Wednesday 19 November 2014

Peas, beans and eggs in the Ukraine basket

Ukraine used to grow an assortment of legumes for human and animal feed but over the last decade the production of peas decreased by 40%.

Having looked at the economics of pea production it is easy to understand why; they made little money, are shallow rooted and a riskier crop to grow but there is no reason why productivity couldn't be improved.

Soybeans have replaced peas as a feed ingredient in recent years and are now produced in sufficient quantities to supply the domestic and export markets (just don’t be surprised if they turn out to be GM despite the law against growing GM crops in Ukraine).

The big problem with the current cropping balance in Ukraine is it relies heavily on a limited number of commodity crops - cereals, corn, sunflower, soyabeans - and while it’s OK to keep all your eggs in one basket you need to make sure you keep tight hold of that basket.

Growing commodity crops means you are completely reliant on the world market and as we saw in H13 the price can drop across all crops to below the cost of production.

Therefore it would be a wise agricultural policy that encourages and supports more crops in the mix rather than less which in addition to the environmental, operational and social benefits provides some buffer to the volatility of world markets.

Where I have seen peas and beans succeed in Ukraine is when they are grown on contract for a local animal feed mill or they are grown at a high quality to be sold locally for human consumption.

With the inevitable expansion of livestock sector domestic legumes would provide a valuable and economically viable source of proteins for emerging feed producers.

Adding value should lift the domestic price making them a more viable option than they seem to be at the moment.

Government policy should continue to support this.