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Commodity Intelligence Report
May 21, 2010

Ukraine:  2010/11 Crop Production Forecasts and Trip Report

Analysts from the USDA Foreign Agricultural Service in Washington and the office of the U.S. agricultural attaché in Kiev conducted crop-assessment travel in central, eastern, and southern Ukraine during April. The team met with agricultural officials, independent commodity analysts, directors of agricultural enterprises, and private farmers in order to examine production prospects for 2010/11 grain and oilseed crops.

Among the key observations:
• Winter grains were in good condition in most of the main production region with the exception of several territories in northeastern Ukraine where crops suffered damage resulting from the development of a persistent ice crust.
• The use of mineral fertilizer and other inputs will likely be similar to last year, but the use of hybrid seed for corn and sunflowers will increase.
• Grain and oilseed producers are experimenting with shorter crop rotations and later planting dates for winter grains in an effort to improve yield, reduce the use of plant-protection chemicals, and enable them to focus on more profitable crops.

Winter wheat was less damaged than winter rape by ice crusting in northeastern Ukraine.  Fall emergence and establishment was generally good throughout Ukraine.The team examined crops in ten oblasts that together account for over half of Ukraine’s total grain production. Winter wheat had fully resumed vegetative growth by early April, although crop development was roughly two weeks later than normal due to the late retreat of this winter's unusually deep snow cover. In the southern oblasts (including Kirovograd, Dnipropetrovsk, Donetsk, and oblasts farther south), winter wheat was observed to be in generally good condition and rape fields were in fair to good condition. In north-central and northeastern Ukraine, winter crops showed evidence of damage that producers attributed to January frost or ice crusting or both. Damage was more extensive on rape fields than on wheat fields because of rape’s lower tolerance to frost.

The USDA estimates 2010/11 Ukraine wheat production at 19.5 million tons (compared to 20.9 million last year), barley at 10.5 (11.8) million, and corn at 11.5 (10.5) million. The lower forecast output for wheat and barley is based on estimated year-to-year reductions in both area and yield, while the higher forecast for corn production is based on an increase in estimated area. Sunflowerseed output is forecast to increase by 8 percent from last year, from 6.5 to 7.0 million tons, and rapeseed production is estimated at 2.0 million tons, up 0.1 million from last year. (See PSD Online for area, yield, and production estimates for all crops.)

Winter Crops: Sown Area and Winterkill
The total area sown to 2010/11 winter crops last fall was similar to the previous year, with an increase in barley area roughly compensating for a decrease in rye area. Wheat was planted on 6.67 million hectares against 6.89 million the year before. Barley area increased by 0.32 million hectares, to 1.59 million, and rye area decreased by 0.19 million, to 0.30 million. The sown area for winter rape was essentially unchanged at 1.42 million hectares. Farmers reported that winter-crop planting was delayed in many areas due to persistent fall drought. (See October 21 report.) Abundant moisture and above-average temperatures in late October and November enabled winter crops to recover from the earlier dryness in most areas. Although the team observed individual winter-crop fields marked by poor emergence, the establishment of winter crops was generally good even in fields that showed evidence of subsequent frost damage.

Various forecasts over the past two months have estimated winterkill anywhere from 3 to 30 percent. The latest estimate from the Ministry of Agricultural Policy pegs overall winter crop losses at about 7 percent. All specialists agree that losses to winter rape and barley will be significantly higher than winter-wheat losses. Not only are winter rape and barley more susceptible to low temperatures than wheat, but the production of both crops has expanded into regions of Ukraine where killing frost is a perennial threat, and varieties have not yet been adapted for these more northern areas.

Winter losses were attributed chiefly to two factors:
• Low temperatures in January. Damage to wheat was limited mostly to parts of eastern Ukraine that recorded extremely low temperatures and lacked adequate protective snow cover. Damage to rape fields was more widespread, and occurred even in southern Ukraine.
• Ice crusting. The most severe damage occurred in northeastern Ukraine, where ice crusts in some areas persisted nearly 80 days. As was the case with frost damage, rape fields were much more susceptible to ice crusting problems than were wheat fields. The extent of wheat damage depended in part on the variety. Survival rates for locally developed strains were higher than for varieties developed in central Europe.

Satellite-derived vegetative indices indicate that early-May conditions for winter crops were worse than last year in most but not all areas of Ukraine after over four weeks of below-average precipitation.  Widespread rainfall reversed the dryness beginning around May 12, and microwave satellite imagery indicates above-average surface moisture in most regions.  Soil moisture reserves were fully replenished following the melting of this season's unusually deep snow cover, and subsoil moisture remains generally adequate despite the earlier dryness. Overall moisture conditions are generally favorable as winter grains advance toward the critical reproductive stage of development, which typically occurs in late May or early June.

Spring Planting Progress
According to data from the Ministry of Agrarian Policy, spring grains were planted on 6.99 million hectares as of May 14, against the target figure of 7.6 million. By the same date last year, 7.02 million hectares had been planted against the target of 7.5 million. Although the planted area to date matches last year’s level, progress during the course of the sowing campaign was considerably slower than last year. As of April 12, only 62 percent of the planned area of early spring grains (barley, wheat, oats, and peas) had been sown compared to 96 percent by the same date last year. Although planting accelerated and the sowing of early spring grains had reached the target levels by late April, some analysts suggest that the late planting of spring barley can reduce potential yield, even if subsequent weather is favorable, because the plants have insufficient time to develop sufficient secondary roots. Official yield data from the past 15 years indicate that final spring barley yield tends to be lower in years that are marked by slow planting progress.

