The Agriculture Ministry says Ukraine is prepared to rebound from its worst harvest season in history and harvest 28 million tons of grain.
But with a fuel shortage already crippling farms' spring sowing efforts and a drastic shortage of agrochemicals and fertilizers looming for the second straight year, most industry insiders say this year could be even worse than 1999.
'We are not so optimistic as the Agricultural Ministry, given the industry inputs situation,' says Serhy Feofilov, director of UkrAgroConsult in Kyiv. 'A dearth in inputs is fast becoming a tradition for Ukraine's farms.'
UkrAgroConsult experts predict the harvest for 2000 will range, weather permitting, from 25.5 million tons to 26.5 million tons of grain. If something is not done to resolve the input situation, that figure could bottom out at as low as 24.5 million tons of grain – about the same as last year's paltry 24.4 million tons.
The main immediate problem is the immense shortage of gasoline and diesel.
As of March 1, diesel fuel reserves at farms stood at close to 50,000 tons. Last year, farms had 85,000 tons of diesel fuel on that date, according to the State Statistics Committee.
Overall, farms require 830,000 tons of diesel fuel to complete spring sowing work, plus another 270,000 tons of gasoline, according to the Agricultural Ministry.
The fuel shortage is particularly acute this year because key Russian fuel suppliers have refused to ship fuel to Ukraine since the beginning of the year in retaliation for the Ukrainian government's plan to lift tax holidays that those suppliers have enjoyed since 1993.
Ukraine, which relies heavily on Russia for its fuel imports, has been forced to turn to other avenues to squirm its way out of the crisis. The country recently signed deals to purchase 600,000 tons of petroleum products from Greece and 400,000 tons of diesel fuel from Azerbaijan in order to bail out its farms.
Deputy Prime Minister Mykhailo Hlady said March 20 that Ukraine had received much of that fuel already and that about 300,000 tons of diesel fuel had already been given to farms. He said that quantity would be enough to complete spring sowing.
But even if the fuel crunch has been alleviated somewhat, the same cannot be said about the shortage of pesticides and herbicides.
One of the main factors behind last year's paltry harvest was the nearly unilateral cutoff of agrochemical supplies by Western suppliers.
Western companies supplied the vast majority of Ukraine's agrochemicals from 1996-1998, directing most of those supplies to middlemen on credit.
The result was predictable for followers of Ukraine's agricultural sector: Farms couldn't pay the middlemen back, and the middlemen, in turn, couldn't pay the Western suppliers back.
Western suppliers finally cut their losses last year and refused to advance more agrochemical supplies. Left to rely on cheap imports from China and low-quality domestic products, farms suffered.
'The ability of Ukraine to produce domestic pesticides is quite limited,' said Pavlo Ratushny, head of plant protection department of agricultural company Rise.
In 1999, Western agrochemical imports were about one-quarter of what they had been in each of the previous three years, according to Ukraine's State Center for Plant Protection (TsentrDerzhAgroZakhyst).
Western agricultural multinationals say they won't resume supplies of pesticides until Ukraine pays up.
'One of the major tasks for agribusiness in Ukraine is to figure out who will be responsible for the previous debt,' said Yriy Petrus, PR and government relations manager of herbicide-supplier Monsanto.
Monsanto and other companies are still supplying a limited amount of agrochemicals to farms, but they've changed their payment strategy.
'Our company changed the strategy for supplying agrochemicals,' Petrus noted. 'Last year we started working on the basis of prepayment or banking guarantees.'
That guaranteed Monsanto would be working only with solvent farms and intermediaries.
Loss making farms, which most of Ukraine's farms are, will be forced to rely on the state to bail them out with supplies of inferior agrochemicals, mostly imported from China and Romania.
The situation is no better with fertilizers. Industry insiders say that no more than 100,000 tons of fertilizers will be used this season, compared to about 415,000 tons of fertilizers used by all Ukrainian farms last year.
That will make Ukraine even more-hard pressed to meet its ambitious grain targets.
