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At the heart of Eastern Europe, Ukraine plays a pivotal role in global food security with its vast farmlands and abundant agricultural resources. In recent years, Ukraine has faced not only geopolitical challenges but also the trials of war, which have undoubtedly had a profound impact on its agricultural economy and agrochemical market.
Against this backdrop, we have produced this special Ukraine Market Feature, published in our latest publication "Market Overview 2024", aiming to delve into the current situation, challenges, and future of Ukrainian agriculture and agrochemical regulation. At the same time, Ukrainian agricultural enterprises and experts are demonstrating extraordinary adaptability and determination, seeking new opportunities for development amidst turmoil.
Ukraine Market Feature | Regulatory framework for plant protection products (PPP) in Ukraine
In this feature, we interviewed Borys Todorov, CEO of ALFA Smart Agro, a representative enterprise in the Ukrainian agricultural market. He discussed how ALFA Smart Agro adjusted its business strategy to support Ukrainian farmers during the ongoing war. Additionally, he addressed the challenges faced by the Ukrainian agrochemical market, including raw material supply and logistics issues, and how the company is tackling these challenges. This also showcases the adaptability and development capabilities of local Ukrainian enterprises in an adverse market environment.
Borys Todorov, CEO of ALFA Smart Agro (ALFA)
Development of Ukrainian Agricultural Market
As a significant European agricultural country, how has Ukraine's strategic position in agriculture changed under the current geopolitical situation?
Ukraine is one of the largest countries in Europe, and global food security largely depends on our farmers. Ukraine is aware of this responsibility. All the fields that can be sown are planted. All possible means of delivering food to the global market are used, including even container shipments of grain. After the sharp collapse in 2022, Ukrainian agro-export is gradually recovering, primarily thanks to seaport operations.
We are witnessing a positive trend in our agricultural exports. The volumes of agricultural products shipped through Ukrainian ports have almost reached pre-war levels. In the 2023-2024 marketing year, 55.2 million tons of Ukrainian agrarian products were shipped by sea to foreign markets. This is a significant recovery, especially when compared to the 2021-2022 marketing year, mainly before the war, when Ukraine's maritime agro-export was about 60.3 million tons.
Over the past two years, Ukrainian agribusiness has demonstrated a remarkable skill: adaptability. In the long run, this adaptability will become our main strategic advantage. It instills confidence in the future of our industry, showing that we can navigate through challenges and emerge stronger.
Another trend brought about by the war is a shift toward the EU market. More than 60% of agricultural exports now go to the EU. We are rediscovering the European Union as a significant consumer of Ukrainian agricultural products, and the EU is opening up to Ukraine's agro-industry. Mutual adjustments accompany this process, but it will not stop.
What changes are occurring in Ukraine's crop planting structure? How does this affect the demand for agrochemical products?
Ukrainian farmers closely monitor global prices and trends. Given the high logistics costs, this is a matter of survival for agricultural producers. Therefore, in recent years, the structure of planted areas in Ukraine has changed dynamically.
The top three crops remain unchanged—sunflower, wheat, and corn. However, in 2024, the areas under oilseed rape and soybeans have significantly increased. This is primarily due to the profitability of these crops.
For us, farmers' crop choices are one of the main factors in planning the supply and production of agrochemicals for the season. Due to the unstable situation, many farmers delay deciding on crop structure until the last moment. Therefore, we focus on general trends. The most noticeable trends are a reduction in corn area, growing interest in oilseed rape and soybeans, and a return of areas under wheat cultivation.
Since Russia occupies parts of Ukraine's southern and eastern regions, the share of the western regions' agrochemical sales is growing. The climate in this part of the country allows for high yields, and farmers traditionally use products that help maximize crop potential. However, the economic situation is difficult in all regions. This means that the demand for agrochemicals that can reduce the cost of crop protection without compromising effectiveness will continue to grow.
What changes are taking place in the competitive landscape of Ukraine's agrochemical market? Compared to multinational companies, what advantages do local enterprises have?
Since Ukrainian farmers are focused on reducing production costs, the market share of post-patent and generic agrochemicals is growing. Prices for such products have significantly decreased compared to 2021-2022. As a result, the market share of multinational producers is shrinking, and this trend will continue to influence the market.
Of course, the Ukrainian agrochemical market has contracted in value and volume terms compared to 2021. However, comparing 2023 and 2024, there has been a significant increase in consumption volumes. Currently, ALFA Smart Agro ranks among the top four companies in the market in terms of sales value. The leaders are Bayer, Syngenta, and BASF. Our market share in terms of value is about 8%.
At the same time, ALFA Smart Agro products are ranked No. 1 in Ukraine by area treated (calculated based on single application rates). We have maintained this leadership for four consecutive years. Our advantage lies in our ability to respond flexibly to demand, produce additional products that are in high demand, and promptly supply farmers with what they need right now.
Company Development under Current Circumstances
The duration of the war has exceeded expectations. What specific impacts has this had on ALFA Smart Agro's agrochemical business? How has the company adjusted its long-term business strategy during this period to help Ukrainian farmers face planting challenges?
