Ukraine wheat output set to dip

The impact of an extended political crisis is being felt in Ukraine’s primary economic sector.

Ukraine’s wheat output is forecast to fall by a notable amount in the wake of a 40 percent devaluation of the Ukrainian currency, the hryvnia (₴), according to a recent report by the Foreign Agriculture Service, a subsidiary of the US Department for Agriculture.

The USDA forecasts that 2014/15 wheat production will net around 20 million metric tons against 22.3 million last year.

The currency’s devaluation has made the cost of the agricultural inputs such as fertilisers, fuel for farming machinery and insecticide from overseas significantly more expensive and forced many farmers to use less. In turn this has resulted in lower yields of the crop.

There are some winners in the local market that are taking advantage of higher foreign prices such as local seed producers that are expected to do well, according to the report.

A recent ban by Russia on all Ukrainian fruit and vegetable imports will be the next concern for Ukraine’s agricultural exporters.

Corn and sunflower crops are set to remain the most popular crops to grow, as average profitability for those crops remains consistent, despite the high cost of production. Profitability levels work out at 45 percent for sunseed and 24 percent for corn, according to the report. The graph below bears testament to corn and wheat’s popularity. These products are forecast to be Ukraine’s most successful agriculture export product for next year.