Saturday, March 9, 2013

Agriculture of Ukraine

Agricultural Sector's Bountiful Harvest: A Boon for Ukraine

Ukraine’s rich, black soil is one of the country's greatest resources. It is becoming increasingly important to the rest of the world. The vast fields of wheat, barley, rye, oats, sunflower, rapeseeds and other grain and oil crops have long made Ukraine a “breadbasket.”

Ukraine:  Agricultural Overview

Ukraine agriculture has been evolving since it achieved independence in 1991, following the breakup of the Soviet Union.  State and collective farms were officially dismantled in 2000.  Farm property was divided among the farm workers in the form of  land shares and most new shareholders leased their land back to newly-formed private agricultural associations.  The sudden loss of State agricultural subsidies had an enormous effect on every aspect of Ukrainian agriculture.  The contraction in livestock inventories that had begun in the late 1980's continued and intensified.  Fertilizer use fell by 85 percent over a ten-year period, and grain production by 50 percent.  Farms were forced to cope with fleets of aging, inefficient machinery because no funds were available for capital investment.  At the same time, however, the emergence from the Soviet-style command economy enabled farmers to make increasingly market-based decisions regarding crop selection and management, which contributed to increased efficiency in both the livestock and crop-production sectors.  Difficulty in obtaining credit, especially large, long-term loans, remains a significant problem for many farms.  

Agricultural Land Area and Major Crops

The climate of Ukraine is roughly similar to that of Kansas:  slightly drier and cooler during the summer and colder and wetter during the winter, but close enough for comparison.  The weather is suitable for both winter and spring crops.  Average annual precipitation in Ukraine is approximately 600 millimeters (24 inches), including roughly 350 millimeters during the growing season (April through October).  Amounts are typically higher in western and central Ukraine and lower in the south and east.  
Of Ukraine's total land area of 60 million hectares, roughly 42 million is classified as agricultural land, which includes cultivated land (grains, technical crops, forages, potatoes and vegetables, and fallow), gardens, orchards, vineyards, and permanent meadows and  pastures.  Winter wheat, spring barley, and corn are the country's main grain crops.  Sunflowers and sugar beets the main technical, or industrial, crops. Agricultural land use has shifted significantly since Ukraine declared independence from the Soviet Union in 1991.  Between 1991 and 2000, sown area dropped by about 5 percent, from 32.0 million hectares to 30.4 million, and area decreased for almost every category of crop except for technical crops (specifically sunflowers).  Forage-crop area plunged by nearly 40 percent, concurrent with a steep slide in livestock inventories and feed demand. 
Wheat is grown throughout the country, but central and south-central Ukraine are the key production zones.  About 95 percent of Ukraine wheat is winter wheat, planted in the fall and harvested during July and August of the following year.  On the average, approximately 15 percent of fall-planted crops fail to survive the winter.  The amount of winterkill varies widely from year to year, from 2 percent in 1990 to a staggering 65 percent in 2003, when a persistent ice crust smothered the crop. Wheat yield declined during the 1990's following the breakup of the Soviet Union and the loss of heavy State subsidies for agriculture.  Farms struggled with cash shortages, and the use of fertilizer and plant-protection chemicals plummeted.  Due to a combination of favorable weather and a modest but steady improvement in the financial condition of many farms, wheat production has rebounded in recent years (except for the disastrous 2003/04 crop which fell victim to unusually severe winter weather).  Ukraine produces chiefly hard red winter wheat (bread wheat), and in a typical year roughly 80 percent of domestic wheat output is considered milling quality, by Ukrainian standards.  Feed consumption of wheat dropped sharply during the 1990's, from over 12 million tons to less than 5 million.  Meanwhile, food consumption has remained steady at around 10 million tons. 
Barley has been the top feed grain in Ukraine for most of the past ten years in terms of consumption, surpassing wheat in the early 1990's.  Spring barley accounts for over 90 percent of barley area, and the main production region is eastern Ukraine. Spring barley is typically planted in April and harvested in August, and is the crop most frequently used for spring reseeding of damaged or destroyed winter-grain fields.  Area is inversely related, to some degree, to winter wheat area.  Winter barley is the least cold-tolerant of the winter grains, and production is limited to the extreme south. The increasing demand for malt from the brewing industry has led to a jump in malting barley production and the import of high-quality planting seed from the Czech Republic, Slovakia, Germany, and France.  Consumption of barley for malting purposes has surpassed 300,000 tons, but still accounts for only 5 percent of total  barley consumption.  
Increased production -- specifically, three bumper harvests since 2001 -- and diminishing domestic demand for feed grains have contributed to a jump in Ukrainian wheat and barley exports.  The boom in exports was fueled also by relatively low production costs and the reduction or elimination of price controls and export restrictions in 1994.  Most exports go to the Middle East, North Africa, and Europe. (See attaché reports: Grain and Feed Annual, April 2004, and How is Ukrainian Grain Competitive?, August 2002.)  
Corn is the third important feed grain in Ukraine.  Planted area has increased despite several impediments:  obsolete and inadequate harvesting equipment, high cost of production (specifically post-harvest drying expenses), and pilferage.  The main production region is eastern and southern Ukraine, although precipitation amounts in some oblasts in the extreme south are too low to support corn production.  Corn is typically planted in late April or early May.  Harvest begins in late September and is usually nearing completion by early November.  Only 25 to 50 percent of total corn area is harvested for grain; the rest is cut for silage, usually in August.  (The USDA corn estimates refer to corn for grain only.)  Corn is used chiefly for poultry and swine feed, and production and consumption have risen since 2000 concurrent with a rebound in poultry inventories.  Russia and Belarus are the chief destinations for Ukrainian corn exports.  
Sunflowerseed is Ukraine's chief oilseed crop.  Production is concentrated in the southern and eastern  oblasts.  Sunflowers are typically planted in April and harvested from mid-September to mid-October.  Because of a combination of high price, relatively low cost of production, and traditionally high demand, sunflowerseed has become one of the most consistently profitable crops.  (See Sunflowerseed Production in Russia and Ukraine, June 2004.)  Its high profitability fueled a significant expansion in planted area beginning in the late 1990's.  Many farmers in Ukraine abandoned the traditional crop-rotation practices recommended by agricultural officials which called for planting sunflowers no more than once every seven years in the same field.  The aim of the 1-in-7 rotation is to prevent soil-borne fungal diseases and reduce the depletion of soil moisture and fertility.  (Because of their deep rooting system, sunflowers reportedly extract higher amounts of water and nutrients from the soil than do other crops in the rotation.) 
Sugar beets are grown primarily in central and western Ukraine.  Beets are planted in late April and early May and harvested from mid-September through the end of October.  Production has been on the decline since the early 1990's due chiefly to low profitability compared to grains and sunflowerseed.  Between 1994 and 2003, planted area declined by 50 percent to less than 0.8 million hectares, and production from 28.1 to 13.4 million tons.  Large farms are sometimes encouraged by the local administrators to plant sugar beets not so much to make money but rather to provide a social safety net or to supplement to pensioners or farm workers.  A family may be responsible for weeding a specific section of a field and the workers in turn receive 20 percent of the sugar processed from the beets harvested from its section. Sugar also frequently serves as part of farm workers’ salaries.
On private household plots, meanwhile, sugar beet area has increased.  Sugar beet production requires a significant amount of hand labor and remains a viable option for small household farms with limited access to agricultural machinery.  Household plots now account for approximately 25 percent of Ukrainian sugar beet output compared to only 3 percent in 1995.  (See attache report:  Sugar Annual, April 2004.)