Russian crop condition

Just spent a day driving around Kursk and Bryansk in western Russia.

Crops have enjoyed the rain over the last few weeks with spring plantings looking green and lush and as temperatures have picked up we now have some fine growing conditions.

Corn  at V6-8; sunflowers in bud, sugar beet meeting across the rows, didn't see any soya or oilseed rape but if I did I would expect it to be in a similar good condition.

Cereals at full ear emergence and in full flower but one negative is rain and wind has lodged a good deal of crop, perhaps as much as 30% of what I saw from the road.

Lodged crops are not the end of the world particularly this early in the season as plants will start to bend at the node and try to sit back up again.

But it will impact on yield and ability to get that crop cut efficiently and it will impact on quality as lain crop are more vulnerable to disease and germinating in the ear.

Overall, good.

Ukraine harvest update

To date Ukraine has cut 557kha compared to this time last year when it was reported they had cut over a million hectares.

To me that doesn't sound right as this season is at least ten days ahead of last year.

Could be weather has slowed harvest a bit compared to last year or Crimea is not in this year’s statistics which has over 1.5mha of arable land (although how much of that is planted and will be cut is anyone’s guess) or last year’s figures were inflated to appease a corrupt government that thought it was in control a soviet era centralised farming system?

Anyhoo, current reported total yield average is 2.79mt/ha compared to last years 2.49mt/ha.

This breaks down as wheat 59kha yielding 2.43mt/ha; barley 497kha yielding 2.84mt/ha; oilseed rape 41kha yielding 1.62mt/ha.

Which if you add up those reported areas comes to more than the total 557kha and we haven’t even included peas (1kha, 2.16mt/ha).

So it looks like those figures still contain, ahem, errors, which comes as no surprise as on several occasions in the past I have been told to report harvest complete when it wasn't otherwise it made the local head of administration look bad.

I suspect it will take some time to break old habits.

Ukraine takes one step forward

This morning in Brussels Petro Poroshenko signed the European Union Association Agreement.

This was the agreement his predecessor pulled out from signing at the last minute back in November deciding that he still had issues with the detail who then hot footed it over to the Kremlin to sign a deal with a smug looking Putin.

At the time large groups gathered in Kyiv to protest at the none signing but as the cold days passed the mood seemed to be resigned and fatigued that the brief glimmer of hope for progress was once again snubbed out.

Then in the early hours of one November morning just as the protesters seemed to be running out of steam someone gave the order to use force to break up a small crowd.

In my mind this was the spark that led to the mass surge of support and protest which escalated the agenda leading to the government losing control of the capital and fleeing the country.

The current conflict in eastern Ukraine while difficult to fully understand is a direct consequence of that November night in Kyiv.

So what does the signing of the European Union Association Agreement mean then?

I would be lying if I said I knew or understood the detail but what I believe it represents is an opportunity for Ukraine to catch up with the other ex-soviet EU club members who have seen their economy and their standard of living improve over the last decade.

I’m an agronomist not an economist so how do I know the living standards have improved?

If you spend some time in Poland and Ukraine as I have done and are fortunate enough to be able to travel freely across the border, the difference is jarring.

The infrastructure, the roads, the houses, the hospitals, attitudes, the police, the authorities, the smell, even the smell is different.

We would give an audible sigh of relief as we crossed the border in to Poland and immediately feel slightly more relaxed with the opposite true as we passed back in to Ukraine.

This is not a criticism of Ukraine people or culture but an attempt to communicate the differences between two neighbouring countries that were in broadly similar conditions back in 2004 and how they now find themselves as a result of political action and inaction.

Coming from a Ukraine which has spectacularly failed to progress as a nation (although individuals have done inexplicably well) the European Union looks like a pretty good idea to me.

To be blunt 20 odd years of whatever passed as governance before failed so the EU can’t be any worse.

Lets hope Ukraine doesn't take two steps back.

The latest crop monitoring MARS bulletin on European Russia

Positive outlook

Warmer-than-usual thermal conditions and infrequent rains facilitated the successful ending of the spring sowing campaign.  

The development of winter crops is advanced by 1-2 weeks.  

