Heat Wave Hits Ukraine Grain Crop Yields

KIEV, Ukraine -- Ukraine may lose up to 8 million metric tons of grain this season due to the extremely hot weather currently hitting the country’s grain producing regions, Prime Minister Mykola Azarov said Thursday.

Ukraine was once known as the "Bread basket of Europe".

Ukraine, one of the world’s biggest producers of grain, harvested 56.6 million metric tons of grain in the 2011-2012 marketing season, becoming one of the top grain exporters.

This will likely change this season as the country was affected by extremely cold weather in the winter and now by the extremely hot summer.

“Due to the difficult weather conditions… the harvest will be 8 million metric tons less this season,” Azarov said in a statement while visiting the Zaporizhia region, one of the biggest hit by the drought.

Leonid Kozachenko, the head of the Ukrainian Agrarian Confederation, said farmers will probably face huge losses of up to 15 billion hryvnias ($1.85 billion) in the 2011-2012 season, up from 13.6 billion hryvnias ($1.68 billion) previously expected.

The situation will be especially bad if the government decides to introduce restrictions on exports of grain, a measure that has been in effect for most of the 2010-2011 season.

“If the ban on grain exports will be introduced, the government will not be able to compensate the losses,” Kozachenko said, adding that exports would help the farmers to offset some of the losses.

“Prices on world markets are currently very attractive, and this would allow the farmers to improve their financial standing,” Kozachenko said.

Meanwhile, Azarov said the government did not plan any serious measures to restrict the grain exports because it had enough grain in state reserves.

“The state has huge a stockpile of food and grain enough to provide the Ukrainian market,” Azarov said, adding that lower grain harvest will not affect domestic grain prices as the government will step in with interventions.

“Speculators are already raising their heads in anticipation of higher grain prices this year,” Azarov said.

“But the prices in Ukraine will not increase.”

Control over grain prices is extremely important for the ruling Regions Party, which is led by Azarov for the October 28 general elections.

Bread remains the main food staple for many Ukrainians and the more expensive bread means lower electoral result by the Regions Party, analysts said.

Source: Ukrainian Journal