Agrimoney

Ukraine is at risk of seeing a food "crisis" emerge from its political turmoil, the Ukrainian Agribusiness Club said, warning that the country's "difficult" situation may cost it 11m tonnes in grains production.

The industry group warned that 20% of the land allocated to spring grain and oilseed plantings may go unseeded this year, equivalent to 11.1m tonnes of grains production, which hit 63m tonnes last year, and equivalent to 25.1bn hryvnia.

The caution reflected in part "atypical weather conditions", in particular a dearth of winter precipitation which has spurred cautions of drought in central and eastern regions.

However, the Ukrainian Agribusiness Club (UCAB), also known as the UAC, also warned over the difficulty growers are having in obtaining for planting this year, amid the country's unsettled economic and political situation.

'Significant loss of yield'

"[Farming's] unprofitability for most of last year, and the absence of any financing due to the difficult economic and political situation in Ukraine, may lead to significant loss of yield of grains and oilseeds in 2014," Ukrainian Agribusiness Club (UCAB) president Alex Lissitsa said.

He urged the country's interim government to "to do everything" it could to ameliorate the agriculture sector's setbacks.

"Neglecting these problems can cause the country another crisis – food," he cautioned.

The club demanded action including protecting some agricultural perks, including VAT benefits and a fixed agriculture tax.

Contrasting comments

The comments followed the Moscow-backed weekend elections at which Crimea voted to secede from Ukraine and join Russia, a ballot which Western powers have refused to recognise.

Indeed, the European Union and the US on Monday unveiled travel bans and asset freezes on Russian and Ukrainian officials deemed complicit in the poll.

However, they contrast with a report last week from the US Department of Agriculture's bureau in Kiev that "access to the standard sources of agricultural credit for Ukrainian agricultural enterprises has not been impeded".

Although Ukraine banks are charging farmers interest rates of more than 20%, "instead of borrowing from banks, agricultural producers in most cases either rely on their own resources or sign forward- sale contracts with grain trading companies in exchange for inputs," the bureau said in a report.

"Current prospects for Ukraine's winter crops and spring-sowing campaign remain generally favourable," the briefing added, although it did acknowledge a potential setback from a hryvnia which has fallen to record lows against the dollar.

"The use of certain imported inputs, specifically plant-protection chemicals and hybrid seed, could decrease from last year's level if Ukraine's currency exchange rate does not improve within the next few months."