Ukraine: Political Crisis Impacting Output of "Europe's Breadbasket"
Thanks to the rich soil of its steppes, Ukraine has long been known as "Europe's Breadbasket." But it appears that the recent turmoil affecting the country may impact this year's Ukrainian wheat harvest, which is expected to be down ten percent from last year. Reports the Kyiv Post:
Political turmoil, currency fluctuations and loss of territory will prevent major Ukrainian grain producers from enjoying another banner year. Analysts expect the grain harvest this year to reach 54-56 million tons, 12 percent down from last year’s record of 63 million tons.
Statistics do not include forecasted Crimean yield figures because Russia has annexed the peninsula.
Indeed, losing a large swath of fertile territory can certainly have an impact on a country's agricultural output. Being next door to a threatening and belligerent neighbor can also make things tough, as the Registan blog points out in a very interesting post on how the Ukraine crisis is affecting that country's agricultural sector:
Even with status as one of the world’s largest grain exporters, Ukraine is still beholden to its top trading partner, Russia, for agribusiness. Russia already utilized this leverage in a tactical move against the newly installed government in Kiev. On 24 February, Sergei Dankvert, head of the Russian veterinary and phytosanitary oversight service Rosselkhoznadsor, hinted at temporarily limiting certain food imports from Ukraine, explaining, “Cooperation between veterinary and phytosanitary experts is largely based on trust. If the conditions in which the Ukrainian service is working do not improve, moreover, if its leadership is replaced, the business contacts, built over the past few years, may be affected.”
More notably, the recent annexation of Crimea means Russia controls key ports along the Black Sea through which Ukraine distributes its agricultural products to international markets. Ongoing geopolitical tensions will likely further increase the risk attached to Ukrainian commodities, hindering the flow of goods, hiking global grain prices, and creating more demand for U.S. output. By so hastily acquiring new territory, Russia singularly faces even bigger economic challenges including feeding a Crimean populace that received more than 70% of their food directly from Ukraine.
Not everything can be blamed on politics or Russian president Vladimir Putin. As the Wall Street Journal explains in an article about Ukraine's agricultural challenges, while farmers have already planted the spring corn crop, its prospects are uncertain -- not because of anything to do with Mother Russia but rather because of Mother Nature. who has been withholding rain from parts of Ukraine, leading to drought conditions in many agricultural areas.