharing resources and establishing personal relationships between participants and by reaching down to the grassroots level.

The first panel focused on the topic "Current Activity in Food Systems Development in Ukraine." Attendees heard current practitioners in the field describe their companies and what they are doing in Ukraine. Participants in this panel were: David Holpert of WJ Grain Company Jim Asher of Massey Ferguson of ADKO (the largest tractor supplier in Ukraine); Harry Walters, former USAID agriculture specialist; Volodymyr Avramenko of AVK (the second largest confectionery company in Ukraine); and Andrei and Kenneth Hartt of United Spirits Import Company (which imports Soomska Vodka to the United States).

These entrepreneurs have seen their businesses prosper and expand, especially during the last five years. Each representative acknowledged that there are problems inherent in the Ukrainian system, but each maintained that it is possible to overcome them creatively and honestly.

The second panel zeroed in on "Financing Food Systems Activities in Ukraine." Natalie Jaresko of the WesNIS Enterprise Fund, Mr. Holpert of WJ Grain Company, John Costello of the Citizens' Network for Foreign Affairs, Iain Shuker of the World Bank and Richard Shriver of the CIME Endeavor Group all spoke about the scarcity of available financing in Ukraine and the importance of land reform and reducing rampant corruption in order to increase the level of investment in Ukraine.

Mr. Holpert said that it is important to know that "there are real people doing real business honestly in Ukraine and that not everyone has to surround himselves with bodyguards." Mr. Shriver, noting that although Western investment in Ukraine is a tenth of what it should be, stated that in the last five years there has been a vast increase in the number of small businesses that have been created and that consumer spending is up, even in western Ukraine (the poorest part of Ukraine).

Ms. Jaresko summarized, and most panelists agreed, that "money goes where money grows." The Western press focuses on problems in Ukraine. The growing number of success stories also must be made known to attract greater investment.

The keynote speaker, Ambassador Bill Taylor, coordinator of U.S. assistance to the NIS at the U.S. Department of State, began by saying that he was humbled to be in the room with such a variety of successful entrepreneurs and people associated with the food-processing sector in Ukraine - the fastest growing sector of Ukraine's economy due in large part to the efforts of the conference participants.

According to Ambassador Taylor the big question is: Will Ukraine's commitment to reform continue in light of recent political developments there? The United States is very concerned, and the U.S. government, along with many potential investors, will be evaluating what kinds of signals the Ukrainian government sends with regard to its future course, especially who is selected as the new prime minister, how the investigation of the murder of Heorhii Gongadze proceeds and what the International Monetary Fund decides in its dealings with the banking system of Ukraine.

One of the highlights of the day was the appearance and presentation of Sen. Richard Lugar (D-Ind.), who underscored the strategic importance of Ukraine and the value the United States places on having a viable strategic relationship with Ukraine.

"As a friend of Ukraine, I am concerned by the recent developments in Kyiv," he said. "Ukraine has made such important progress that we must all redouble our efforts to ensure that Ukraine does not lose ground during this time of political upheaval."

He gave Ukraine high marks for voluntarily dismantling its nuclear missiles and noted that Ukraine is making progress in the political arena, citing such things as the new Constitution, elections and interest in NATO and joint military exercises. The results in the economic sector are mixed, and the recent exit of Prime Minister Viktor Yuschenko is probably not a positive development, Sen. Lugar said, but he added that the United States must remain committed to assisting Ukraine in pursuing market economic reforms.

"Not only must Ukraine be prepared to make difficult choices and implement challenging economic policies, but the U.S. must be prepared to expand its role in assisting reform implementation," declared Sen. Lugar.

The last panel was devoted to the future of food systems activities and opportunities for the small producer/businessperson in Ukraine. Representing successful Ukrainian entrepreneurs, Mr. Avramenko of AVK said that he is optimistic about the future for a number of reasons. Among the numerous factors he listed were the fact that young Ukrainians with management skills are appearing in greater numbers in Ukraine and that the vast majority of Ukrainians believe that going back to the past is unimaginable.

Ms. Jaresko said she foresees investment from Russia, Greece, Turkey and Eastern Europe in the near term, with greater Western investment to follow. John Shmorhun added that he believes the future for Ukraine's food systems sector is good because it has had to face the shock therapy of competition from European neighbors right from independence.

John Block, Former U.S. secretary of agriculture, said he was very encouraged by what he heard at the conference and believes that things will get better for Ukraine if reforms reach the whole system. Dennis De Santis of ACDI/VOCA and Brad Beeler, former project manager of the Ohio Farm Project, both expressed their belief that a long-term, integrated approach, targeting individual businessmen and farmers, will create growth and ultimately transform Ukraine.

Doug Campbell of the USUF, with help from Motrya Mac, planned and coordinated the conference. Richard and Sophika Smith of Foresight Publishing Services, Inc. of Kensington, Md., provided the creative display boards showing the work of the foundation in Ukraine, the components of the food system and the products made in Ukraine.

The conference was punctuated by coffee breaks that featured examples of Ukrainian confectionery products. The Embassy of Ukraine provided stuffed dumplings (varenyky) and stuffed cabbage (holubtsi) - foods that were not unfamiliar to the participants were but nonetheless big hits. Various Ukrainian products were available for sampling, including ketchup and other condiments from the Chumak Companies, various chocolates from AVK Confectionery Co. and Kraft Foods Ukraine (Svitoch), assorted non-alcoholic drinks from the Obolon Brewery in Kyiv, bags of potato chips (including a mushroom-flavored variety) from Kraft Foods and the world-class Soomska horilka (vodka) from United Spirits Import Co.

For more information contact the U.S.-Ukraine Foundation, 733 15th St. NW, Suite 1026, Washington, DC 20005; telephone (202) 347-4264; fax, (202) 347-4267; e-mail, usuf@usukraine.org; homepage, www.usukraine.org.

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