Ukraine reports poor harvest; analysts cite misguided policy (01/24/99)

Ukraine reports poor harvest; analysts cite misguided policy

by Pavel Politiuk
Special to The Ukrainian Weekly

KYIV - Ukraine, once the breadbasket of Europe and then the Soviet Union, harvested just 26.5 metric million tons of grain in 1998 - down about 25 percent from the previous year's crop of 35.5 million tons.

The crop of 26.5 million tons was the second worst since independence in 1991 and far below Soviet-era harvest levels of about 50 million metric tons. Only the 1996 harvest was poorer at 24.5 million tons.

Ukraine's Agriculture Ministry officials blamed drought and the crisis in neighboring Russia, while independent agricultural analysts said the poor performance had more to do with a misguided farm policy since independence.

"This (poor crop) is the result of serious drought in the eastern and central Ukrainian regions, such as Kharkiv and Poltava," said Stepan Dovhan, vice-chairman of the sowing department in the Agriculture Ministry.

However, agricultural consultant Serhii Feofilov put the blame elsewhere. "The results expose the absence of market reforms in Ukraine and the Ukrainian Agriculture Ministry's misguided policies," said Mr. Feofilov, director of the Kyiv-based UkrAgroConsult company.

Analysts said policies that protect the Soviet-style collective farms from market reforms and radical changes, which would make them more effective and competitive, are at the heart of Ukraine's agricultural problems.

"Private land ownership is the key problem for Ukrainian agrarian reforms, and any changes are impossible without it," said Mykola Vernytsky, analyst at Ukraine's Agricultural Exchange.

The Constitution of Ukraine allows private land ownership, but analysts say there is no mechanism to properly implement such reforms. The left-leaning Ukrainian Verkhovna Rada has said repeatedly that it will not allow the privatization of land.

Last week President Leonid Kuchma appointed Mykhailo Hladii to the newly created post of vice prime minister of agriculture and, while announcing the appointment, said that the main task for the former head of the reform-minded Lviv Oblast would be to introduce radical market reforms.

"Hladii's task is to quickly implement market reforms in the Ukrainian agricultural sector and to introduce private land ownership," said Pavlo Haidutsky, deputy chief of the Kuchma administration and a former agriculture minister.

However, agricultural analysts say poor legislation and Ukraine's old ways of management hamper land privatization and the use of the country's world renowned fertile black soil as a commodity or as collateral for borrowing.

Mr. Vernytsky explained that Vice Prime Minister Hladii will have a tough time fulfilling his mandate. "He will not be able to achieve anything before the Parliament has resolved the issue of private land ownership," said Mr. Vernytsky.

Other analysts said Mr. Hladii also would receive a hostile reception from local government officials in Ukraine's rural regions, who oppose market reforms and cling to Soviet-era collective farming, and saw no chance for Mr. Hladii to put serious market reforms into place in the sector.

Agriculture Ministry officials hope the new agrarian leader will help it to overcome the huge crisis in that sector and have already optimistically forecast a 1999 harvest of about 35 million metric tons of grain.

"We predict that Hladii's coming will mean a new stage for Ukrainian agriculture, and it will be the market stage," said Mr. Haidutsky. But he added that the Agriculture Ministry's forecast for 1999 is overly optimistic and that there are no real grounds for expecting such sharp growth in the grain harvest for this year.

Mr. Haidutsky said he expects that Ukraine's troubled farms, stricken by chronic shortages of money, large debts and outdated farm machinery would not gather more than 30 million metric tons of grain.

Grain is not the only sector of agriculture where harvests are down: Ukraine's sugar beet harvest was about 15 million metric tons in 1998, compared to earlier predictions of some 20 million tons and a 1997 harvest of 17.5 million tons.

"This harvest shows the huge crisis in our agricultural sector: farms do not have the money to cultivate land well, and the very small yield is the result of this trend," explained Petro Pasechnyk, head of the Agriculture Ministry's sugar beet and sunflower seed department.

The poor sugar beet harvest resulted in an equally meager production of white sugar for 1998. The association of sugar producers, Ukrtsukor, announced last week that Ukraine's white sugar output totaled just 1.875 million metric tons in 1998, compared to more than 2 million tons in 1997. They said it was the worst year for white sugar since the end of World War II.

Officials say that Ukrainian farms have exhausted the potential of their Soviet-era machinery and have done nothing to replace it. That, for one, has thrown the sugar beet harvest back to the pre-mechanized era of the 1930s.

Analysts warn that if urgently needed reforms are delayed any longer, Ukraine soon may not be able to feed itself.

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