Biomass accumulation of winter wheat is close to normal in the Central Okrug, but it is promisingly positive in the Southern Okrug.  

The rainfall deficiency has led to an accelerated decrease of the soil moisture under spring crops, primarily in the Near Volga Okrug.

The period of review started and ended colder than usual, but from 10 May until 10 June daily temperatures typically fluctuated well above the average, resulting in a positive thermal anomaly of between +2 and +4°C for the period of review in the central and southern agricultural areas of Russia.

Plentiful precipitation (60-100 mm) was experienced between the Baltic Sea and the Black Sea, along the western border of Russia.

The rains during the last days of May in the Central Okrug were especially beneficial for spring and summer cereals, and favourably replenished the below-average soil moisture levels, just before the flowering phenophase of winter cereals.

In contrast, scarce precipitation was observed in the wide southern areas of the Near Volga and Southern Federal Okrugs.

The Kalmykiya,Tatarstan and Bashkorstan Republics as well as the Orenburgskaya, Saratovskaya, Volgogradskaya, Tambovskaya and Astrakhanskaya Oblasts experienced a precipitation deficit, though some rainfall arrived in mid-June and partially eased the situation.

The mild weather conditions accelerated the development of winter crops by 1-2 weeks.

In the first dekad of June, winter cereals started flowering in the Black Soil Region, and have typically entered the grain-filling stage in the Southern Oblast.

Our crop simulations indicate good total and storage organ biomass accumulation in the Southern District, mainly in Rostovskaya Oblast, Krasnodarskiy and Stavropolskiy Krays.

In the Black Soil Region, biomass accumulation is near or slightly above average.

The rainfall deficiency in the Near Volga Okrug has been unfavourable for the spring crops, but soil moisture reserves have probably been sufficient to avoid significant water stress so far.

The latest crop monitoring MARS bulletin on Ukraine

Substantial rainfall improved soil conditions

May was particularly rainy and allowed plants to recover from the exceptionally dry conditions previously observed.  

The intense precipitation may have slightly impacted yields due to some pest pressure and lodging, but crop growth conditions are deemed to be generally fair.

May was particularly rainy, while winter cereals were reaching the grain-filling stage and spring cereals the flowering stage.

These conditions contrasted with the dry conditions observed in the previous months.

Rainfall was largely above average in almost all regions, even reaching twice the average in central regions.

The only exceptions were Khersons’ka, Mykolayivs’ka, Krym and central Odes’ka, where rainfall was close to the average.

Khersons’ka is now the only region which may remain affected by dry conditions.

After a particularly cold first dekad, with minimum temperatures below 0°C in western regions, the second half of May was exceptionally warm with maximum temperatures reaching 33°C in eastern regions.

The warm weather continues in the east, whereas temperatures in the western half of the country close to the average during the first dekad of June.

As a consequence of the mild winter, winter crops are still in advance by one dekad compared to an average year.

Spring cereals are slightly ahead of schedule due to the high temperatures recorded at the end of May.

Whereas the border region of the Black Sea area may still be impacted by some dry conditions, the western and central regions may face some lodging due to the intensive rainfall, which reached more than 40 mm in one day in some regions.

Forecasts for wheat and barley are expected to be higher than the 5-years average but slightly lower than last year due to the dry conditions in April.

Maize is forecasted close to the 5-years average as the price of fertilizer and other inputs has increased a lot this year and grain maize yields strongly depends on it.

Ukraine and Russia harvest 2014

The Ukraine and Russian harvest is up and running with first reports of areas and yields available.

Russia has reported that harvest has started in the southern regions of Krasnodar, Stavropol, Crimea (contentiously) and slightly further north in Rostov.

They have cut 290kha of (helpfully called) grains producing 1.1mmt with a yield average of 3.85mt/ha

Ukraine are reporting harvest in Dnipropetrovsk, Zaporizhia, Zakarpattia, Mykolaiv, Odessa and Kherson.

They have cut 388kha of grains producing 1.0mmt with a yield average of 2.74mmt/ha.

Fortunately Ukraine does go on to break grains down into more helpful wheat 2.19mmt/ha; barley 2.78mmt/ha; oilseedrape 1.70mmt/ha.

