Azernews.Az

By Bloomberg

Agrotrade Group, a Ukrainian grain and seed producer and exporter, has slashed its 2015 investment plans as this year’s plunge in the currency makes the former Soviet republic less attractive for doing business.

The privately-held company will cap investments to $2.7 million for this year so it can complete previous projects. That figure compares with the $9.3 million invested last year for seed operations and grain storage. It used 25 percent less fertilizers this year because import prices surged on the declining hryvnia. Deliveries of imported fuel and other inputs for spring planting have been irregular because of the currency.

“We’re not thinking about new investments now,” Chief Executive Officer Vselovod Kozhemyako said in an interview in Kiev on Tuesday.

Ukraine’s economy shrank more than 17 percent from a year earlier in the first quarter as the fight against pro-Russian separatists in the nation’s two easternmost regions undermined industry. In 2015, gross domestic product may contract more than 7.5 percent, European Bank for Reconstruction and Development President Suma Chakrabarti said earlier this month.

The country is locked in negotiations with creditors over restructuring its debt. The government says a cut in principal payments is needed to restart economic growth, while a group of creditors led by Franklin Templeton argues that a writedown isn’t needed.

Ukraine threatened as recently as last week to halt bond payments if progress wasn’t made toward a restructuring deal. The country has made a $120 million bond coupon payment due on Friday, said a person with knowledge of the situation, who asked not to be identified because the details are private.

Attracting Capital

Kozhemyako said he wasn’t concerned “with the default prospect” for the nation.

“Agrotrade will not suffer direct losses, but attracting capital will be more difficult,” he said. “It’s quite difficult already now and may become even worse.”

Agrotrade, which cultivates 65,000 hectares of agriculture lands in five Ukrainian regions, scrapped plans to sell about a third of its shares in Warsaw in 2011 to boost its land areas and increase grain production.

The effect of government reform efforts on business is so far “a drop in the ocean” as hurdles in relations between the state and business have accumulated over the years, Kozhemyako said.

Positive changes, including the removal of unnecessary regulations for agriculture, fall short of “overrated expectations” created by government’s publicity campaign, Kozhemyako said.