Washington, July 10 (RFE/RL) -- A U.S. Agriculture
Department economist says Ukraine's official forecast of a record low
grain crop this year is unduly pessimistic and may be used in Kjiv to
argue for avoiding needed reforms in agriculture.
Britta Bjornlund, with the department's Economic Research
Service, says the Ukrainian forecast of a 28 million ton grain
harvest this year is "significantly lower" than the U.S. forecast of
around 34 million tons.
She told our correspondent that while a dry spring has reduced
the expected harvest in Ukraine -- the U.S. lowered its forecast from
39 million tons to 34 million tons -- the situation is not all that
bad. After all, she says, forecasting the harvest to be the lowest
ever could be "advantageous" to those who want to increase support
She says it allows those opposed to reforms to say: "look, our
yields have really gone down, our production is down, we need to help
our farmers, we need to increase subsidies, we need price supports,
we need export controls," says Bjornlund.
What Ukraine really needs is to quit stalling and start pushing
ahead on market reforms throughout the agricultural sector, she says.
Bjornlund and two other agricultural department experts, David
Sedick and Mary Lisa Madell, have just completed a study of
agricultural reforms in Ukraine. It says that Ukraine could be a
major food supplier for the entire region, but is bogged down by the
slow pace of institutional reform.
The study says that reforms in the agricultural sector in Ukraine
have gone by fits and starts, leaving the entire industry caught
between partially freed prices for inputs and continued government
controls on crop sales; between a partial start on land reform and
the unchanged collective farms.
It says that many of Kjiv's agricultural policies, "by limiting
the exposure of the farm to market forces, actually impede needed
improvements in farm management."
It says that despite some sweeping changes in livestock
production, the "institutions of Ukrainian agriculture have remain
relatively unaltered." The study says land reform and the creation of
financially viable farms have "progressed slowly." For example, it
says, while nearly all of the former collective farms in Ukraine have
completed the formal change to private ownership, in fact most
continue to be worked collectively and "neither the management team
nor the management approach has changed for the majority."
Prices for grain remain set by the state, which continues to
"control the profit and trade margins for wheat, flour and bread
The study says it was to be expected that crop yields would go
down in the early days of reform because price liberalization would
force farmers to use fertilizers and other inputs in a more
economical manner. However, as is now happening in Russia, once
market prices become reality, production should begin to resume.
"Although its independence in 1991 initially resulted in a
decline in trade," says the study, "Ukraine has potential for
expanding agricultural exports within the region."
Sedik (pronounced SEE-dick) says Ukraine has been exporting one
to two million tons of grain to former soviet neighbors annually in
recent years, and that won't change much this year either. "Even with
this lower forecast," he told our correspondent, "we don't think
Ukraine will be importing grain -- if anything, they'll be exporting
one million tons, more or less, just like last year."
Bjornlund and Sedik agree that Ukraine's lowered grain crop this
year is due "mainly" to poor weather -- hot, dry conditions in May
and June when the wheat kernals were forming. However, they say,
American experts have re-checked Ukraine's main grain growing areas
and believe their forecast of 34 million tons this year -- a little
below last year's 36.5 million ton crop -- is the better prediction.
Sedik says the lack of reforms in Ukraine will, long term, hold
down harvests. He points to the fact that world wheat stocks are low
right now, so world price are at very high levels. This encourages
farmers elsewhere, including Russia, to plant more wheat. But because
Ukrainian farmers still are not connected to the markets, they "don't
have the incentive to increase the area of wheat" they plant.