Ukraine: Organic farming to stave off unemployment and the rural exodus

Rising costs and falling revenue are forcing poor Ukrainian farmers to leave the land for the cities. SDC's 'EcoFinLan' project is encouraging organic farming and the sale of organic produce on domestic and foreign markets. The aim is to provide farmers with alternative sources of income and help rural regions to develop.

Ukraine used to be the bread basket of the Soviet Union and a major exporter of agricultural products. When the country gained its independence in 1991, the ensuing social upheaval took its toll on farming. Today, this major productive sector still hasn’t recovered from the end of collectivisation. Unresolved problems include dwindling farm subsidies, unclear property rights and inadequate investment to modernise farms. However, Ukraine’s recent accession to the WTO and the worldwide food crisis are now lending fresh impetus to long-awaited reforms.

A new start with organic farming
SDC's ‘EcoFinLan’ project focuses on organic farming and seeks to provide rural inhabitants with a genuine alternative. Organic farming is becoming increasingly popular in Ukraine since it protects the environment at lower cost by avoiding the use of chemical fertilizers, pesticides and herbicides. There is also greater added value since increasing demand for organic products makes consumers more willing to pay higher prices in shops. By working with private industry and agricultural colleges, the project helps generalise organic farming techniques.

Ukrainian farmers are shown how to produce organic inputs and how to market their products. The 'EcoFinLan' project has lent support to an organic farmers' federation which helps smallholder farmers market their products. It has also set up a platform for the exchange of information and experiences. Finally, the project is currently working with two Ukrainian banks on an initiative to provide affordable financial services to organic farmers.

The project is being implemented by the Swiss Agricultural College (SHL) in Zollikofen and the Illinzi Agricultural College in the Winniza region. Seco export-promotion measures, such as the development of sales outlets in Switzerland and organic certification, serve as a complement to the project.

Ukraine seeks to introduce market-economy mechanisms in agriculture, but progress is slow. Projects such as 'EcoFinLan' provide urgently needed stimulus for upcoming reforms and guidance for concrete, innovative measures in a difficult environment.

Economic 'malaise' after the disbanding of the collective farms
From 1991 to 1999, the national income of Ukraine dropped by more than half, and it was not until 2000 that the economy began to show signs of recovery, though rural areas have been almost excluded from this new growth. During the Soviet era, agricultural production in Ukraine covered about one quarter of the USSR's food requirements. Today, exports are at a modest level. Slashed subsidies led to lower agricultural production, less profitability and insufficient investment in farm modernization.