Thursday, 31 March 2011

Talking of fools...

This week I had the unfortunate experience of having to attend a meeting with a local administrator.

I was subjected to a diatribe of how farms should be managed from a guy who looked like he didn’t have the mental capacity manage his way out of a wet paper bag.

If we didn’t follow his recommendations then life could become very difficult indeed.

There are investors looking to find homes for large sums of cash in Ukraine, cash that would filter in to the local economy, create jobs and opportunities, improve the infrastructure and services, generate wealth and bring happiness, harmony and well-being to many.

In short lift the silent majority out of perpetual poverty and hardship.

Unsurprisingly investors hesitate when they meet individuals like this.

I’m sorry Ukraine but you have to do better than this. These guys are stopping your country developing.

Wednesday, 30 March 2011

A fool and his grain

Ukraine has announced that it will cancel export quotas.

Actually what the President said was after 31st March when the period of validity of the export quotas for grains terminates the Government prepares the corresponding legislative act, which would change the current regime for customs duties in case of need.

Taken to mean quotas would really be cancelled, no really!

After the 31st March? That will be 1st April then.

Sunday, 27 March 2011

Grain monopoly

The rumours and stories surrounding a Ukraine state grain board continue to circulate.

I have yet to read or hear an opinion or argument in favour of the idea although no one was in favour of the export ban and that still went ahead.

Richard Ferguson from Renaissance Capital writes a concise argument (here) of why a state grain board and the continued government intervention in agriculture in general is a bad idea.

Unfortunately just because it's a bad idea doesn't mean it's not going to happen.

Soil temperature

Apologies for the cluttered chart below but I thought this was an interesting development.

The weather data show soil temperature are currently behind on last year with the trend line predicting mid April before hitting 4-5 degrees.

Obviously this will change as solar radiation warms up the dark soil much quicker and this data is only for central Ukraine but interesting none the less.

Worth bearing in mind as farmers are rushing to get fertiliser on and the first spring crops sown.


Monday, 21 March 2011

Ministry for stating the bleedin' obvious #2

"Most buildings and facilities in Ukraine are not earthquake proof" says earthquake expert and Deputy Director of the Institute of Geophysics of Ukraine Academy of Science, Oleksandr Kendzera.
I'm no expert but I reckon most buildings in Ukraine aren't even strong wind proof let alone an earthquake.

Saturday, 19 March 2011

Follow the lead

Russia has followed Canada in cutting grain harvest estimates even before the spring sowing campaign has begun after warnings on credit and the quality of seed.

How long before Ukraine comes out and does the same?

When they do it's worth bearing in mind the reason farmers lack funds to pay for seed and fertiliser was because they couldn't access the world market and who's fault was that?

Thursday, 17 March 2011

Back to the future?

As events in Japan unfold some startling images are emerging, none less so than the pictures of empty supermarket shelves.

Are we glimpsing the near future?

Wednesday, 16 March 2011

Talking of great train robberies

Against all odds the bald headed cockney Phil Collins has sensed something in the air and decided to give us all another day in paradise by hanging up his drumsticks for good.

Nope Phil, you certainly can't hurry love or the end of your career, fickle business is show business.

Suss-sussudio indeed.

The great grain robbery

The Ukraine League of Industrialists and Entrepreneurs, Ukraine Agrarian Confederation and Ukraine Grain Association have written an open letter (here) against the interventionist actions towards agriculture by the government.

They join the World Bank, IMF, EBRD, WTO, GAFTA and a host of other acronyms that have recently come out against the monopolisation of the grain business.
Personally I don't think Yanukovych will be that concerned and with global interest currently focused elsewhere they may just get away with it.

Friday, 11 March 2011

Crop Update

Reports are coming in about the post winter condition of the crops and the news is essentially good for central, western and southern regions.

Still waiting for updates from eastern Ukraine where we might see higher levels of winter kill as low levels of snow failed to provide sufficient insulation.

We have not seen the same climatic conditions as we did last year when we saw a thaw in February which allowed melt water to pool and then re-freeze killing plants.

More detailed reports to follow as we get a better look at the emerging crops.

A worrying development?

The Ukrainian government has been talking about installing a state run grain monopoly which many considered to be a bit of smoke and mirrors.


Well it seems the government is more serious about it than most of us thought and have started to implement legal changes that may well make the spectre of a Ukrainian grain board a reality.


My mate Cuck Penner of LeftField Commodity Research tells me that when he researched the Canadian Wheat Board he found that it left Canadian farmers some $400-600 million worse off each year mostly due to inefficiencies and a lack of competitive bidding.


Is the UWB likely to be any more efficient than the CWB?


The EBRD and World Bank have been financing some spectacularly expensive grain storage and handling facilities with private trading companies.


I can't see them financing a state run monopoly so who is going to pay to upgrade the sorely needed storage?


Two years in the last three saw grain export bans; ships full of wheat sat at port through most of August and September last year; a poor 2010 harvest coupled with low prices made it difficult to make a return on investment; murky land ownership procedures; difficulties in sourcing reliable inputs; corruption; theft etc.


You can see why private investment is not rushing headlong in to Ukraine agriculture; the introduction of a UWB is unlikely to boost confidence and encourage further investment now is it.


So what is anybody doing about this?


The EBRD, World Bank and IMF held a round table discussion and have written a stern letter to the Prime Minister of Ukraine!