We diversify risks and plan business processes considering potential force majeure events. In 2022, we focused on solving logistics issues. Currently, this allows the Bila Tserkva Formulation Plant (ALFA Smart Agro's main production facility in Ukraine) to receive raw materials generally without significant delays. We have relocated part of our production from Ukraine to other sites in the EU, China, and India while ensuring that each batch of ALFA Smart Agro products is tested in Ukraine according to our quality control system.
The company is focused on being a reliable partner for farmers and distributors. We offer customers various products for various cultivation technologies, ranging from premium segments to systems with minimal investment, all while maintaining our high-quality standards.
As for investment projects, we have continued implementing everything planned earlier. In 2023, we opened a new production line for granulated herbicides at the Bila Tserkva Formulation Plant. In 2024, we launched a mobile service for comprehensive seed preparation for our clients.
It is important to note that ALFA Smart Agro is one of the largest taxpayers in the industry. We continue to operate in Ukraine, create jobs, and support the Ukrainian Defense Forces.
With limited agricultural production areas and facilities, how does ALFA Smart Agro plan products and businesses and conduct corresponding market activities to help farmers maintain productivity?
Despite part of the land being occupied, Ukraine remains one of the largest countries in Europe — the sown area for the 2024 harvest exceeded 18 million hectares. Ukrainian farmers are very qualified and professional. Therefore, ALFA Smart Agro aims to provide agricultural producers with the necessary solutions.
By the start of the agricultural season, at least 70% of the ALFA Smart Agro products that farmers need from planting to harvest should be in our warehouses. This rule was in place before the full-scale war and still applies today. Farmers must receive the necessary products on time and in total, and ALFA Smart Agro ensures this.
Additionally, over the past two years, our product portfolio has significantly expanded — we have introduced 18 new products. We have added some basic single-component products to the assortment while presenting farmers with innovative developments that ALFA Smart Agro's R&D department has worked on for several years.
Farmers increasingly value high-quality agronomic support from crop protection product manufacturers. Therefore, we are expanding our team of regional representatives. Despite their high qualifications, these specialists undergo regular training themselves. Their main tasks are to provide quality consultations, share knowledge, and help farmers achieve higher yields, including lower crop protection costs.
What are ALFA Smart Agro's most competitive products and services currently? In the next 3 to 5 years, what developments and changes do you expect in these businesses?
Our bestsellers are the Oscar Premium and Oscar Power soil herbicides (propisochlor + terbuthylazine), which protect sunflower, soybean, and corn crops. Our leaders in the cereal herbicide segment are Triathlon( thifensulfuron-methyl + tribenuron-methyl + florasulam) and its next generation, Triathlon Prime (tribenuron-methyl + thifensulfuron-methyl + florasulam + isoxadifen-ethyl), which targets broadleaf weeds. Regarding fungicides, the three-component Artis Plus (myclobutanil + tebuconazole + thiophanate-methyl) is worth highlighting: the product performs exceptionally well on various crops, so we are expanding its registration, including for orchards. The soybean seed treatment fungicide Avido (thiophanate-methyl + kresoxim-methyl + cymoxanil) is also among the market leaders. Our top-selling insecticides are Napoval (imidacloprid + alphacypermethrin) and Nokaut Extra (alphacypermethrin).
We constantly monitor climate changes, farmers’ demand, and technology changes so our product portfolio evolves. This process may accelerate even further in the coming years due to the harmonization of Ukraine's legislation with EU requirements.
Regarding product supply chain, has ALFA Smart Agro encountered challenges in raw material supply and logistics? How does your company plan its production?
In 2024, the challenges included rising logistics costs, changes in transit routes bypassing the Suez Canal, and the container crisis in Shanghai, all leading to longer delivery times. Delays in raw material supplies are unacceptable for us.
We are continuously working to optimize logistics. To increase our capabilities, the company has expanded its fleet of freight trucks. We are also actively utilizing railway container transportation.
How do you view the future development of Ukraine's agricultural industry? What are ALFA Smart Agro's plans for developing its international market?
Ukraine's crop protection product industry will scale up. Integrating EU regulations related to pesticide production and application in Ukraine will take some time, but it will be successful. This will open new opportunities for us in the global market, though it will also reduce the product range.
We do not know what condition Ukraine will be in after this war—what the demographic situation will be or which industrial capacities will remain. However, the Ukrainian agricultural sector has demonstrated significant resilience, which means it has enormous potential for development.
The development of Ukraine's agricultural chemical industry requires international cooperation and support. The global community's involvement is necessary to restore the destroyed logistics chains, such as the "grain corridor". Overall, every effort to solve the logistical problems of Ukrainian businesses is excellent support for Ukraine. Another essential factor is trade credit.
We constantly study international markets and look for new growth opportunities in the EU and other regions. ALFA Smart Agro products are exported to Armenia, Georgia, and Moldova. With the start of the war, we completely halted operations in the Russian and Belarusian markets. In 2025, we expect to receive our first registrations in the EU. Unfortunately, the registration processes in the EU are highly complex and lengthy, so development in this direction will take a considerable amount of time.
This article was originally published in AgroPages magazine 2024 Market Insight. Download to read more.
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