Growers in the conflict areas of Donetsk and Lugansk are calling for a safety corridor so they can transport crop once harvest starts there.

They also point out that health and safety issues means it might be difficult getting contractors and tractor drivers to operate in these regions.

Investing in Ukrainian farmland

Although land tenure is a bureaucratic and tedious affair requiring you to accumulate several meters of box files, once acquired it is secure.

You cannot buy land in Ukraine but you lease it typically on 5 to 10 year leases with the right to renew and first right to buy once the moratorium on land sales is lifted.

Don't hold your breath on the moratorium being lifted anytime soon though, its been in place since 2004, was recently extended to 2016 and is not high up on the agenda for a country with bigger problems to address. 

This is not necessarily a bad thing as it means you can secure land at a relatively low cost allowing your capital to go in to equipment and stocks. 

To acquire land you often need to pay “key money” which “gives you the right to lease it”.

Better quality land and location is still valued high ($600) but it is perfectly possibly to pick up blocks of good land for $200 per hectare with an annual land rent in the region of $50-100 per hectare paid after harvest and often in grain.

Your landlords will be villagers and your neighbours who have more use for half a tonne of grain to feed their animals than the cash equivalent.

You can pick up a former collective farm of 2-5000ha with a range of buildings in workable condition, import some equipment, talk to a few suppliers and away you go.

The risks are often perceived as great but in my experience they are no greater than anywhere else and manageable once you understand them.

But take advice; what happens in your home country will bear little resemblance to what happens in Ukraine and if you bring your business sense of fair play with you, you will be burnt.

Acquisition prices are low at the moment as many businesses are looking to divest and the current news stories has all but stopped institutional interest. 

It is now possible to pick up a business for 50% of its valuation and if you keep your acquisition costs down then you have more funds available to go farming.

The conflict will pass but the demand for food will continue to rise.

What three things will boost farming output in Ukraine?

Research, research and research.

While the infrastructure in Ukraine is improving incrementally the general lack of support services and almost complete absence of primary research mean you have to pull on all your years of experience and training on almost a daily basis.

On more than one occasion I have stood in a crop studying unfamiliar (to me) insects to determine if the local agronomist’s advice to nuke them based on nothing more than his instinct was the right way to go (it wasn't).

There is a big gap in the market for independent farm focused research that gives growers access to practical sound information that helps them make commercial decisions.

At present farming in Ukraine is back to basics and pioneering.

Investing in agriculture

Ukraine's agricultural potential and location to markets has not been lost on investors who increasingly see Ukraine as the place to farm with $3 billion invested in 2013.

Agri-investments projects are often funded by entities based in brushed steel and glass offices in cities like London and New York who once they make the decision to go farming in Ukraine actually need someone to go farming in Ukraine.

Consequently there is a steadily increasing demand for experienced, adaptable western agriculturists who can take the rough with the smooth and thrive in the Ukrainian environment while pushing through the change process on the ground required to achieve success.

If you are technically capable, adventurous, adaptable and culturally sensitive with the ability to tolerate excessive hospitality while staying the right side of a table, then Ukraine could be for you.

At times Ukraine is difficult, exasperating, frustrating and sometimes slightly dangerous but where else would you get the chance to plant more crop in one season than you might spend a lifetime growing at home?

Plus you get to dine out on all your jaw dropping stories.

Ukraine in conflict but still full of agricultural opportunities

Ukraine has been top of the news for months with stories of revolutions, invasions and war so it might not rank high on your list of place to visit let alone to work or invest in, but perhaps it should.

The country is essentially one big arable block with good soils, large rolling fields and a continental climate with access to markets in Europe, Russia (currently restricted), through the Black Sea to the Mediterranean, North Africa and beyond.

Slightly smaller than France or Texas, Ukraine is nearly all flat and accounts for about 12% of the European arable land area.

The winters are cold and dry with plenty of snow to protect overwintering crops; summers are long and hot leading to an intensive growing season.

Ukraine grows the main crops of wheat, barley, oilseed rape, sunflowers, soya and maize plus less traded rye, oats, linseed, flax, potatoes, sugar beet, buckwheat, millet and even rice along with a typical range of fruits and vegetables.

