Grain replaced metal: Metamorphoses and paradoxes of Ukraine’s economy

Author : Oleksandr Okhrymenko

Grain becomes that "economic magic wand", which saves the export of Ukraine and the economy of Ukraine in general
09:10, 11 May 2017

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In order to understand what is happening with Ukraine’s exports, you probably need to know only two figures. They capaciously describe everything that happens with our foreign trade. So, for the first quarter of 2017, grain exports in physical terms increased by 23% compared to last year, and metal exports fell by 10%. These figures are calculated in tons. In money, both metal exports and grain exports demonstrated growth. This is due the fact that metal prices in the world are growing. Although, rather, in recent months they show a decline, not growth. But increase in metal prices became the main factor that ensured the growth of Ukraine's exports at the beginning of the year. It seems to be something boring and uninteresting. Nevertheless, this is our economy.

Related: Free trade not for all: Ukraine's exports statistics by regions

But to understand what would happen to our economy and exports, we should mention two more figures. Namely, the exports of metal and grain for March 2017, when Donbas blockade has been launched. In March 20017, grain exports from Ukraine in physical terms increased by 26% compared to the same period last year, while metal exports fell by 14%. Therefore, it is not surprising that the share of exports of agrarian products and food products in Ukraine's exports is almost 50%. Ukraine becomes an agrarian monster, while the export of metal, which used to be the main one, is receding into the background. Grain becomes that "economic magic wand", which saves the export of Ukraine and the economy of Ukraine in general.

Related: In 2016, Russia exported to occupied Donbas goods at cost of $ 222 mln

National Bank of Ukraine (NBU) has published a very interesting indicator: "Index of production of basic industries." Consistent with this index for March 2017, the growth of the food industry was 7.5% compared to the same period last year, but metallurgy showed a fall of 2.2%.

Or maybe, we should be less worried about all these metamorphoses, but should simply think about the future, development, and those things that are perspective in Ukraine? Maybe that is why the IMF advises to launch the agricultural land market, because this is the only chance to pull the economy of Ukraine out of the crisis?

Related: Ukrainian exports: Challenge for the next 5 years

Of course, we should talk about high technologies and make plans for Ukraine's industrial growth, but the reality is that these would remain just plans, not a real prospect. Ukraine has really learned how to successfully produce agrarian products and successfully export it. Few people noticed that Ukraine, in addition to traditional sales markets for its agar products, entered new markets: Bangladesh, Thailand, and even South Korea. Ukrainian exporters are increasingly claiming their rights to the world food market. Soon, Ukraine would indeed be respected as one of the main players in the world food market. Everybody likes to eat in all places of the world. Ukraine is able to feed people and at the same time rise its own economy.

Related: EU-Ukraine disputes: A new attempt to solve the problem of timber exports

The world economy also does not stand still. Everything is changing in terms of globalization. Ukraine in these conditions has to take its place in world production and consumption. And it becomes more and more clear that the future of Ukraine belongs to grain and food products rather than to smartphones and tablets. Moreover, Ukraine knows how to sell good grain, buying smartphones and tablets for this currency. Circuit of money and goods in the world is constant.

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