Travelling scholars field report
Posted by: Brent Alexander	Date: 16 September 2004

My tour of the Ukraine was set up by Geoff Sansome (UK Nuffield scholar) who works for DEFRA, the UK department of ag equivalent.

The UK is putting a lot of money into Ukrainian agriculture. The two organizations I was working with had a budget of A$15million for the next 4 years to spend in the Ukraine on rural development. There is a lot of work to do in rural areas; as the old state run farms were not only responsible for employment, but also ran schools, bus runs, basically all rural infrastructures.

The two UK organizations were working with: educating farmers, income stabilization, legal help, financial backing, community development and also training for new jobs.

The Ukraine is a place of two stark contrasts. The people of the cities are, in general living a very civilized life, in cities that would not be out of place in most of Western Europe. Kiev has many beautiful buildings and huge areas of parkland, although it is a little unkept.

As soon as you leave the city and head down the highways you see a completely different picture and although the highways themselves are in good condition, they are littered with people in old vehicles broken down, people on pushbikes and many on foot. There are also some horse drawn vehicles mixed in amongst them. The closer you get to the rural villages, the more the standard of living drops.

Farmers are amongst the poorest people in the Ukraine and as one advisor with the Kiev Rural Advisory service put it to me; there are three ways to go broke in the Ukraine: cards, women and agriculture.

Prior to the commencement of the Communist regime, farmers enjoyed relative prosperity. They farmed in some of the best soil in the world and had built up some very good farms; this of course meant they were very opposed to Communism, as their hard earned assets were stripped from them. Farming however fared reasonably well under communism, as food was seen as a very important part of life and Russia was keen to see it prosper.

Most of the decay in the farming regions has taken place since 1991 and the fall of communism.

There are two very limiting factors that are impacting on farming at the moment, firstly the fact that farmers were only granted 50ha under the equalization scheme and there is now a moratorium on any further land sales, which has severely limited the scale of farms.

Secondly is the fact that interest rates are running at 25% and compounding this problem is the fact that farmers only have 50ha of land to borrow against, which is not enough for the banks to use as capital; even if the farmers did want to risk borrowing at 25%. There seems to be a large hangover from the old communist days, in that the 50ha handed out and the land sale moratorium is designed to give everyone an equal opportunity at owning land.

Farmers do have the opportunity to expand their enterprises through rental agreements and there are some quite large “enterprise farms” that have done this. Some of these farms actually purchased more land prior to 2002 when the land sale moratorium was introduced. There was a bizarre rule that was in place up until then, that enterprise farms could purchase more land, but individuals could not. I enquired as to why farmers couldn’t just become an enterprise and was told that they could, but none of them could afford the legal fees associated with becoming a company or pay an accountant to audit their books (which is mandatory for all companies).

I had always thought that the main reason these old USSR countries were struggling with their farming was because of a lack of infrastructure, but it seems that this a minor concern for them. They appear to have access to chemicals, fertilizer etc and machinery although very poor here, can be imported relatively easily.

Their grain varieties seem to yield reasonably well. I visited the Crop Production Institute in Kiev and the Agricultural University in Bila Tserkva and both of these institutions were achieving yields in wheat of up to 12t/ha.

They do seem to have some quality issues, but this may have been mainly to do with their unseasonably wet harvest they were currently experiencing and there is a large lodging issue with many varieties.

From what I have seen, their poorest piece of infrastructure seems to be grain storage facilities. I toured the facilities in Bila Tserkva and they were in very poor condition and this storage was run by a university in which the director had recently been awarded a certificate of merit for the way he ran the University farm.

Having said that varieties were yielding well under research conditions, the story out in the country was very different. Average yields for Ukraine are around 3.5t/ha and this is on arguably the best black soil in the world in a 400 – 700mm rainfall belt.

This relatively low figure is mainly due to finance, as farmers don’t even have the money or the ability to borrow for inputs.

The richer or enterprise farmers are achieving yields of 8t/ha and with the price of wheat here being very similar to Australia, they are making quite good money

Average costs for inputs on wheat are around US$500/ha and land can be rented for US$20/ha, so there is money to be made here.

I also had the opportunity to tour around the city of Kiev with two tour guides who used to work for the Soviet run Intourism. It was fascinating talking to these women who told me that they were watched very closely by KGB because they were the only people who had access to the western world. Their entire tourist agenda was set by the KGB and every tour that took place was accompanied by a KGB officer.