Milk and dairy products are produced although cattle numbers have fallen from eight million in the mid-nineties to less than three million today and nearly 80% of the national herd consists of individual house cows which are not being replaced.

Pig and poultry is developing with some big producers cornering markets for meat and eggs and while mutton is available, lamb is not on the menu so virtually none is produced.

The current government is getting cosy with the EU and all sorts of positive noises are coming out of Kyiv and Brussels that bode well for the farming future in Ukraine.

Is this the right time to make a move?

Ukraine’s corn agricultural policy

Ukraine's previous president, Yanukovych was inaugurated in February 2010 and what passed as an agricultural policy was put in to place.

A big part of that policy was corn.

Corn was considered the strategic crop to grow.

It works well in Ukraine’s climate and soils and increasing global demand meant it could be exported in large quantities to generate foreign currency which was desperately needed by a state running out of cash (although as it turned out not all that cash was destined for state use).

To encourage growers to plant more corn legislation was put in to place to limit the crops farmers could grow in their rotation.

More stick than carrot policy.

Particular emphasis was placed on restricting the expansion of sunflowers which was becoming popular because it had done well in previous dry years, was easy to grow, profitable and you could follow it with winter wheat, something you couldn't do with corn.

I was told directly and with no allusion to grow corn and do not grow more sunflowers otherwise there would be consequences.

Naturally I ignored this and stuck to the planned crop rotation as that is the right way to run a business and in reality legal consequences were limited and other consequences, well that kind of goes with the terrain.

Corn is a great crop to grow as long as it’s not a wet harvest when drying eats in to the margin or an early winter making it difficult to gather or fertiliser prices are not too high as it needs feeding to get yield or you don’t need to transport it too far as it’s a bulky crop or it’s not a drought year as its shallow rooting or you don’t want to follow it with an autumn planted crop or, well you get the picture.

The question now is what is the future for corn in Ukraine?

Will the new government continue to squeeze farmers for cash and follow the previous policy of corn at all costs; or will they implement a more enlightened approach and encourage a business environment that allows individuals to make the right decisions for them based on market forces and technical developments?

More carrot and less stick please.

Ukraine's common agricultural policy?

Ukraine has a new President after the previous one raided the country’s finances and ran away.

It also has a new Minister of Agriculture who presumably is in the process of determining the new agricultural policy.

The Ukrainian agricultural policy has never been that clear to me - to be fair which country’s is - but it seemed to consist of centralizing power in Kyiv, recreating (did it ever really go away) a command led system with the local administration barking commands, directives, orders and threats at farmers.

As an example, for the last three or four years I have frequently and consistently been ordered to start milking cows as this is what the Ministry of Agricultural has decided must be done therefore I must implement it immediately if I didn't want problems with my current business.

To be fair again, the domestic dairy herd has been in free fall from around eight million cows in the mid-nineties to less than three million today and most of what’s left appear to be house cows.

So an agricultural policy to encourage investing in dairy herds to increase productivity and efficiency of the national herd would appear to make sense.

It would take advantage of the increasing consumption and demand for dairy products in Ukraine and elsewhere; it would reduce the need for imports and create export opportunities; it would create jobs (particularly in the rural areas) and livestock always compliment crop based farming systems.

All in all its probably not a bad idea.

But by creating an almost untenable business environment and doing nothing to control corruption then commanding foreign investment projects start milking cows immediately and demanding to see business plans, that was never really going to work.

The problem with command led systems is those at the top start to believe that only they have the knowledge and the wisdom to see the big picture and they then patronize and expect those beneath them to respond accordingly.

This might have worked in former times (it never really did) but in today’s developing economic structure demanding to see the business plan for a new 1000 cow dairy unit from a private and often foreign investor is just not going to work now is it.

Let’s hope the new Ministers of Agriculture and the new administration recognize the importance of agriculture and what it has to offer in enabling Ukraine to get on its feet economically and support and help farmers accordingly.

I sincerely hope it’s not just a case of “meet the new boss, same as the old boss.”

Latest USDA weather update

Volume 101, no. 24, full report here.

