Photo from UNIAN
For years, the United States was China’s main source of corn, but not anymore as Ukraine shipped 470,047 tons of corn to China in January 2015, overtaking the United States, according to official customs data.
Ukraine shipped nearly 1 million tons of corn to China in 2014, and officials said in July that they want to double that amount this year, as Ukraine’s agricultural sector provides a much-needed jolt of life for Ukraine’s flat-lined economy, RFE/RL reports.
Amid fierce fighting in the east of the country with the combined Russian-separatist forces, the economy shrank nearly 7 percent last year and is projected to do even worse in 2015. The hryvnya has dropped more than 70% against the dollar since early 2014.
Despite that, Ukraine’s total crop production in 2014 reached 63 million tons, a post-Soviet record, and agricultural officials are hoping to come close to that this year.
The bumper crops should come as no surprise for a country once dubbed Europe’s “breadbasket” due to the bountiful harvests cultivated on fertile lands known as “black soil.” Ukraine has about 32 million hectares of arable land, about one-third as much as in the entire European Union, and this has officials in Beijing salivating.
Ukraine fits into China’s plans to diversify its agricultural imports, according to Fred Gale, a senior economist at the U.S. Department of Agriculture.
“One of its key strategies has been to diversify its sources of corn imports because China has been importing almost exclusively from the United States," Gale told RFE/RL in a telephone interview.
China is the world’s second-biggest consumer of corn, which Beijing needs mainly to feed livestock as the Chinese population’s appetite for a Western diet -- including lots of meat -- grows.
And the Ukrainians have eagerly stepped forward.
In 2011, Beijing declared a Sino-Ukrainian strategic partnership, and a year later, in September 2012, Kyiv signed a $3 billion loan with the Export-Import Bank of China. Dubbed “loan-for-crops,” the deal guaranteed Ukraine a line of credit in exchange for part of the country’s corn harvest for a period of 15 years.
Ukraine is also a piece of Beijing’s grander puzzle to develop a new trade route from China to Europe, according to Gale.
"China has a strategy to raise its profile in global economics and politics. Part of that is its new Silk Road or also known as ‘One Belt, One Road’ strategy. And that involves strengthening economic relations with various countries between China and Europe, including Ukraine,” he said.
In November 2013, Beijing declared its ambitious intention to rent and farm 5% of Ukraine’s land. A moratorium on the sale of land in Ukraine is set to expire on January 1, 2016. The ban, however, has not stopped foreign-owned companies from tilling the soil there. For example, Kernel Holding S.A., based in Luxembourg, farms 405,000 hectares of land in Ukraine under lease agreements.
Beijing’s interest in Ukraine extends beyond its farmland.
In March, China lent Ukraine $15 billion over 15 years for housing construction to revive Ukraine’s collapsing real estate market.
That same month, Ukrainian Economic Development and Trade Minister Aivaras Abromavichus said China was interested in investing in Ukraine’s information technology, or IT, sector. A few months later, in July, a first-ever China-Ukraine forum on science and technology was announced.
Beijing’s closer ties with Kyiv may not sit well in Moscow, which has been hit with sanctions by the United States, the EU, and other Western nations over its support for the pro-Russian rebels in eastern Ukraine and its annexation of the Ukrainian peninsula of Crimea.
However, John C.K. Daly of the Jamestown Foundation in Washington believes that “China’s budding economic ties with Ukraine are most likely to always take second stage to its relations with Russia,” and the current trade figures seem to support him. Annual trade between Russia and China is worth some $100 billion, while trade with Ukraine amounts to $10 billion.