 As a small town boy, I grew up in the tobacco, peanut and vegetable fields of South Georgia and have spent a considerable part of my life involved with agriculture at one level or another. My involvement with agriculture in Ukraine has further convinced me of a long-held conviction that governments, when dealing with agriculture, should adopt the old motto that is taught to aspiring medical students, "First, do no harm."
Ukraine's agricultural authorities have not shown themselves very adept at adopting policies that actually benefit agriculture and some of the die-hard socialist and communist elements in the parliament further complicate matters by pushing policies that were out-of-date and just plain wrong 50 to 70 years ago.
Other politicians have shown themselves as totally corrupt in using agriculture for their own purposes while doing great harm to farms and farmers in the process.
If one seriously examines the recent history of agriculture in Ukraine, it is hard to avoid the conclusion that the best thing that the government could do for farmers - and consumers - is to get out of agriculture and stay out.
Recently, an ill-advised action by the current government has led to disruptions and negative consequences. A government ordered blockage of export sales of grain without any notice led to huge backlogs in the country's port facilities, daily losses in the hundred of thousands of dollars for wheat exporters who had contracted shipments in good faith, and further damage to Ukraine's already questionable reputation as a reliable supplier. Since late January, there have been reports that as much as 300,000 tons of the stored wheat and other grains have spoiled and have been destroyed or dumped.
Grain stoppages are bad policy under any circumstances and this particular stoppage appears to have been more ill-advised than most. Farmers with winter wheat planted last August will be left wondering how government intrusion into the market would affect their chances of profitability in the coming year. Some of those with stands that are not so good may very well decide to simply abandon fields if there is a lack of certainty as to market conditions in the coming summer and fall.
The exporters who have been buying wheat in previous years at levels that supported both the domestic and foreign markets will either exit the market or offer low prices for lower quantities to minimize their risks of further losses that could be brought about if the government involves itself in the grain market again in 2007.
Exporters will change their trading patterns to minimize risks, and this will almost certainly have a negative effect on the profitability of Ukrainian farms. Some multinational companies closed their Ukrainian affiliates as a result of the latest embargo, leaving considerable numbers of experienced Ukrainian grain trade personnel unemployed.
At some point - and it may yet take years - Ukrainian governments may finally arrive at the conclusion that going into the market and buying reserve grain at market prices is the best policy for all concerned. However, that lesson has not sunk in yet and it is hard to see it happening any time soon.
Russian grain authorities have been considerably cleverer, sometimes announcing intervention prices, but not necessarily making any purchases. On the other hand, Ukraine follows the old communist-era rules, making intervention purchases, thus giving jobs to bureaucrats who will then have to work with this grain, write reports on it, move it from one place to another and possibly wind up selling it under special circumstances that benefit insiders but not the government and certainly not the farmers.
There is in my opinion an even darker side to this issue. There are those in the legislative and other government branches today who greatly desire to see agriculture brought back under strong government control and for the oldest and worst agricultural institutions, Khlib Ukrainiy, to again raise its ugly head.
Nothing could be worse for Ukraine's farmers or the country's reputation as a reliable trader, but we seem to be headed in that direction.
All of this suggests that the sooner World Trade Organization accession may be completed the better off everyone will be. WTO membership would tie the hands of government and avoid many of the worst of the government's current abuses of its power.
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