Separatists aren’t hurting Ukraine’s exports: Minister

Separatists pose no risk to agribusiness: Ukraine Minister

The conflict in eastern Ukraine hasn't hurt the country's reputation as the breadbasket of Europe, a Ukraine minister told CNBC on Tuesday.

Oleksiy Pavlenko, the Ukrainian Minister of Agriculture and Food, said agricultural exports were still thriving despite tensions between pro-Russian separatists and Ukrainian troops surrounding key farming land in Donetsk and Luhansk.

"We don't see any risks at this moment from separatists (around) agribusiness, and the major territories are under control of Ukrainian military forces," Pavlenko told CNBC during an interview on Squawk Box Europe.

Agriculture currently makes up 14 percent of Ukraine's total GDP, and ranks at the country's top export accounting for 37 percent of all products sold abroad, according to Ukraine's Ministry of Agriculture and Food.

A combine harvester gathers grain from a field in the village of Mala Divytsa on July 27, 2015.

Donetsk is host to nearly 1.1 million hectares of cultivated land, with a further 940,000 hectares located in Luhansk, data from the Food and Agriculture Organization of the United Nations (FAO) shows.

Earlier this year, the FAO estimated that over 900,000 of the 2014 barley and sunflower harvest couldn't be collected from these regions due to conflict, representing a 30 percent harvest loss.

But Ukraine is still hoping to export 36 million tons of grain this year, Pavlenko said, and has now diversified its roster of trade partners.

Exports to sanctions-hit Russia have dropped to 2 percent, the minister explained, while Chinese exports doubled to $889.7 million over the first seven months of the year. Exports to the US have risen 36 percent and Asia 10 percent, while European exports are up by 6 percent during the first half of 2015.

Ukrainian servicemen take part in military exercises on the shooting range of Ukrainian forces near Ghytomyr, some 150 km west of Kiev.
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The ministry expects grain exports to jump over 12 percent by year-end.

Still, the FAO has allocated $800,000 to assist some of the most vulnerable farmers in the conflict zones with, seed, animal feed and 7000 chickens being distributed to some of the neediest families.

There are hopes for a sustained end to the conflict which has killed over 8,000 people since fighting erupted in April 2014, with regional security organization and special Ukraine monitor, the OSCE, reporting a relative "calm" in both Luhansk and Donetsk over recent days.

It comes in the wake of renewed ceasefire agreements negotiated in August that took hold September 1.

"For sure...peace is key for stability of the economy and also of the political situation," Pavlenko said.