NEWS ANALYSIS: Ukraine Slammed for Worst Harvest




KIEV -- Ukrainian farmers gathered the lowest harvest in the country's post-Soviet history this season.


Officials blame bad weather for all woes, but analysts say a lack of market reform remains the main problem.


The State Statistics Committee said farmers harvested 24.37 million metric tons of grain by clean weight in 1999, even less than the meager 26.5 million gathered in 1998.


In the Soviet era, the country produced 50 million tons a year.


Of the major crops, only sunseed prospered last year as output rose to 2.75 million tons, from 2.26 million in 1998, because of an increase in the area sown.


Last year, officials said crops had been hit by frosts in November 1998, unseasonal cold in April to May 1999 and then summer drought.


But analysts challenge such explanations.


"We have to recognize that the absence of reforms and modern agricultural technologies makes the sector very dependent on weather conditions, while leading Western countries are able to neutralize them at least partially," said Serhiy Feofilov, director of UkrAgroConsult consulting company.


"These results show that Ukraine is at least five or six years late in making agrarian reforms," he said.


Ukrainian farming remains dominated by large, loss-making Soviet-era collectives.


President Leonid Kuchma has issued a decree to privatize collective farms, but the document stopped short of introducing real land reform. Ukraine's rich black soil still cannot be bought, sold or used as collateral.


Traders say an economic crisis that has shrunk the ex-Soviet state's economy to a third of its size in 1991 and a financial crisis that hit in August 1998 have added to farmers' woes.


"Farms have nothing to work with - no machinery, no quality seeds, no pesticide, no herbicide and, most important, no money to buy them," said Anatoly Temborsky, commercial director of Agritechnical Company.


Around 85 percent of Ukraine's 12,687 collective farms made losses in 1999. In 1997, the figure was 75 percent.


"Supplies of herbicide and pesticide fell five-fold last year because farms were unable to pay for them," Temborsky said. "I have every reason to say the situation will be even worse this year."


Traders say Ukraine, a traditional grain exporter, may now be forced to import or face serious problems providing the people with bread.


Given last year's disastrous harvest, they saw no surprise in official data showing a shortage of grain on the market as early as November.


"All of us were ready for this news and official results confirmed our expectations," one said. "This grain shortage has caused the growth in grain prices in the past two months."


Domestic prices for third-class wheat have risen to $105 to $110 per ton from less than $90 in October, and are forecast to rise to $125 by May or June.


Traders say large imports may be needed to meet demand before the new harvest starts in the middle of the year.


"A country that used to harvest over 50 million tons of grain may be forced to import it," one said.