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.

Latest USDA weather update

Volume 101, No. 19, full report available here.

Unsettled albeit cooler conditions continued over much of the region, though warm weather lingered in southern- and eastern-most crop districts.

A stationary frontal boundary draped across the region separated chilly conditions (up to 3°C below normal) over northern and western growing areas from above-normal temperatures in southern and eastern wheat districts.

While the cold conditions over Belarus, northern Ukraine, and Russia’s Southern District slowed winter crop development, nighttime lows (-3 to 0°C) were above the threshold for crop damage.

A storm system tracked northward along the front, producing widespread showers (5-35 mm) across most major growing areas.

The rainfall was beneficial for vegetative winter crops — particularly in central and eastern Ukraine — but continued to temper the previously rapid planting pace of spring wheat and summer crops.

South and east of the front, above-normal temperatures (up to 3°C above normal) accelerated winter and spring grain development in southern Russia as well as southeastern portions of the Volga District.

Fishing games

Today and tomorrow are holidays in Ukraine and probably Monday too if I looked it up.

As a consequence my neighbours have invited me to go drinking fishing and I am tempted even with a 4am start.

Which reminds me of the story I was told by an agronomist pal when, back in the day he was invited to go drinking fishing with his pal who just happened to work for the secret service.

When the fishing wasn't up to much and the vodka was starting to take effect his KGB mate opened his bag to reveal a hand grenade, presumably standard issue at the time.

As we all know great ideas are often borne under the influence and this was one of those days, "let's lob the grenade into the river then we could just scoop up the fish when they all float to the surface?"

What could possibly go wrong?

Hand grenade lobbed, big explosion, then the river bank they were standing on started to give way and slide in to the water taking them, their fishing kit and their Lada in to the water.

How they laughed...I guess.

Brief update from the FSU

Belarus has officially completed planting maize with 231kha in the ground, declared the Ministry of Agriculture and Food of Belarus.

They also went on to say that 33kha (32% of the plan) of spring rapeseed has been planted.

My contacts in Russia are telling me all crops are looking very good there and planting is well on schedule although April has been dry in parts and they could do with some rain now please.

I hesitate to mention buckwheat, a staple food item in these parts, because when I mentioned it last time for some inexplicable reason the hits on my blog went through the roof and I was inundated with emails but here goes. 

During the first 8 months of 13/14 MY Russia exported a record 27kmt of buckwheat compared to 8kmt the previous year and 2.5kmt the year before that.  Ukraine is the main export market with 14kmt delivered so far this MY.  I guess Ukraine will be looking to up its buckwheat planting for this year because I assume that source will no longer be available.

Ukraine’s Ministry of Ag is preparing an Agrarian Code of Ukraine to come in to force by 2015 and will annul competing laws.  Let’s hope they don’t turn to their new pals in Brussels for advice on putting together a common agricultural policy because we all know how well that works.

Further developments from Ukraine’s mad busy Ministry of Ag is to decentralize agricultural control suggesting they will cancel excessive controls and delegate responsibility to the regions.  That could be a double edged sword depending who is in charge of the regions.

At the same time the Government has announced they will reduce the number of taxes in the new version of the Tax Code to 8 in attempt to simplify the tax procedure and reduce the possibility for tax evasion.

On the face of it all these changes to legislation and business practice seem sensible and will make the business environment easier for investors which is what Ukraine desperately needs.

Farming in Ukraine continues despite the threat of war

Here is a copy of my latest blog for informative and useful Farmers Review website.

While a full on war hasn't quite broken out the situation in eastern Ukraine continues to teeter on the brink of something tense but no one seems quite sure what.

Various official buildings and offices are being taken over by pro-Russian, pro-separatist groups who rally around a single issue agenda of self-rule and have a general distrust of the interim Government in Kiev.

Shots have been fired with several deaths reported, journalists have been kidnapped, so too have international military observers (whatever they are), some bodies have turned up with signs of torture and pro-Ukraine and pro-Russia groups are clashing on the streets with bloody results.

Recently the mayor of Kharkiv was shot and is now in critical condition in what appeared to be an assassination attempt aimed at  the situation further.

Russia is widely thought to be behind the separatists or at least the former disgraced Ukrainian President in exile in Russia where he ran to with $32 billion which he is now using to fund the separatists but as yet no one has been able to produce conclusive proof that Russia is directly involved.

I’m sure they are but only in the same way the US is directly involved supporting the other side.

