Ukraine likely to boost farm subsidies

Ukraine's new government will prove more "subsidy-oriented" towards agriculture than its predecessor, boosting prospects for farm operators who are already enjoying firmer crops prices, farming group Landkom's chief executive said.

While the administration put in place since Viktor Yanukovych won presidential elections in February is limited this year by Ukraine's weak finances, it is likely in next year's budget introduce measures to support agriculture, to tackle waning self sufficiency in food, Vitaliy Skotsyk said.

The country imported 440,000 tonnes of fish and 450,000 tonnes of meat last year, both records, besides its growing reliance on foreign sugar at a time of elevated prices.

"That introduces restrictions," Skotsyk said, flagging problems in reviving some subsidy plans, such as the UAH80-per-hectare payout for growing winter wheat. The government is also considering plans for a 3,000 hrynia-per-head handout to cattle breeders, paid on top of the sale price.

One likely route looked to be help to farmers in repaying loans from commercial banks which, at interest rates of 24-30%, were deterring investment in agriculture.

Enhanced state support would represent a further fillip to farming businesses enjoying crop prices boosted both by some recovery in international markets and a weaker hryvnia, which has boosted prospects for Ukrainian exporters.

"Those companies which survived and who managed to plant crops will have much better prices for their crops than the year before," Skotsyk said.

Landkom itself had restructured itself to become eligible for government subsidies, which it had been unable to receive in its initial guise, with separate farming and land-holding arms.