It should be very profitable for farmers and traders alike. It should also help feed mouths in Ukraine and abroad.
Unfortunately, due to crony state policy, farmers have had a bad taste in their mouths from planting to harvesting.
Due to misguided protectionist policies – namely export restrictions imposed last year – and murky insider dealings, it has become increasingly risky for cash-starved farmers to work.
Unsure if exports will be sanctioned and if they will be able to sell their crop to grain traders for the highest price, agribusiness has for many in Ukraine become a loss-making venture.
With such uncertainty sprouting up instead of more crops, citizens have found themselves spending more on basic foods.
It was “too little and too late” when Ukraine’s government announced this week that export quotas on grain will be lifted.
The restrictions were unnecessary in light of a reasonabe 40 million ton crop harvested last season.
The restrictions also, according to industry estimates, incurred losses of “hundreds of millions of dollars” on domestic and foreign agribusinesses that have invested billions of dollars in past years to help Ukraine reclaim its reputation as the “Breadbasket of Europe.”
Looking forward, President Viktor Yanukovych says he will sign into law duties on grain exports ranging from 9-14 percent, and lasting until January 2012.
Why is this necessary, in light of government forecasts of an even bigger harvest this year? What purpose did the recent restrictions serve?
To find the answer to why such policies exist in Ukraine that damage the interests of the majority, one needs only to follow the money trail to the murky dealings where the minority insiders close to government profit handsomely, and, according to some, corruptly.
When will Ukrainian government officials be able to clearly explain why a previously obscure quasi-state company called Khlib Investbud received a large share of export quotas when most companies were left to count losses?
Why was this company chosen to buy grain for the state reserve?
Why can’t government officials or the company identity their private shareholders?
Will it happen again?
If it does, a select few may get richer, but the nation won’t stand a chance of attracting the investment needed to realize its agribusiness potential.