That’s the problem with geo-politics, you never have the full picture and it’s very easy to run to simplistic conclusions about who are the goodies and who are the baddies.

On a positive note events haven’t yet spiraled out of control and I assume the longer it goes on the less likely it is for the situation to break down completely.

 

But then again I’m a farmer not a strategic analyst so don’t blame me if I get it wrong.

On a further positive note there has been a series of rapid fire announcements coming from the Ministry of Agriculture in Kiev all seemingly sensible and geared towards making business easier, more transparent and aimed at encouraging investment in to the sector.

Some of the initiatives include EU trade preferences for Ukrainian exporters; the introduction of minimum term on agricultural land leases; deregulation of the market for pesticides; cancelled grain and granary certification; develop organic production and exports; National Bank provided lending support and a simplified procedure of agricultural land allocation.

I get the impression that the new Government, which boasts the highest ever share of top and mid-level government officials with western degrees and international business experience are actually trying to do something sensible and effective.

Recent rain in central and western regions helped the over-wintered crops and newly planted spring crops and they are looking very good at the moment.  Crops further east are starting to show signs of stress from a lack of water.

Winter wheat is around GS30-32 (pseudo stem erect, 2^nd node detectable) and winter oilseed rape is at early to mid-flower.

The season is about twenty days earlier than last year which will have the effect of increasing the yield potential for all crops assuming the season ahead is conducive to growing.  However any yield potential will be restricted by a lack of finance, inflation, exchange rate fluctuations and general uncertainty which will discourage a high level of investment in to this year’s crop, particularly fertiliser.

Gas prices going up (Russia supplies Ukraine with gas) will make grain drying expensive so I anticipate a drop in maize planting to be replaced with sunflower or even fallow.  We are about half way through sunflower planting and about a third of the maize crop is now in the ground.

Crop prices have moved upwards on the back of the continued uncertainty in Ukraine and cold weather in the US which is good news if you still have crop to sell.

The farming clock keeps turning regardless of what Putin, Obama and the rest get up to.

Latest USDA weather update

Volume 101, No. 17, full report available here.

Warm, wet weather in western portions of the region contrasted with mostly sunny skies in the east. 

Moisture associated with a slow-moving storm system over the Black Sea produced showers and thunderstorms (2-25 mm) across Ukraine, Belarus, and southern Russia, with a heavier band of rain (25-70 mm) embedded over central and northwestern Ukraine.

The rainfall improved soil moisture for vegetative winter wheat and conditioned fields for planting of small grains, corn, and sunflowers.

Dry weather across central Russia maintained a rapid pace of fieldwork, including planting of spring grains and summer crops.

A warm southerly flow persisted, allowing daytime highs to push into the lower and middle 20s (degrees C) across much of the region. 

However, colder weather arrived at week’s end, with readings in northern portions of the Southern District reaching -5°C, possibly causing some localized burnback of more advanced winter wheat. 

Amid tension in Ukraine, positive change sought for farmers

Here is a copy of an article I'm quoted in posted by the editor of Grainews Lisa Guenther.

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.

Lisa Guenther is a field editor for Grainews at Livelong, Sask.  Follow her at @LtoG on Twitter.

Mike Lee blogs about farming in Ukraine; you can also follow him on Twitter at@AgronomyUkraine

Ukraine crop update

Winter oilseed rape starting to flower as nitrogen, sunshine and warmer weather have taken effect.

There has been a no significant winter kill so almost all plants have survived giving some pretty decent if not slightly thick plant stands.

Recent cool temperatures slowed growth down a little which might not be a bad thing but caused no damage.

Although it is a long way to go before harvest the crop at this stage looks very good.

Winter wheat is in good condition and now at GS30-31 (pseudo stem erect, 1^st node detectable) which is what I think they call jointing in the US.

Call me fussy but I do like the simplicity and accuracy of the decimal code growth stage system, makes perfect sense to me.

While I’m at it all decimal makes sense; kilograms or litres per hectare are easily divisible, how on earth do you calculate half rate of 3 pints per acre then decide how much to put in the tank?

And what is a bushel all about?

Soil temperatures are now warm enough for sunflower planting to be well underway with corn and soya getting started further south.

Wishing you and Ukraine a peaceful Easter.

Crop monitoring in Europe

MARS Bulletin Vol. 22 No. 4 (2014), you can find this and previous reports here.

If you’re not familiar with the Monitoring of Agriculture with Remote Sensing (MARS) project, it started in 1988 and was designed to use space technologies to provide independent, timely information on crop areas and yields.

