By Tim Burrack: Arlington, Iowa
Traveling through Ukraine and looking at its farmland is like a trip in a time machine for someone who farms in Iowa. Every mile you drive away from Kiev, the capital city, takes you back a year. The facilities, the machinery, the way the people live--it’s a window into the past.
You find villages with the town water source an open well with a winch and a pail on a chain. You see horse-drawn wagons that move feed and people. And livestock that is driven out to the fields in the morning and back home at night.
Yet this region is essential to the world’s food security. The global population just topped 7 billion and most demographers say it will keep on growing for decades to come. To keep up with demand, farmers everywhere must double their crop yields by the middle of this century--and bringing Eastern Europe and Ukraine into the modern world of agriculture should be one of our highest priorities.
Success will require changes in technology, politics, policies and attitudes. But if the world is to have enough food, we’ll have to do a much better job of producing crops in this part of it--and my own experience of farming for about half a dozen years in Ukraine tells me that we can. It just won’t be easy.
Most of the world’s best farmland is already committed to agriculture--so in our quest to double production, we can’t simply plant more of it. We have to do a better job with the acreage we’ve got, taking areas that underperform and helping them improve.
In this regard, we hear much about Africa, which lags the rest of the world in food production.
But we can’t lose sight of other areas that have their own catching up to do. In the Black Sea region of Ukraine, Russia, Kazakhstan, Moldova, and Georgia, farmers produce wheat at two-thirds the rate of farmers in the United States. The results with other crops are even worse. They produce only half as much in soybeans and 40 percent as much in corn.
Perhaps it’s not fair to compare farmers in these struggling nations with the best in the world, but we shouldn’t necessarily expect less of them. Ukraine is blessed with many of the ingredients for high-yield production. The dirt is black and beautiful and at least as good as anything I’ve encountered here in Iowa. The climate is a little drier, but the region is still a breadbasket.
I’m convinced that with the right kind of management and policies, farmers in this region could grow twice as many crops as they do now.
At one time, I had hoped to help out. More than a decade ago, one of my friends went on a mission to Ukraine to hand out Bibles. He came back with stories about rich farmland that needed better machinery. A group of us made an investment. We pooled our resources, bought equipment, and started a farming operation.
We began with about 2,000 acres and worked our way up to 14,000. But we found that it was almost impossible to conduct ordinary business. We were constantly asked to pay bribes. One time, we shipped a pair of four-wheel-drive tractors to Odessa. They were there one day and gone the next. They vanished from the docks and we never saw them again.
We learned that Communism had crushed the souls of the people. They lacked initiative. Whenever we asked them to do something that seemed to depart from custom, we had trouble. If we asked them to work a field at an angle, in order to improve the tillage, they’d follow our directions until we were gone--then they’d go back to doing things the old-fashioned way, even though it was less efficient.
Government policies complicate the matter as well. Kiev refuses to pay value-added tax refunds to foreign investors. Export taxes also hurt productivity.
Ukrainian farmers were exceptional at one thing: mechanical repairs. Because new machinery is so rare, they know how to take junk and make it function. I just wish they could adapt the same ingenuity to agriculture production as a whole.
One step might involve the introduction of biotechnology. Right now, almost nobody in this region grows GM crops, according to the International Service for the Acquisition of Agri-biotech Applications (ISAAA). There’s a little activity in the fields of Poland and Romania, but essentially none in Ukraine, Russia, or their neighbors.
The European Corn borer is a very serious pest that causes huge corn losses in this part of the world. Currently, they release butterflies in an attempt to control the corn borer. It was quite clear that this attempt at pest management was worthless. Allowing Bt corn to be grown here would raise corn yields 30% to 40% by reducing the loss they are experiencing from this pest alone!
If we help this region step into the present day, we’ll begin to secure future food needs.
Today's Macro Event Does Nothing to Change Fundamentals in the Grains
Jim's Morning Markets Report--December 1