As seeding progresses in Ukraine,
farmers are eyeing input prices, markets and weather, just as their
counterparts do in other parts of the world.
But Ukraine’s farmers have the added worry of whether conflict in the
eastern part of the country will boil over.
Last week Russian and Ukrainian
officials signed an accord agreeing to back away from further violence and
calling for demonstrators to leave public buildings in eastern Ukraine. But three pro-Russia separatists were slain in
a shootout in the eastern city of Slavyansk over the weekend, and the bodies of
two people allegedly abducted by pro-Russian activists were discovered Tuesday.
Ukraine forces on Thursday reportedly
killed up to five pro-Moscowseparatists.
Both sides lay blame for the
violence on the other’s doorstep; Russian President Vladimir Putin most
recently warned of “consequences” if Kiev used its army against its own people.
The U.S. is now deploying NATO troops to
Eastern Europe.
Mike Lee, an agribusiness consultant
based in the western Ukraine city of Lviv, said the conflicts have polarized
people. Lee is originally from the
United Kingdom but he’s also worked in Kazakhstan, Uzbekistan and Russia. He now works with private investors setting up
farms in Ukraine.
It’s difficult to know whether
Russia is stirring up trouble in eastern Ukraine, or whether the separatists
are local people unsure about legislators in Kiev, he said.
“In all conflicts, the first
casualty is the truth, and it’s very difficult to actually find out what’s
going on. Time will tell, I suppose,” said Lee.
Crop
season already difficult
Lee said Lviv is quiet right now but
the conflict in the east is affecting agricultural production throughout
Ukraine. “I do see the inflation and exchange
rate having a big impact on an already difficult season.” [Related story]
Commodity prices collapsed after the
2013 harvest, Lee said. “That collapse
has made a big hole in everybody’s cash position. And cash is king.”
Ukraine’s planting season is 20 days
ahead of what it was last year. There’s
an urgency to get the crop in the ground, but Lee said he thinks “people are
struggling.”
Lee expects to see more land left
fallow and less corn in the ground this spring.
“The last three years I’ve had my
suppliers on the phone at this time of year screaming at me that supplies of
(maize) seeds have run down,” he said.
But the phones have been quiet this
year, he said. “So that tells me that
there’s a surplus of maize seed to go in the ground.”
Gas prices are also climbing, which
will turn maize drying from a costly exercise to a “prohibitively costly
exercise,” said Lee.
Fertilizer is available, although
it’s more expensive. How much fertilizer
will be applied to seeded acres is a question mark, Lee said.
On the positive side, Ukraine has
been getting much-needed rain recently. Spring cereals and rapeseed have been planted
and maize planting is gaining momentum, Lee said.
“If we don’t get a wash-out through
the rest of this month, into next month, I could see crops going into the
ground in good time, in good fashion,” said Lee.
“How they perform after that with
the amount of fertilizer that may or may not be applied, we’ll see.”
Longer-term view in ag
Lee said there is a group of
legislators in Kiev who are “trying to bring in sensible changes to
legislation.”
For example, the Ukraine government
recently announced land leases would be extended “which on the face of it is a good
thing because it encourages a bit more of a longer-term view, which is what
agriculture needs,” said Lee.
There is a moratorium on selling
agricultural land in Ukraine. Lee said
expectations that the government will eventually lift the moratorium have
created a culture of short-term rental agreements “where landlords are looking
to have a short lease because they want to be able to sell at the first
opportunity.”
Renters have first refusal for
extending lease agreements or land sales once they’ve started renting a chunk
of land, said Lee. But renters “find it
difficult to invest long-term in the land because leases are relatively short.”
A working group with Ukraine’s
Ministry of Agrarian Policy and Food is also considering loosening regulations around importing plant
protection products by moving to a licensing system, a move Lee said could
significantly boost wheat yields in years rather than decades.
Right now Ukrainian farmers can’t
pick up the latest chemicals that are available to their Western European
counterparts, Lee said. Generic
chemicals are also available from third-party suppliers, but Lee said farmers
who buy from them run the risk of buying adulterated products.
“So while there is a range of
chemicals to use, it isn't the sort of full armoury that we can go at, I
presume, because there isn't a big enough demand to bring in some of those more
expensive chemicals,” said Lee.
“And the legislation and the process
are so cumbersome and expensive that it’s not worthwhile.”
Lee said changing the legislation
would “open up the market to allow the import of a wider range of chemicals
into Ukraine.”
Other changes planned, or recently
made, to Ukraine’s ag policy and legislation include cancelling grain and
granary certification, developing the organic industry for export to the
European Union, new lending support through the National Bank, simplifying
agricultural land allocation, and renewing the Deputy Prime Minister position
of the agrarian complex.
Mike Lee blogs about farming in Ukraine; you can also follow him on Twitter at@AgronomyUkraine