It is a brilliant EU project but I can’t help thinking it would be added to if you had confirmation reports from boots on the ground agronomists.  

Like, for example, me.

The summary is that well-advanced winter crops would now welcome rain.  Winter crops are strongly advanced from western to eastern Europe, positive biomass accumulation in the Mediterranean countries with unfavourable canopy development in eastern Ukraine and central Turkey.

Here’s what the latest MARS bulletin has to say about Ukraine.

The map displays the differences between the fraction of Absorbed Photosynthetically Active Radiation (fAPAR) observed during the period 21-31 March 2014 and the long-term average (LTA, 1998-2012) for the same period.  Essentially how developed the crop canopy is.

In Ukraine, persistent warm temperatures determined high crop growth rates during March.

In central regions (e.g. Poltavs’ka), increased crop demands for water are not met due to the large precipitation deficit built up over the past months.

Exceptionally dry conditions may affect crop growth.

After a mild and dry winter, March also remained milder than usual, and rainfall was sparse.

The exceptionally dry conditions in central Ukraine may affect yields of winter cereals.

Winter wheat yield forecasts are below the 5-year average.

Meteorological conditions in March followed the tendency observed during this winter.

Average temperatures remained milder than usual, from 3°C above average in eastern regions to 5°C in north-western regions.

Rainfall remained far below the average, and the six-month period October-March is one of the driest recorded in our database.

The driest conditions were observed in central regions (Cherkas’ka, Kirovohrads’ka, Mykolayivs’ka) which received 50% of the average cumulated rainfall from October to March, and 40% of the average cumulated rainfall since 1 March.

According to our model, winter crop development is 20 days in advance compared to an average year, which implies that leaf area and crop water demand are also unusually high for this time of the year.

Biomass accumulation of winter cereals will be negatively affected unless soil water levels are significantly replenished.

The emergence of spring crops may also be impacted by these exceptionally dry conditions.

Are we seeing the first real shoots of growth in Ukraine?

As Ukraine appears to teeter on the brink of civil war and uncertainty it’s worth noting that this month alone the following announcements and changes to agricultural related legislation and policy have been made.

  

I'm no expert and I have yet to study the detail but on the face of it they all seem positive, sensible and for the general good.

I get the impression there are lot of people working away in the background trying to effect real change for the nation; may be this is what the revolution was really all about.

• EU trade preferences for Ukrainian exporters come into force;
• Ukraine to introduce the minimum term on the agricultural land lease;
• Ukraine: Ministry of Agrarian Policy to deregulate the market of plant protecting agents;
• Ukraine canceled grain and granary certification;
• Ukraine to develop organic commodities production and exports to the EU;
• Ukraine: National Bank provided a new way for lending support;
• Ukraine: position of the Deputy Prime-Minister of the agrarian complex to be renewed;
• Ukraine simplified the procedure of agricultural land allocation.

Source: APK-Inform.

Latest USDA weather update

Volume 101, No. 15, full report available here.

Early-week cold gave way to more seasonable temperatures, while unfavorable dryness persisted in parts of Ukraine.

Temperatures during the beginning of the period dropped as low as -8°C across central and eastern Ukraine and -5°C in Russia’s Southern and North Caucasus Districts.  

Winter wheat in the coldest areas was likely in the tillering to early jointing stages (G.S. 30-31) of development, and consequently could withstand temperatures as low as -9°C.  However, more advanced winter grains in Ukraine may have been susceptible to burnback in the coldest locales.  By week’s end, temperatures rebounded into the teens and lower 20s (°C), mitigating any further freeze threat.  

More importantly, the first significant rain of the spring (locally up to 25 mm) arrived in Ukraine, providing much-needed soil moisture for vegetative winter crops and recently-planted small grains.  Despite the rain, longer term deficits persists, with north-central portions of Ukraine - a key corn area - reporting less than 50 percent of normal precipitation over the past 90 days.  

In contrast, additional light to moderate rain and wet snow (2-20 mm liquid equivalent) in Russia, Belarus, and Moldova maintained adequate soil moisture for winter wheat development and upcoming summer crop planting.

Ukraine farmers finish spring planting

Here's a copy of my article in this weeks Farmers Weekly Interactive written by Phil Case.

Spring drilling has got off to a flying start in Ukraine amid a growing sense of optimism for the future, says expatriate agronomist Mike Lee.

Following an unusually mild late winter, drilling started mid-March – up to a month earlier than in previous years.

