Ukraine's leading English-language newspaper since 1995

One policy that will ameliorate the pain and hasten the agricultural transition is establishing a futures market. An independent futures market will quickly rationalize the agriculture sector by smoothing out and eventually stabilizing prices.

r was twice demolished. The first time by forced collectivization and genocidal famine, and more recently, an economic collapse following Ukrainian independence.

Membership in the WTO promises a breadbasket reborn. The rebirth will not be painless. Inefficient farms and food processors will fail in the new competitive atmosphere. Commodity prices will fluctuate, inciting consumer furor. Both will put pressure on politicians of all stripes to “do something.”

There is an opportunity for Ukraine’s politicians to display leadership by resisting the temptation to fix short-term discomfort with policies of disastrous long-term decisions.

To date, the country’s leaders have an unimpressive agricultural policy record. They have yet to lift the land sale moratorium, which could bring badly needed investment and market prices for agricultural land. They imposed short-sighted export quotas in the name of food security, but their true populist motivation was to keep food prices low ahead of elections. They have incompetently and corruptly managed the country’s value-added taxes, further discouraging foreign investment.

One policy that will ameliorate the pain and hasten the agricultural transition is establishing a futures market. An independent futures market will quickly rationalize the agriculture sector by smoothing out and eventually stabilizing prices. It would be a win-win situation for all parties affected by the inevitable discomfort.

Food producers and farmers could use market-set prices to optimize seasonal plans, ultimately increasing yield and profit. Food processors could use the price stabilization the market would provide to rationalize production plans and increase output and profit. Consumers would be the ultimate beneficiaries as retail prices would drop and stabilize.

Ironically, the biggest winners will be the politicians, allowing them to resist the populist policies of the past while providing opportunity for their voters.