Investing in organic farming: market overview and key players

Organic farming has been gaining popularity in recent years around the world, including in Ukraine. This is due to the growing demand for organic products, increased environmental awareness among consumers, and the prospects for exporting organic products. Investments in this sector are becoming increasingly attractive to both local and international investors. In this article, we will analyze the current state of the organic farming market, key players and development prospects.

The state of the organic farming market

Organic farming involves growing crops without the use of synthetic fertilizers, pesticides, and genetically modified organisms (GMOs). According to IFOAM, the global market for organic products reached more than $150 billion in 2023. Ukraine is one of the leaders in Europe in terms of certified organic land, with about 470 thousand hectares.

The main export destinations for Ukrainian organic products include cereals (wheat, corn), oilseeds (sunflower, soybeans), berries, and honey. The main markets are the EU, the US and Switzerland.

Key market players

Both large agricultural holdings and small farms operate in the Ukrainian organic farming market. Among the most well-known companies:

• 1. “Astarta-Kyiv Agricultural Holding is one of the largest producers of organic grain and oilseeds.
• 2. “Gals Agro specializes in organic grain growing and dairy farming.
• 3. “EthnoProduct is known for its organic dairy products, which are actively exported to the EU.
• 4. “Organic Milk is one of the first producers of organic dairy products in Ukraine.

In addition, there is a growing number of small farms that find their customers through local markets and online sales.

Investment prospects

Investing in organic farming promises long-term profits due to the stable demand for environmentally friendly products. The main reasons for attracting investors:

• Stable demand for organic products. The global market is projected to grow by 10-12% annually until 2030.
• State support. Ukraine has introduced subsidy and compensation programs for organic producers.
• Export potential. Ukrainian organic products are in demand in the EU markets due to their competitive prices and high quality.

This year, there are many support programs for organic producers in Ukraine, including “Online Trade in Organic Products in Ukraine”, processors, including “Organic Processing and Trade: New Generation Food”, and exporters, “Peculiarities of Exporting Organic Products”. In addition, the German-Ukrainian Cooperation in Organic Agriculture (GOCA) is constantly working to help with certification.

Challenges for investors

Due to the war, Ukraine’s organic market suffered significant losses, decreasing by 35%. However, the industry is gradually recovering, and the launch of the State Register of Organic Operators in August 2023 was an important step forward. This registry allows for transparency and control over the production of organic products, which increases confidence in Ukrainian producers both at home and abroad.

Today, there are more than 170 certified operators in Ukraine that comply with the current legislation. The increase in activity in 2023 compared to 2022 indicates a gradual recovery of the market, even in difficult conditions.

The European Green Deal aims to increase the share of organic land to 25% by 2030. Ukraine also has plans to increase this share to 3%. This task is realistic, but it requires support for farmers, investments, and new technologies.

However, this sector has its own risks: the high cost of certification, the long payback period, and the difficulty of switching from conventional to organic farming.

Conclusion.

Investing in organic farming in Ukraine is a promising area with great potential. Demand for organic products continues to grow both on the domestic and foreign markets. Successful cooperation with key players, a competent strategy and risk management will help investors to make significant profits and contribute to the sustainable development of agriculture.