All the spring peas, barley, wheat and oats are pretty much planted across the country, which remains under threat of invasion from Vladimir Putin’s Russia, according to reports in the Western press.

Now farmers are starting to plant the main spring crops of sunflowers, maize and soya, says Mr Lee.

“The spring planting season is very early this year. We have had a mild season and we are three to four weeks ahead of previous years,” he explains.

This season, spring plantings in Ukraine are forecast to be 9-10% down on last year.

A lack of cash, increased credit costs and the threat of war hanging over the country means most growers are adopting a cautious approach.

“Last year, commodity prices dropped significantly. Many people were growing maize as a way of trying to be profitable,” says Mr Lee.

“But that hasn't worked. People are short of cash. On top of that, the heightened war risk is making credit expensive.”

Diesel and fertiliser are the two big costs, but farmers are also trying to cut their wage and chemical bills.

Spring seed and chemicals are available to buy, but companies are typically charging 20-30% for farmers to buy products on credit.

As a result, farmers are trying to cut costs by buying generic chemicals and local seed.

Inputs costs are broadly similar to those of the UK and western Europe, but rented land is a lot cheaper, at £35-40/ha. However, prices are generally 20-30% lower than world market prices, because crops are mostly exported.

Owing to the dry field conditions, farmers who have previously deep cultivated will be reaping the benefits as roots grow deeper into moisture, says Mr Lee.

About half of the cropping in Ukraine is row cropping. And farmers generally use big drills, such as the Horsch Pronto, to drill cereals and Gaspardo precision drills for sunflowers and maize to cover the ground.

“They need to go for scale. If you look at the agricultural system in western Europe, it is small scale but very intensive farms,” he says.  “North America and Australia have big farms, but they are low-intensive. In Ukraine, you have the potential for intensive, large-scale farms, which is unprecedented.”

Ukraine has about 20 “super-large” farms of 100,000-500,000ha.

It is not uncommon to have a farming workforce of up to 40 people, alternating on shifts 24 hours a day. 

“The wheels need to be turning all the time,” says Mr Lee.  “For example, crop spraying will start this month and run through to November.  They are pretty much non-stop.”

So, what does Mr Lee think the future will hold for Ukraine?

“It’s not a straightforward situation. We still don’t know what will happen,” he admits.  “The geopolitical situation escalated. You have got Russia versus the West, and Ukraine as a pawn in the middle.  “Ukraine is being used as a catalyst for the re-emergence of Cold War sensitivities. Beneath that, you have a new interim government and elections on 25 May.

“Ukraine has a lot of issues – massive debts, corruption, and credit is very expensive.

“But there is this real sense of a possibility to improve life here.  The country has a real opportunity to develop and turn into what it should be.

“Can it do that without the influence of the West and Russia, which is trying to use the country to enact its influence?”

Russia has reportedly amassed roughly 40,000 troops near the federation’s border with eastern Ukraine.

But while the world waits to see if the massed Russian troops will invade, Mr Lee says the farming must go on in the country.

“We are out planting. From a farming perspective, we cannot wait until [Putin] decides what he’s going to do,” he adds.

“The planting season starts regardless of politics. The cycle continues.”

Mike Lee is a freelance consultant based in Ukraine. He updates his blog Agronomy-Ukraine and Twitter account @AgronomyUkraine with regular updates on farming and life in Ukraine.

Why the dry weather might not be all bad for Ukraine winter crops

Some rain happening now in western Ukraine, moving eastwards throughout the rest of the week.

This will stimulate germination and establishment of recently planted spring cereals and peas and  bring some relief to over wintered wheat and rape crops.

The dry winter and spring thus far might not necessarily be as bad for over wintered crops as it initially seems.

In dry conditions plant roots tend to go deeper looking for water and warmer than average (and warmer than last year soil temperature - see graph in the adjacent column) will have stimulated root development earlier in the season.

This will have allowed for a greater mass and length of root to develop, as can be seen on this chart.  The upshot of this is that if soil structure and everything else allows, there will be more roots deeper in to the soil profile which will be able to absorb water for longer as it drains past.

So the moral is to fix your soil structure so roots can develop to depth, it’ll pay dividends in a dry season.

Latest USDA weather update

Volume 101, No. 14, full report available here.

Sharply colder weather settled over the region, while unfavorable dryness persisted in parts of Ukraine.

A strong early-week cold front was followed by temperatures up to 5°C below normal, with nighttime readings dropping as low as -7°C across central and eastern Ukraine as well as portions of Russia’s Southern and North Caucasus Districts.

