Despite long winter and hot summer, grain harvest this year may become record-breaking again. Thus, as of August 5, 9.9 million hectares of early grain crops and grain legume had been threshed and 30 million tons of grain had been harvested. Average crop yield index makes 30.3 dt/ha, which is 4.8 dt/ha more than in 2012. 

Wheat has been harvested from 6.3 million hectares with crop yield index of 34dt/ha, and grain yield of this crop has made 21.7 million tons. Moreover, grain yield of barley has made 7.13 million tons, of winter rape - 2.2 million tons, of rye - 514 thousand tons, of oats - 295 thousand tons.

Considering the figures, experts have already increased the forecast of national grain harvest for this year up to 51.1 million tons, against 46.2 millions tons in 2012. Thus, the country will beat the last year record of 56.7 million tons of crops. According to analysts of Ukrainian grain association, considering the expectations to harvest 27-28 million tons of corn, it may be the absolute historical record of grain harvest. 

Speaking about export, as of August 7 there had already been exported 1.7 million tons of grain, which is 24% more against the same period of 2012/13 marketing year (MY). Besides, almost 1.5 million tons have already been delivered to dock-sides and 190 thousand tons have already been loaded on ships.

Higher ratings

US department of agriculture expects Ukraine to hold the 6th place in the world rating on corn production and 3rd place on its export (16.5 mln te) after the U.S. and Brazil in the current marketing year. Last year our country held the fourth place. As for wheat and derivative products, the 9th place is expected on production (19.5 mln te) and 6th place on export (8 mln te) against the 9th place last MY. In total, grain export in 2013-14 MY may reach 30 million tons, head of the analysis department of the consulting agency AAA Maryna Kolesnikova says. It means that the country may hold the 2nd or 3rd place on general grain supplies (against the 7th place last MY) and enter the Top 3 global exporters. To compare, this MY Russia can export not more than 22 million tons of grain.

In this respect, President Viktor Yanukovych has called upon agrarians to make every effort to collect and preserve the harvest. In particular, the President has suggested large agro-enterprises with the latest equipment to help smaller farms with harvest and storage to preserve maximum grain. In turn, in the beginning of August Premier Azarov charged relevant ministries to work out and submit a project on simplified logistics and reduced expenses on the grain market. "It is hard work to cultivate such a great harvest, so it requires maximum coordination and simplicity of the processes," he said.

In turn, "Ukrzaliznytsya" (UZ), national railroad service, has worked out a number of measures to optimize logistics, following the principle "freight car - ship" and avoiding transship stores, which enables to reduce the cost and time of transportation of grain. Moreover, to cheapen grain transportation, it has been opened 25 stations for commercial operations on shipment. Next, the repair of grain hoppers have been made within record-breaking terms - it was planned to finish repair of 1031 grain hoppers by the year end, but already by July 31 the total of 1110 hoppers had been completed, i.e. 108% of the annual plan. In total, Ukraine has 12213 railway grain hoppers (84% operational) and 668 stations for transshipment of grain. 

Finally, UZ assures that the grain transportation costs are the lowest in the region. Thus, transportation tariff in Ukraine makes $12.77 for ton per 500 km, while in Belarus it makes $13.1, in Russia - $17.03, in Hungary - $ 28.02, in Romania - $50.56, in Slovakia - $53, in Poland - $62.52. 

Tasks for the future

Such efforts prove that the state policy is indeed focused on the agricultural sector. Thus, yet in 2011 the Cabinet approved the AIC support program for the period until 2015 with the cost sheet of 134.23 billion hryvnias. President of the Ukrainian grain association Volodymyr Klymenko informs that the allocated means are used for technical modernization of the agro-production, formation of materiel and power resources, introduction of resource-saving technologies. "It is an important program for revival of national rural areas in general, aimed at provision of stable food security by means of diversified development of the agro-industrial complex and competitive growth of its production," the specialist notes. Within the program it is planned to improve the quality of agricultural goods, to omit the use of chemical additives, to create a net of modern interregional laboratories on quality control. Moreover, on August 7 of this year the Cabinet adopted amendments to the Program regarding production of agricultural machinery. In particular, in five years the country is supposed to produce up to 10 thousand harvesters and 20 thousand tractors annually.

Indeed, Ukraine needs to renew its fleet of agricultural machinery, as 78% of tractors and 72% of harvesters are already worn-out. The Ministry for agriculture says the demand for tractors and harvesters makes 400 thousand units and 75 thousand units respectively. According to the State Program on economic boost for 2013-14 years, 1.2 billion hryvnias will allocated for financial leasing of agricultural machinery, which should be enough for purchasing 4000 various agro-equipment. According to the specialized minister Mykola Prysiazhniuk, per every hryvnias allocated by the state budget it is planned to attract 4 hryvnias from producers or creditors. 

Thus, in 2013 "Ukragroleasing" company should get more than 160 million hryvnias of budget financing. Company CEO Mykola Shpak underscores that per every 100 million hryvnias invested by agricultural producers the financial leasing enables to produce machinery costing 260 million hryvnias. Moreover, engineering enterprises will get an advance payment guarantee and an opportunity to use agricultural companies for formation of a dealer network. "Significantly, finance lease is granted only for domestic machinery, which gives domestic engineering plants an advantage," the official pointed out.