The planting of the later spring crops (chiefly sunflowers, corn, and sugar beets) was in the final stages by mid-May. As of May 14, sunflowers were planted on 3.5 million hectares (against the target of 3.7 million and compared to about 2.9 million by the same date last year), and corn was planted on 2.5 million hectares (against the target of 2.7 million and compared to 2.0 million last year). Sugar beets were planted on 0.48 million hectares, surpassing the target by 11 percent.

Technology: Fertilizer, Chemicals, and Seed
Most analysts and producers indicated that the use of mineral fertilizers and plant-protection chemicals is unlikely to increase or decrease significantly from last year, but also noted that input use in 2009 was already down from the previous year. Direct government subsidies for agriculture have essentially disappeared over the past three years, although, as one veteran observer put it, “the promises get bigger every year.” Furthermore, credit is tight for agricultural enterprises and the government no longer offers subsidies on commercial-credit interest although prevailing interest rates in Ukraine range from 25 to 35 percent. One bright spot is the continued increase in the use of hybrid sunflower and corn seed. The explosive growth in corn yield over the past ten years – from 2.5 tons per hectare in 1999 to 5.0 tons per hectare in 2009 – is attributable largely (but not exclusively) to the increase in the use of hybrid seed.

Shorter Crop Rotations
Many grain and oilseed producers, including both large agricultural enterprises and smaller farms, are re-examining conventional crop rotations and letting the market more fully determine their planting decisions. For example, in response to low demand for feed crops farmers are planting less spring barley this year and focusing on producing milling wheat (as opposed to lower quality feed-grade wheat). Farm directors also indicated that they plan to plant more corn, sunflowers, and soybeans – the more profitable crops. Despite the consistent high profitability of sunflowerseed, however, farmers are still careful to guard against the threat of fungal diseases. Most producers plant sunflowers in the same field no more than one year out of four, and some less frequently.

Perhaps most interestingly, a growing number of farmers are eliminating the long-standing practice of planting consecutive years of wheat. Traditional seven-year crop rotations in Ukraine almost invariably featured at least two consecutive years of winter wheat as the first crops in the rotation. Interrupting the consecutive planting of wheat is recommended by Ukrainian researchers and specialists as an effective disease-prevention measure, especially against fusarium, a fungus that prevents the formation and development of secondary roots. Researchers also recommend using fungicide-treated seed to reduce fusarium infestation, although not all enterprises and private farms can afford this practice.

One large holding company (typically regarded as the largest in Ukraine, planting about 70,000 hectares of crops throughout the country) is experimenting with different crop rotations in Nikolayev oblast, including three- and four-year rotations that focus chiefly on wheat, barley, corn, and an oilseed crop (sunflowerseed, soybeans, or winter rape). The chief goal is to eliminate consecutive years of wheat in an effort to reduce pest and disease infestation. This results in some unconventional cropping sequences, like wheat after corn or wheat after sunflowers, and enables the enterprise to reduce the use of plant-protection chemicals. The chief agricultural specialist of the holding company indicated that wheat after sunflowers has not proven to be a particularly good combination, but no worse than wheat after wheat. For 2010/11, this particular holding company will sharply increase its planted area of corn (to over ten times last year’s level) and soybeans (to over 1,500 hectares compared to zero last year), while slashing the area of spring barley by 90 percent. Meanwhile, the sown area of winter wheat and the planned area of sunflowers are both up about 5 percent from last year.

Later Planting of Winter Grains
Some farmers have begun in recent years to plant winter grains about two weeks later than usual, in order to reduce exposure to insects and disease, and to prevent excessive top-growth prior to dormancy. (Winter grains accumulate sugars in the crown during fall vegetative growth prior to dormancy, and these sugars then feed the plant when vegetative growth resumes in the spring. If fall overgrowth occurs, winter crops can exhaust these sugar reserves in the event that unusually warm winter weather triggers unfavorably early growth.) Later planting offers the advantage of a reduction in the use of insecticides and fungicides, but also raises the risk of weather-related damage in the event of an early winter. Many farmers prefer to risk the weather-related damage since they don’t have the money for plant-protection chemicals.

Genetically Modified Crops
Although the government of Ukraine does not sanction the planting of genetically-modified (GM) crops, local specialists maintain that the risk of violating the ban is minimal. According to most independent analysts in Ukraine, GM crops account for a majority of the country’s soybean area and a smaller but growing share of the corn. Observers further suggest that officials routinely overlook the use of GM crops as a show of support for agricultural producers and in recognition of the role that GM crops play in boosting Ukraine’s agricultural exports.

Despite the tendency of the government to look the other way regarding the use of GM crops in Ukraine, acceptance of the planting of GM crops is not universal. Many specialists prefer the use of conventional breeding methods to develop new varieties, and domestic seed producers want to prevent competition from dealers of imported GM varieties.

Current USDA area and production estimates for grains and other agricultural commodities are available on IPAD’s Agricultural Production page, or at PSD Online.  The contribution of Alexander Tarassevych, agricultural specialist at the U.S. Embassy in Kyiv, is gratefully acknowledged. 

For more information contact Mark Lindeman | | (202) 690-0143
USDA-FAS, Office of Global Analysis

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