Winter wheat in the coldest areas was likely in the tillering to early jointing stages of development, and consequently could withstand temperatures as low as -9°C.

However, more advanced winter grains - particularly in Ukraine - may have reached the mid- to late-jointing stages, and therefore be susceptible to freeze damage from readings of -4°C or lower. In addition, Ukraine producers are in need of moisture due to a drier-than-normal winter and early spring, with rainfall during the past week (5 mm or less) doing little to improve winter crop prospects.

Short-term dryness also reduced moisture reserves for small grains in Belarus and Moldova.

In contrast, widespread rain and wet snow (5-25 mm liquid equivalent) maintained adequate soil moisture in Russia.

USDA latest weather update for western FSU

Volume 101, No. 13, Weather April 1, 2014, full report here.

Unseasonably warm, dry conditions were followed by sharply colder weather by week’s end.  

A strong area of high pressure maintained unusually warm weather over the region; temperatures averaged up to 10°C above normal in Belarus, 7°C above normal in Ukraine, and 8°C above normal in western Russia.  

Daytime highs topped 20°C from central Belarus southeastward into Ukraine and southern portions of Russia’s Southern District, which continued to foster a faster-than-normal pace of winter crop development.

However, the sunny skies and unseasonable warmth also increased water demands and further reduced soil moisture for winter wheat and rapeseed, especially in central and northern Ukraine.  

By week’s end, a strong cold front was accompanied by light to moderate showers (2-13 mm) across southern portions of Ukraine and Russia. 

Behind the front, temperatures dropped as low as -4°C in the more advanced southern growing areas, though wheat had not yet reached the temperature-sensitive jointing stages of development.  

Therefore, little - if any - widespread impact is expected from this week’s freeze. 

The end of the beginning or the beginning of the end for Ukraine?

Over the course of a couple of weeks Ukraine went from having a functioning if not deeply corrupt administration to the government ordering the devastating use of live ammunition in Kiev to the President fleeing the country and a new interim government issuing a warrant for his arrest.

Russia thought this was a good time to invade Crimea and through a hastily organised referendum held at the barrel of a gun annexed the peninsular before anyone could figure out what was going on.

The US and EU then issued sanctions targeted at specific Russian individuals and their assets and Russia responded in kind.

Russian troops have massed on the border in preparation to invade further in to mainland Ukrainian sovereign territory.

Tomorrow the former President of Ukraine will give a press conference in Rostov-on-Don, Russia, to complain about how ethnic Russians in Ukraine are under attack from fascists thereby giving Putin the legal framework to order the invasion of mainland Ukraine.

The International Monetary Fund announced today they would draw up a deal for assistance worth $14-18bn to Ukraine over the next two years but only if they remove the subsidy on gas which will not go down well with voters.

On the ground the police are starting to become visible once again, but there are checkpoints manned by the police or military or more worryingly armed guys dressed in black with no insignia and tank movements in the east are making a mess of the already pretty poor roads.

Not much has changed for us on a practical level, shops still open with plenty of food, kids still go to the play park, sun keeps shining but I can’t help feeling that our time in Ukraine is going to be over at least for some time.

In my opinion if the new interim government can follow through the massive task it has set itself of ridding Ukraine of institutional corruption and if Russia will leave Ukraine alone then Ukraine might just might start punching on the global economy somewhere near its true potential.  That is a couple of big ifs.

Spring planting is underway with 1.5 million hectares of spring barley and 100,000 ha of spring wheat in the ground.  Sunflower planting in the south of the country has just started with 47,000 ha of the predicted 4.7 million hectares sown and 63,000 ha of an estimated 370,000 ha sugar beet.

Nitrogen fertiliser has started to go on to the overwintered crops but the question is how much?

A 20% drop in commodity prices just before 2013 harvest means many businesses are short of working capital.  The political unrest has made credit for seeds, chemicals and fuel harder to secure and when you do it is more expensive.  Fluctuations in the exchange rate have in effect increased the cost of inputs by 30%.  There is precious little inward investment as everyone is waiting to see how the situation plays out before risking funds in country.

All in all there’s not much cash to go farming with so I am expecting plantings to be down this year and what is planted receiving less fertiliser with a corresponding drop in yield.

To give some light at the end of the tunnel prices might go up by harvest but the access routes to export markets might just end up being under the control of Russia.

Sometimes its darkest just before dawn or just before it goes pitch black, let’s hope it’s the former.