January 12, 2011

 

Ukrainian cash shortage may hamper grains rebound

 

 

Despite elevated crop prices, cash scarcity may prove the biggest obstacle to a sharp rebound in Ukraine's grains harvest, restraining farmers' use of much-needed fertilizers and pesticides.

 

The Black Sea agricultural powerhouse looks on course to lift wheat production by 22% to 21 million tonnes this year after plentiful, if late, rains recharged soil moisture levels sapped by the summer's drought, improving autumn sowing conditions, UkrAgroConsult said.

 

However, "abnormally" warm November temperatures which favoured crop development also boosted pest populations and prompted "large-scale emergence of wintering weeds", the influential analysis group said.

 

Besides a widespread need for pesticides this spring, farmers will also need to up fertiliser rates too, after autumn-sown crops were poorly provided with nutrients.

 

"All autumn-planted crops acutely need spring nitrogen fertilization," UkrAgroConsult said.

 

The demand for farm inputs comes at a time when farmers face higher prices for them, while being denied subsidy support from the government for growing grain.

 

Some producers have also complained that the country's export quotas, imposed after last year's slip in grain output, has denied them the full benefit of soaring global prices.

 

"A deficit of working capital may seriously hamper growing operations in spring and summer," UkrAgroConsult said.

 

It was also mentioned that hiked prices for fuels, fertilisers, pesticides, and other inputs will prevent many farms from timely and qualitative performance of necessary growing practices, and that this will substantially reduce the grain yield potential of both winter and spring crops.

 

UkrAgroConsult also flagged a downside to the country's damp autumn, saying that the predominantly cloudy, rainy weather poorly favoured hardening of winter crops.

 

Nonetheless, the group's estimates for Ukraine's grain crops indicated a recovery in production this year to well above average levels, let alone 2010's drought-weakened output.

 

The prevailingly good and satisfactory condition of grain seedlings around early December suggests that their wintering will be normal and spring reseeding will be comparatively little, UKAgroConsult said.

 

On entering winter dormancy, 93% of crops were in "good" or "satisfactory" condition, compared with 89% a year ago.