ECONOMIC REVIEW

AGRICULTURAL  INDUSTRY

Kherson region is the territory with a well-developed agricultural industry. The region possesses about 2 million hectares of agricultural land which is the greatest share of plowed fields in Ukraine. The total area of agricultural land is 1969.5 hectares (1776.8 thousand hectares – plowed fields, 26.6 hectares – perennial crops, 10.4 thousand hectares – hayfields, 155.7 thousand hectares – pastures).

The region is a leading producer of vegetables and gourds in Ukraine. In 2012, more than 2 million tons of this production was grown and collected there. The most important vegetables grown here are tomato, cabbage, onion, salad pepper, eggplant. Kherson tomatoes and watermelons are widely known far beyond the region and serve kind of its hallmarks. The other crops of great importance are sunflower and soya. There are a lot of fruit gardens rich in cherries, apricots, peaches, apples and plums.

Wheat (including winter wheat), rye, barley, oats and millet are the traditionally cultivated cereal crops. The largest areas of cereal crops are in Beryslav district – 68.2 thousand hectares, Novotroitsk and Henichesk districts – 62.9  thousand hectares.  

The area of irrigated fields in Kherson region is 426.8 thousand hectares, or 21.6% of total agricultural area.

Kherson agricultural sector has an appropriate scientific and technical support: Institute of Agriculture of Southern Region within Ukrainian National Academy of Agrarian Sciences, Kherson National Technical University, Kherson State Agricultural University, Institute of Animal Breeding in the Steppe Regions “Ascania Nova”, Institute of Rice Growing, research stations.

In 2007, an American multinational corporation “Cargill, Inc.” became the first company in Ukraine which started to implement promotion program of high-oleic sunflower cultivation and processing (in Kakhovka). The initial investment amounted to 400 million UAH. In 2008, “Agrofusion” Holding Company, one of the biggest European tomato paste producers, the owner of the famous “In Agro” trade mark, built a tomatoes' processing plant in Hola Prystan of the total cost 12.5 million USD. The same year, “DANCROFT HOLDINGS LIMITED” company established the soybean processing enterprise which produces soy oil meal and soy oil. The investment amounted to 176 million EUR.

Kherson region also boasts stock-raising. Pig factory farms, dairy farms and poultry farms are rapidly growing. Research farm "Askaniyskoye" of the National Academy of Agrarian Sciences of Ukraine specializes in beef husbandry. Specialists of its pedigree farms breed cattle and Ascaniyskaya fine-wool sheep. Here the leading Ukrainian Agricultural Holding “Avangard” has being constructing the Europe's largest poultry farm. The first stage of the farm is already launched, and operates successfully exporting eggs to the Middle East countries.

In the villages there is a tendency to establish cooperatives. Such form of cooperation is considered the way to save small privately owned households. Joining the cooperation movement provides farmers with the possibility to improve their position in the market, to gain direct access to consumers and producers of agricultural products. 32 agricultural servicing cooperatives are registered in the region.

Agricultural enterprises of Kherson region produce high quality products and yield enough food to meet region's needs. Food and processing industry occupies a leading position in the structure of the regional economy and consists of more than 90 large companies, 300 small and medium size enterprises producing a wide range of food stuffs. Among them – poultry farms, meat and milk processing factories, butter making plants, bakeries, producers of  flours and pastries, grits, cheese, tomato ketchup, mayonnaise,canned vegetables and fruits.


INDUSTRY

The industrial complex of the Kherson region is formed by more than 200 enterprises of different branches of economic activity: machine-engineering, food and processing industries, chemical, pulp-and-paper, light industries, and electric-power generation. However, shipbuilding industry traditionally remains prioritized.

Kherson shipbuilding companies provide a full production cycle, from series-produced vessels to their repairing. The largest enterprises in the industry are PJSC “Kherson Shipyard”, Kherson State-owned Plant “Pallada”, Kherson State-owned Works of ship equipment and ship fittings “Sudmash”. Modern ship-repairing floating docks, produced by the Kherson plant “Pallada” are exported to many countries of the world. A unique technology of caisson free joining of dock's parts afloat allows to produce blocks of almost any desirable size.

Kherson region companies master technologies of foundry production of ferrous and non-ferrous metals, and aluminum recycling. The regional enterprises produce construction metal structures and hardware, heaters and central-heating boilers, tools, attachment devices, chains and springs, roadway markers.

One of the most important industrial branches is machine-engineering. Kherson enterprises produce high-capacity electric machines, special welding equipment, agricultural machinery (harvesters and tractors), graders, lift-trucks, light single-engined aircraft, hydraulic structures, service parts for diesel locomotive engines, pumping equipment and hunting ammunition. There are also producers of dry building mixes, constructional materials (brick, expanded concrete) and construction equipment.

The pulp-and-paper enterprises manufacture filter paper for the car industry, and the new plant of the Austrian company “Dunapack” plans to produce 120 million m? of high-quality corrugated cardboard production annually.

The chemical industry plants produce a wide range of products: pharmaceuticals, paintwork materials, a variety of plastic products, plastic windows and doors, plastic bags, rubber technical goods and so on.

Unique features of the region determine the fact that the food industry possesses the largest share in the industrial structure. Kherson companies supply regional and export markets with flour and pastas, sunflower seed oil and confectioner's goods, juices and canned vegetables.

