Kuchma Says Tough Farm Sector Reforms Necessary

KIEV -- Ukraine, once the breadbasket of Europe, must introduce tough farm reforms to overcome bad harvests and regain its place as an agricultural powerhouse, the country's president, Leonid Kuchma, said Wednesday.

"Ukraine has every chance to become a world leader in agricultural production in the near future. In Soviet times, Ukraine was a world leader," he told an agriculture conference.

"But we had an irrational, half-feudal system with no motivation for effectiveness. Now our duty and policy is to direct reforms so that this sector will lead the economy and the country out of crisis."

Kuchma organized the conference -- attended by the nation's ministers and senior industry officials -- to outline a plan to rescue the farm sector, which has been caught in a downward spiral since the breakup of the Soviet Union.

Collective farms, cut off from most state subsidies for fuel, seed and fertilizers, face declining yields and many are virtually bankrupt.

This year's grain harvest was 36 million tons -- just 500,000 tons more than last year's drought-damaged crop and nearly 10 million tons less than in 1993.

But not all of the setbacks to the sector can be blamed on earlier economic reforms.

Agriculture Minister Pavlo Haydutsky told the conference that up to one-third of winter wheat sowings might have been damaged when a weekend thaw melted snow, which subsequently froze again on fields. Most of Ukraine's wheat crop consists of winter wheat.

Ukraine's draft plan for revitalizing agriculture emphasizes more state support for exporters, lower taxes and foreign investment.

It avoids radical market reforms, instead envisaging gradually privatizing land and transforming Soviet-style collective farms into joint-stock companies.

Haydutsky said that with more fertilizers and modern technology, Ukraine could produce a grain harvest of 50 million tons by 2000.

It could also increase refined sugar production -- and potentially lucrative exports -- to 5 million tons from this year's forecast of 3.5 million tons, he said.

Output in the farm sector fell 2 percent this year after plunging by 17 percent in 1994. But this year's improvement was tempered by the fact that last year's harvest was devastated by severe drought.

A Western industry analyst who attended the conference said he was disappointed that none of the speakers discussed more radical reforms. "No one touched on many of the key issues -- like land ownership and what to do with collective farms. It's true Ukraine has a lot of potential but they appear to have no new ideas to convert the sector to the market," he said.

Kuchma, who introduced Ukraine's first market reform program last year, admitted that there was little consensus on how to restructure the paralyzed sector.

Any type of land privatization is sure to be opposed by a sizable minority of socialists, communists and agrarians in parliament.

"With the farm sector there are more questions than answers," Kuchma said, adding that he was cautious about a wholesale restructuring.

"I still support large-scale farming as well as smaller farms," he added.