For now, Tymoshenko’s inaccurate words are considered a slight misunderstanding with bad consequences.
align=justify>“We have lifted the restrictions and now [exporters] can easily export grain outside of Ukraine,” he said.
Within three days, it became evident that that was a stretch. In actuality, Tymoshenko merely relaxed quotas for grain exports. And three days were enough for world grain prices to fall by almost half.
“If you have acquaintances (at a commodity exchange) and an acquaintance who is the prime minister of Ukraine, and then you say that (export) restrictions will be abolished not only for grain but for sunflower oil as well, you can become a very rich person – you can make hundreds of millions of dollars within two hours,” said Leonid Kozachenko, president of the Ukrainian Agrarian Confederation (UAC). “I am just speaking theoretically.”
Russian Federation Agriculture Minister Alexey Gordeyev is not only interested in a theory.
The market’s reaction to the prime minister’s “word play” inspired him to propose a project on a global scale create a grain cartel with Ukraine and Kazakhstan, something akin to a grain OPEC, to control the world market with the help of crop price controls.
The idea seems to be quite reasonable. World prices for grain are increasing faster than for energy resources. Over the past year, world grain prices have tripled.
But Ukrainian farmers have other things to worry about. Government authorities have kept Ukrainian grain out of the world market.
Grain export restrictions have deprived the agricultural sector of $2 billion, according to Kozachenko.
The ban on exports is being extended for the second year in a row, despite the fact that millions of tons of grain from last year’s crop have been rotting in Ukraine’s grain silos.
In about a month, Ukrainian farmers will start harvesting new crops, which promise to be rich. However, all the Ukrainian silos combined cannot accept the expected volume of grain.
“We have 20 million (tons) of wheat alone. Where do we put all of it?” Ukrainian Grain Association (UGA) President Volodymyr Klymenko appealed to the government.
“Take 1 billion hryvnia, buy the grain and stop torturing us after all.”
The Ukrainian government started the rumor on April 29 that grain export restrictions would be loosened. Practically the same day, World Bank President Robert Zoellick called Ukraine’s president and the prime minister and expressed words of gratitude.
The world food shortage is forcing a number of countries to deal with starvation, famine and food riots. Releasing the Ukrainian silos of their content would have been very opportune.
“Ukraine makes a significant contribution to global efforts for easing the current food crisis,” Zoellick said then.
At that time the president of the World Bank did not know that his leg was being pulled. Ukrainian grain exports have remained under lock and key, as before. However, due to the world’s being in a state of illusion created by Ukrainians, grain prices started to rapidly fall.
“Within three days, prices fell by 40 percent,” specified Kozachenko. “The Chicago Mercantile Exchange (the biggest grain futures market) lost $800 million.”
If investigated, such actions would be considered a malicious attempt at profiteering, he said.
For such an offense in America, a person could be sentenced to up to 16 years in prison. For now, Tymoshenko’s inaccurate words are considered a slight misunderstanding with bad consequences.
On the day when Ukraine’s Cabinet of Ministers announced the lifting of grain export restrictions, Tymoshenko signed a resolution to increase grain and barley export quotas to 1.2 million and 900,000 tons respectively.
However, this was not enough for world market prices to return to their levels a halfyear ago.
Last February, wheat reached its historical high of $800 a ton, a few months earlier it was only $350 a ton. In short, food prices grew quicker than energy prices.
Foreign agricultural experts who worked in Ukraine for years said if the country used modern fertilizers and harvesting technologies, transportation and grain storage, Ukraine would be quite capable of harvesting 100 million tons annually.
This year, Ukraine will harvest around 40 million tons of grain, nearly 10 million tons more than last year. But there is little to rejoice over the Ukrainian land’s generosity because domestic silos can store no more than 30 million tons.
By the middle of the summer, about 7 million tons from last year’s crop will remain in the silos. In general, they crack because of the huge volumes stored in them, and the crops rot unsold.
“We explained to high government authorities that last year’s corn crops rotted,” said Klymenko, emotionally. “I don’t know who (or what) will eat them. It is too late to feed it to poultry. You want to ruin the new crops too? For the sake of what? Cheap bread? But we have the cheapest bread in the world. What more do you want?”
When Volodymyr Slabovskiy, president of the AllUkrainian Association of Bakers, hears someone say the phrase “cheap bread,” his hand immediately reaches for a handkerchief.
“When I observed how it was reported in Ukraine’s regions that a loaf of bread cost 1.4 hryvnia, I wanted to cry,” he said. “How can this be, when the agricultural fund allocates flour for 1.9 hryvnia (per kilogram)?”
According to his calculations, socalled ‘social’ bread, that is subsidized by the state, should cost no less than 3 hryvnia. The price for bread that is not subsidized must start from 5 hryvnia. But only a suicidal person is capable of increasing prices for bread right before elections, which take place almost every year.
“And do the people who bake bread have to get a salary of 600 to 700 hryvnia all their lives?” asked Klymenko. “What does our state want?”
The answer is clear on the surface. State functionaries want the power, and it is better if it is eternal.
Once again, one of the candidates for Kyiv’s mayoral seat, Leonid Chernovetskiy, declared in his election campaign that he has managed to achieve the lowest prices for bread in Kyiv.
“I feel pity for Kyiv,” said Slabovskiy, bitterly. “The best human resources (Kyivkhlib), the best technologies, the richest market and the crappiest, forgive me, the lousiest bread (is here). They have the equipment, but prices (for their food products) are being limited. Subsidies are late by three, four or six months. Poor Kyivians have been led into a crazy situation. I really feel pity for them. Kyivkhlib is forced to buy primary products we refused last year.”
Klymenko has a business proposal – to provide targeted food subsidies for needy people. And the rest can pay for products at the true market price.
“33 percent of our population is poor,” he calculated. “Not 46 million, but only a third of that. Subsidies received on one’s card can be spent only on food. This is good for producers of grain, bread and butter. People will be able to eat in a normal way. In order for children not to suffer from hunger.”