When a large processing company established, policy of closed-loop production including growing, processing and selling, is implemented. “Chumak” company have been operating successfully for more than 10 years. This Ukrainian-Swedish company is the leading producer of canned products in Ukraine. If the market share of the mentioned product exported from Ukraine makes up more than 70%,  the market share of the product produced by “Chumak” company is evaluated as equal to 35-40%. In addition to canned vegetables this company produces and exports ketchup, mayonnaise, sauces and juices.

Continuing its investment activities, “Chumak” company is implementing a project “Green Team” with the main aim to build a vegetable store with capacity of 200 000 tons in Kakhovka district of Kherson region.

A successful investment project was implemented by the French company “Danone”. Since 2006 the “Danone Dnipro” factory has been operating. The plant produces over 80% of the whole Ukrainian “Danone” dairy products.

The wine industry traditionally prospers. Agrofirm State Farm “Bilozerskyi” is the largest producer of wine materials, wine, fruit puree. Quality of its wine is confirmed by the numerous awards of international and Ukrainian fairs, with 20 gold awards among them.

The history of “Tavria” brandies starts from the first settlement of Swiss colonists in the 18th century. The largest winery in Ukraine – PJSC The House of Vintage Brandies “Tavria” – produces brandies using domestic and foreign experience in winemaking. Its production scores a great success both in Ukraine and far beyond.


TRANSPORT INFRASTRUCTURE

The main feature of geographic location of the region is its access to two seas as it is located in the Azov-Black Sea basin and the Dnieper River basin. Kherson is a transit area with a powerful transport system, consisting of railway, seaways, river- and road transport. There is a possibility of air travel development. All these factors contribute to Kherson region playing an important role in establishing international and interregional transport connections.

There are two international transport corridors here. The Black Sea Economic Cooperation (BSEC) corridor forms the traffic flows of the Middle East and the Balkans countries  towards the cities of Mariupol and Novoazovsk, while the Euro-Asian transport corridor runs from Europe through the Black Sea ports to the Crimea, Russia, the Caucasus and the East.

Two commercial sea ports, two river ports, thousands of kilometers of railway and road networks connect Kherson region with other regions of Ukraine, CIS countries, Southeast Europe, the Caucasus and the Middle East.

Set up more than 200 years ago, Kherson Sea Port appears to be the oldest port of Ukraine and the Black Sea Fleet. Today, it is a powerful enterprise located on the right bank of the Dnieper, 15 km off the estuary, with year-round navigation and cargo turn-over of more than 3 million tons per year (more than 600 vessels annually is handled in the port). The seaport management makes plans to expand the network of handling terminals in the near future which will enable to increase the port discharge capacity. Another sea port is located in Skadovsk. The port has a line of ferry connection with Turkey.

The leading Ukrainian grain trader "NIBULON" is implementing a project on the construction of river transshipment terminals for grains and oil-bearing crops. The first terminal was brought into operation in Berislav district of Kherson region in 2012.

Besides, the priority sphere for investment is the construction of logistics facilities for agro-industrial areas: vegetable- and fruit stores with the possibility of primary processing of agricultural products.


FOREIGN ECONOMIC ACTIVITY

Kherson region is export-oriented. It has kept a positive balance of foreign trade. Pending the signing of the Free Trade Agreement between Ukraine and the EU, the strengthening of bilateral relationship between Kherson region and the EU countries and trade and investment cooperation expansion have become the main goal of regional economic integration. Kherson enterprises conduct their foreign trade activity with 111 countries of the world. Russian Federation, the Netherlands, Kazakhstan, Belarus, Italy, Germany, Lithuania, Poland, Hungary, Croatia are among those countries.

Regional foreign trade, exports in particular, is an extremely important factor in the regional economy development. An actual participation of the region in export activities is as it is known a multi-level system process. Thus, in 2012, exports from Kherson region was 328,4 million USD, import – to 206,6 million USD. Compared with 2011 exports decreased by 3,1% and imports – by 13,4%. The foreign trade surplus of the region amounted to 121,8 million USD (in 2011 – to 137,8 million USD). Export-import coverage ratio was 1,58%. The basis of the regional commodity composition is formed by grain crops, oil seeds and oleaginous fruits, machines, equipment and machinery, ready-made meals.

The main regional enterprises generally involved in foreign trade are: PJSC “Large-Size Electric Machine Plant”, PJSC “Chumak”, Limited Liability Company “Firm-Industrial Complex “Korabel”, PJSC “Kakhovka Plant of Electric Welding Equipment”, Kherson State-owned Plant “Palada”, PJSC “Kherson Shipyard”, Limited Liability Company “Mechanical Plant”, “Trade House “Kherson” (a subsidiary of Limited Liability Company “Intertrade group L.L.C.”), Public Joint Stock Company “Kherson Bread Factory”.

Taking into account that international and interregional cooperation is a highly efficient way of integration and an important factor of economical development, the work on expanding the geography of cooperation with foreign countries is carried on.

   The region had signed interregional bilateral cooperation agreements with regions of foreign countries: with Bra?ov County (Romania), Akmola Province (Republic of Kazakhstan), Subcarpathian Voivodeship (Republic of Poland), Guria region (Georgia), Yamalo-Nenets Autonomous Okrug (The Russian Federation), governments of Russian regions – Sverdlovsk, Murmansk, Nizhny Novgorod, Tyumen and Novosibirsk; Gomel and Mogilev regional executive committees (Republic of Belarus), Shandong Province (the People's Republic of China), along with large foreign cities: Kent (USA), Zonguldak (Turkey), Kishinev (Moldova) and Tiraspol (Transnistria).

A special attention is paid to more intensive cooperation within the current international agreements. It provides opportunities for expansion and establishment of trade-economical and investment cooperation of regional companies.


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