Widespread showers and thunderstorms improved yield prospects for wheat and summer crops across much of the region.

A slow-moving area of low pressure and its attendant cold front generated periods of moderate to heavy rainfall (5-40mm, locally more per satellite data) from central Ukraine into southern and western Russia.

In addition, the storm brought an end to the recent spell of heat, with highs in the lower 30s (degrees C) replaced by readings in the lower 20s by week’s end.

The wet, cooler weather improved the already-favorable outlook for winter wheat and eased heat and dryness concerns for spring wheat.

In addition, key corn and sunflower areas in southern Russia and eastern and central Ukraine benefited from the recent wet, cooler weather.

Localized moisture shortages lingered, however, in eastern portions of the Volga District, where more rain will be needed as vegetative spring wheat advances toward reproductive stages of development.

Latest USDA weather update

Volume 101, No. 23, full report here.

Showers eased heat impacts in central and southern Russia, while locally heavy downpours continued in western crop districts.

Increasingly hot weather developed from eastern Ukraine into southern and central Russia, with daytime highs reaching the middle 30s (degrees C).

However, showers and thunderstorms (10-25 mm, locally more), particularly in key wheat areas of southern Russia and eastern Ukraine, helped mitigate potential yield losses as crops progressed through the flowering and filling stages of development.

Farther north, however, dry and hot conditions likely caused some stress to reproductive to filling winter crops (eh?) across southern portions of the Central and Volga Districts and adjacent portions of the Southern District. 

Meanwhile, additional moderate to heavy showers and thunderstorms (10-60 mm) from central and western Ukraine into Belarus and northwestern Russia further increased soil moisture for corn and small grains but hampered fieldwork, including late summer crop planting.

Blogs of war...and farming

Unfortunately the news out of Ukraine isn't getting much better.

Heavy fighting continues in the East with government jets shooting rebel targets and the inevitable civilian casualties and retaliation such as this weekends shooting down of a military transport plane killing all 49 on board.

Despite many politicians avoiding the term it is for all intents and purposes a war which is steadily piling up body bags with military personnel and civilians alike.

At the end of May, 48 year old business man Petro Poroshenko was voted in as the new president in a landslide result that suggested that large parts of the population was united in wishing for stability and a return to some sort of normality.

In his inauguration speech he has promised to forge closer links with the EU and restore peace in restive eastern regions. 

But that was before the shooting down of the military plane.

Along with the war he has several other pressing matters including Russia’s annexation of Crimea, the impressively large gas bill to Russia (Russia has just switched off the gas supply to Ukraine) and the not insignificant task of building a functioning country.

However behind the bad news headlines there is a steady drip of governmental press releases which generally and genuinely appear to be sensible and targeted at reducing corruption and creating a more conducive business environment.

Despite all the bad news I still get a steady drip of inquires from investment groups who recognise that the current situation will pass and that the farming business is economically viable and is a sustainable proposition.

Perhaps even more so now, with a dynamic forward looking administration.

On the farming front harvest 2014 is underway in southern Ukraine with early reports of winter barley coming in at 2.6mt/ha and wheat at 1.0mt/ha. 

Before you say “how much?” it is important to keep in mind that although Ukraine crop yields are low when compared to western Europe, a combination of low rent, labour, tax and fuel costs mean the cost of production can be much lower. 

Also crops in the south are lower yielding and yields will increase as harvest moves north over the coming months.

I have yet to see any reports from Crimea as to how the harvest is progressing there other than a recent announcement by the Ministry of Agriculture saying they only had 6% of the fuel needed to run the combines.

Spring planting of maize (corn), sunflowers and soya is all but finished with soil and weather conditions favourable to a good start and over wintered cereals and oilseed rape looking the best they have done for several years.

On a personal note I am travelling through Russia investigating the possibility of setting up an office and taking the opportunity to crop tour.

So far what I have seen is good with similar conditions to western Ukraine although my contacts tell me it’s dry as a dustbowl further east and crops have been suffering.

The downside with travelling further east is you are further away from Brazil and have to stay up even later to watch the World Cup, 4am in the case of the England Italy game.