Simultaneously, the Cabinet plans on introducing the practice of credit rates compensation for purchasing agricultural machinery, and the State Program provides for five billion hryvnias for these purposes. In total, the Cabinet has calculated that in the next five years the fleet of agricultural machinery needs at least 120 billion hryvnias to carry out the upgrade, and both domestic engineers and foreign companies will participate in the process. Thus, first vice PM Serhiy Arbuzov informed that the government was ready to support a joint investment project of the Kherson Machine-Building Plant and CLAAS (Germany) company on production of modern harvesters. The first test harvesters have already left the assembly line. There are also negotiations held with famous corporation John Deer, as well as Italian, Finnish, Chinese engineering enterprises.

There are also joint projects with Belarus: "BelotserkovMAZ" jointly with "Gomselmash" (Gomel, Belarus) have started assembling harvesters "Polesiye", and domestic engineering plants have resumed the dialogue with Belarusian leaders of the sector on realization of the longstanding idea on creation of a joint enterprise.

More investments

Though the above mentioned steps are just the beginning, experts note that the effect manifests in growing dynamics. Kolesnik draws attention to the growth of foreign investments into AIC and says that investments into the infrastructure, reinforce of machinery fleet, technologies and selection enable to harvest heavy yields regardless of weather conditions and "creeping" climate warming.  In this respect, Arbuzov recently informed that foreign direct investments kept growing. Thus, in the first quarter of the year FDI into the agro-industrial complex made 2.5 billion hryvnias, which is 10% more than for January-March period of 2012.

According to the first vice PM, European countries remain the major source of investments, which focus traditionally on food products, bioenergy, crop research. "To improve the investment climate we create transparent conditions, deepen public and private partnership, carry out predictable and consistent policy," Arbuzov notes.

He also adds that in 2013 almost 50% of FDI into national economy may accrue to the agro-industrial complex, which is a clear proof of agriculture being the key sector of economy. Moreover, investments come not only from Europe, but also from Asia, China in particular, and such sectors as dairy and meat, horticulture, biofuel become more and more popular. Analysts assume that in several years sectoral investments of China alone may reach $10 billion.

No surprise that in the first half of the year, against the correction in the industry (-5.3% to the same period of 2012) domestic agrarians demonstrated production growth by 15.4%. The share of AIC in goods export in 2013 make 1/4, which means the importance of agriculture in country's economy rises and the sector becomes the most developing.

In turn, it means that the population is supplied with high-quality products at affordable prices. Thus, Arbuzov is convinced that the prices for bread will not grow till the yearend, which is an important factor of stability for confectionary goods and for food market in general. According to estimations of the first vice PM, 'at least 75% of the harvest will be bread grain, which enables to ensure home consumption in the amount of 28.4 million tons. Government procurement has insured stable prices for bread and bread products." In particular, the Cabinet has already advanced one billion hryvnias to enterprises on forward procurement, obliging them to supply more than one million tons of grain for government reserve. Another 1.3 million tons have been contracted by the State bread grain corporation.

Ukraine walks around the globe

In 2013 the government plans on new measures to stimulate the agro-industrial complex, including the complex development strategy till 2020 and the strategy on development of rural territories. Both programs provide for new approaches to the state policy, based on European principles. In turn, the President presses on innovation projects and reformation of quality control system according to the requirements of the EU and WTO.

Following the dynamic state policy in the sector may bring Kyiv in Top 3 of world grain exporters, specialists believe. In particular, president of Ukrainian agrarian confederation Leonid Kozachenko believes that it may be the 2nd place in the world rating. Development of agriculture under proper state support may result into Ukraine exporting up to 33 million tons of grain to the international market by 2020-21. "Our trades have already occupied strategic markets of North Africa and Middles East; countries of these regions are 30-70% dependent on Ukrainian crops, and this year the supplies will grow even more.  Supplies to Europe, Central and South Africa, the Far East, including Japan and Chine, are growing as well. In 15 years Ukrainian agrarians may harvest up to 90 million tons of grain annually. however, to reach such figures the industry needs about $70 billion of investments," the economist tells. Moreover, Ukraine has an advantage of other important exporters, like Russia and Kazakhstan. In particular, Ukraine can easily increase production of profitable forage crops (corn, for example) without reducing the seeding of milling wheat.

Moreover, crops are not the limit. For five months of the year the export of vegetables has grown by 53%, up to 134 thousand tons. Apart from heavy harvest, Kolesnik notes upgrading of infrastructure of greenhouse complexes and vegetable stores. Speaking about cattle breeding, in the first year half the meat production grew by 9.1% against January-June period of 2012, up to 1.571 million tons. Cattle stock grew by 3.3% to 5.392 million, pig population - by 4.6% to 8.224 million, sheep and goat population - by 5.1% to 2.254 million, poultry population - by 6.7% to 263.608 million. The figures on poultry population are the absolute record for the past 20 years. This autumn Ukraine starts export of poultry to the EU countries and may join Top10 world leaders of poultry export. "Meat" progress owes a great deal to the state policy, including budget subsidies and farm reconstructions. This year state budget provides for 650 million hryvnias for development of cattle breeding.

Well, obviously Ukrainian agro-industrial complex is becoming one of the leading players on the global food market. Planet's population grows, and demand for food products grows with it. 34 countries of the world suffer food deficit, and heavily populated countries like China and India consume enormous amount of food products. Thus, constantly growing markets give our country a chance to develop the production and export of agricultural and food products and to become one of the major international suppliers, and not only to the Third World countries, but to the West as well, considering the launch of free trade are with the European Union.

Andriy Boyarunets


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