During Drought China Turns to Ukraine as Food Source

July 27, 2012

The worst drought in half a century is hitting corn and wheat harvests in the United States, the world’s largest food exporter. So China, a major food importer, is turning to a new source of supply - Ukraine, a nation once known as the breadbasket of Europe.

The drought in the United States reinforces expert forecasts that world food supplies will steadily tighten this decade, and that prices will rise. When grain prices go up, so do the prices of bread, milk, eggs and meat. When that happened two years ago, riots broke out in Egypt and Mozambique.

By 2050, the world will have to produce 60 percent more food to meet demands from a world population that is expected to be bigger and richer.

In advance, China is reaching out to producers around the globe to guarantee future food supplies.

A century ago, rich corn and wheat harvests made Ukraine the breadbasket of Europe.

Now China wants to lock down a portion of the bounty flowing from the black soils of this farming nation the size of France.

Galyna Kovtok is CEO of UkrLand Farming, or ULF, Ukraine’s largest agri-business. With more than half-a-million hectares of farmland under cultivation, she negotiated a $4 billion Chinese credit this year for her company.

“This year, UkrLand Farming may become the first company in Ukraine to send agricultural products to China because at this moment, we are actively working to get certified to export to China,” she said. “The first step will be corn, and then we will work on sending other goods.”