As a result of the drought, the yield of early grain crops in the most affected steppe zone of Ukraine decreased from 22 centner/ha to 16 centner/ha, leading to loss of production at the level of 15-20%. In addition to losses from bad weather, the standardized monetary value of land has increased by 75.6% and became an additional financial burden for farmers this year. As a consequence, according to the calculations of the Association "Ukrainian Agribusiness Club" (UCAB), this year farmers may suffer record losses - about 10 billion UAH. The President of the Association "Ukrainian Agribusiness Club" Alex Lissitsa informed about this   during a press conference yesterday.

Severe weather events in May and June caused serious losses to farmers this year. Drought and heat, fully covering the south, the east and, partially, central regions of Ukraine, prevented from gathering the expected bulk of the yield. As a result, in the steppe zone of Ukraine instead of the expected 22 centner/ha of the yield of early grain crops, the yield capacity is only 16 centner/ha.

The low yield automatically increases the cost of grown production. According to the calculations of UCAB, this year the average cost of production of early grain crops is 1800-2000 UAH/t, while the sale prices vary within the range of 1500-1700 UAH/t, depending on the quality. That means that production losses make up 15-20%, and farmers lose 300-400 UAH per ton. In the forest-steppe zone, where the situation is somewhat better, most manufacturers may scarcely break even.

Experts of UCAB claim that, as a result of bad weather, Ukrainian farmers may receive about 3.5 million tons of early grain crops less than due and that losses amount to 5.6 billion UAH in money equivalent. 

Bad weather - is not the only factor that significantly complicates the financial position of farmers. The resolution № 1185 "On Amendments to the Methodology of Standardized Monetary Value of Agricultural Land and Settlements", adopted by the Cabinet of Ministers of Ukraine last year, increased the official value of land by 75.6%, which pro rata increases one of the most important expense items in agriculture – the lease of land. Last year farmers paid 6 billion UAH rent but this year they have to pay at least 10.5 billion UAH. As a result, farmers have to look for additional 4.5 billion UAH in their budgets.

"Losses from the drought plus the indexation of monetary valuation of the land by 75% take away from the pocket of Ukrainian farmers about 10 billion UAH. This burden may become unbearable for many Ukrainian agricultural producers because it makes them uncompetitive in comparison with Russian producers and threatens with the curtailment of production. Therefore, under such difficult conditions, when the weather has caused huge losses to agriculture of Ukraine, the government should intervene and review the index of standardized and monetary valuation of lands, in order not to smash down the Ukrainian producer of grain completely", - summarized the President of the Association "Ukrainian Agribusiness Club" Alex Lissitsa. 

"The Agrarian Union fully supports the position of UCAB concerning the standardized and monetary evaluation of land. After all, the calculation of the index of this very evaluation remains still unclear for us and, moreover, one can hardly see any common sense in it. The current method of calculation is out of date. On the other hand, under such circumstances, people will not be able to make payments and this will become the reason to terminate the agreements, so in case nobody intervenes, changes and calculates the index professionally and competently, the uncontrolled operations with lands will begin, "- pointed out the head of the Agrarian Union of Ukraine Gennadiy Novikov.

Taking into consideration the abovesaid and the results of the meeting chaired by
the Prime Minister of Ukraine Mykola Azarov with the participation of leading associations of agriculture, which was held on July 3, the Association "Ukrainian Agribusiness Club ", the Agrarian Union of Ukraine and the Association of Farmers and Private Landowners of Ukraine sent a letter to the Prime Minister with the request to sort out urgent issues, as well as to suspend the resolution № 1185 "On Amendments to the Methodology of Standardized Monetary Value of Agricultural Land and Settlements", adopted by the Cabinet of Ministers of Ukraine on October 31, 2011, until the new index is calculated.

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UCAB Press Office

Tetiana Kotyk

The Association "Ukrainian Agribusiness Club" (UCAB) www.agribusiness.kiev.ua was founded in 2007 to protect the economic and professional interests of players of agribusiness in Ukraine. UCAB is a unique platform in Ukraine for establishing business contacts between the leaders of agribusiness, improvement their work and dialogue with the government. UCAB actively supports Ukrainian producers in establishing and maintaining international business relations. The Association consists of the largest producers and processors of agricultural products in Ukraine.