January 14, 2011

Ukraine quotas threaten grain production

Ukraine's head of a major farm operator has warned of a possible "collapse" in the country's grain production if it does not stop export quotas which could cost farmers up to US$1.3 billion.

Chief executive of Ukrzernoprom Agro, Eugene Leng, warned that a fall in sowings of winter crops would call for an even greater fall in spring plantings unless the government lifts the quotas which are denying farmers the full benefit of high world crop prices.

However, the quotas, which have been extended until the end of March, were a "major impediment" to farmers, who were also facing a dearth of subsidy support and, in with their finances deteriorating, growing difficulty in obtaining loans from banks.

"The absence of free grain exports is causing significant losses to farmers," Leng said, estimating the losses could reach UAH10 billion (US$1.3 billion).

"With no funds available for villages in the state budget, rural residents are dealt a heavy blow," he added.

He attributed a fall in winter sowings, estimated by UkrAgroConsult on Tuesday (Jan 11) at 3% for wheat and 24% for both barley and rapeseed, to "confusion" among farmers over their prospects.

"If quotas remain intact then there will be even greater reduction in spring wheat, barley and corn," Leng said, adding that they threatened a "collapse of grain production this season".