You're reading: Profitability of grain production in Ukraine to almost halve in 2011

The profitability of grain production in 2011 in Ukraine will almost halve compared to 2010, according to experts from the Ukrainian Agribusiness Club (UAC).

A report of the UAC issued on Sept. 12 says that while last year the average profitability of winter wheat in Ukraine was 19%, in 2011 it is expected to be only 9%.

"Despite a rise in the yield, Ukrainian producers receive only UAH 120 per tonne of wheat, while a year ago it was two times more – UAH 220 per tonne," reads the report.

The Ukrainian Agribusiness Club’s analysts said that the reason for the fall in the profitability of grain production is the introduction of import duties on grain, the cancellation of VAT refunding to grain traders and a rise in expenses on grain production. They said that expenses on mineral fertilizers and fuel and lubricants grew by 50% this year, expenses on seeds by 60%, expenses on wages by 32% and expenses on rent rates by 20%.

"The growth in expenses per hectare increased the cash cost of wheat by Hr 200 per tonne, while the state takes another Hr 250-300 per tonne from the selling price in the form of export duties, not even taking into account VAT not being refunded during grain exporting," reads the release.