News
16.12.2009
Ukraine crops improve, but credit to stay tight
Credit, which slumped nearly 40% last year, looks likely to remain tight for Ukraine's farmers despite waning fears for winter sowings, a leading analysis group has said.
A court ruling which termed "unconstitutional" parliamentary measures aimed at allowing farmers extra time to pay off loans, because of the global economic crisis, has worsened the sector's already poor credit prospects.
While the level new borrowings looked unlikely to fall for a second successive year, after dropping 7.7bn hryvnia to 12bn hryvnia in 2009, the credit outlook "remains dim", Kiev-based UkrAgroConsult said.
"Bank loans will remain hardly accessible for agricultural producers in 2010," the group said, noting that annual interest rates on available loans were typically 24-7%.
"In the opinion of bankers, next year's increase, if any, in crediting, will be seen in the latter half of the year and will be insignificant, [rising] literally by 3-5%."
Spending cuts
The squeeze looked likely to prompt farmers to keep a tight rein on costs such as equipment and fertilizers.
"The urgent need to repay loans may cause growers to spend less money on machinery, seeds and other input supplies," UkrAgroConsult said.
"Commodity sales proceeds will remain the key source of money for peasants in 2010," with the government forecasting margins of about 10% next year.
Corn remained the most profitable cereals crop, offering a margin of 575 hryvnia per tonne - compared with 327 hryvnia for wheat and 40 hryvnia for barley - although this paled against returns earned by sunflower growers.
Sowings recover
For 2010, UkrAgroConsult noted improved prospects for winter grain sowings, which had been helped by rain and warm weather to overcome a drought-plagued start.
The proportion of crops viewed as being in good condition rose by 2.5 percentage points to 44.4% in the week to December 3, up 2.5 percentage points on the week, with 12.3% of sowings in poor health, down 2.5 points.
"Although the state of winter cereals gradually improves, it is still far [from] ideal," the analysis group said.
"The reseeding area will be larger than in the previous two seasons."
Exports surge
The group also raised its estimate for grain exports in 2009-10 by 1.20m tonnes although, at 20.2m tonnes, it remains well below the 23m-24m outlined by farmers last week.
"Wheat is shipped for export at a fast pace," UkrAgroConsult said.
"About 5.8m tonnes was exported in July-November. That is the greatest volume in at least the past 15 seasons."
Agrimoney
