This article is not about politics, although Ukraine's political leaders have been locked in quite a heated power struggle lately. I am writing about natural heat and extremely high temperatures, which have never before been recorded in this country. This is not a local problem. This is a global challenge. Ukraine's weather influences grain crops and consequently food prices worldwide. Not only does it have an impact on grain traders but it also affects those who eat twice or thrice a day.
Grain has always been a strategic resource in Ukraine. The Bolsheviks expropriated it during the Civil War, declaring that their "struggle for bread is a struggle for the Soviet ideals." In summer 1941, Adolf Hitler ordered his troops to stop their invasion of Russia and redeployed them southwards to enslave Ukraine. His generals later said this decision had been his fatal mistake. Hitler, however, did it because his army could not fight without food. The Germans even freed thousands of prisoners to harvest grain in Ukraine.
The world's first civilian space system, which is still very reliable, was used to monitor crops in the Soviet Union, particularly in Ukraine, and predict food prices. The sky over Ukraine is open now and there is no need to hide information about the country's weather.
Ukraine's weather conditions are much more complicated and less stable than Western Europe's. Ukraine's climate is both mild Atlantic and continental in the east, which makes the country quite a risky place for farming. Last century it survived two great droughts and two famines, in 1920 and in 1946. In 1946, the scorched soil was almost waterless. It had such deep cracks that horses and cows broke legs in them. To save their animals from starvation, farmers tore down their thatched roofs for fodder.
There has been no or very little rain in some regions of Ukraine since spring. This has killed this year's crops. Ukrainians sense such problems genetically. We have been cultivating this land for millennia. We know that Scythians grew grain for trade here. We remember the man-made famine of 1932-1933. This is why we subconsciously think about the weather, no matter what our occupation is.
The Agriculture Ministry was very optimistic in winter 2007, hoping to harvest 38 million tons of grain this year. However, last May's heat of 30-36?C brought severe droughts and even dust storms in some regions. The country's crops began withering at a dramatic speed. There were a few rains later but this did not improve the situation. Ukraine will have to reduce its grain export. Although its contribution to the world's grain balance is relatively small, less than 10%, the country is still one of the biggest grain exporters, together with the United States of America, Canada, Argentina Russia, and Kazakhstan.
This year has also been quite unsuccessful for them. Argentina and Canada are expected to harvest less than expected. Russia and Kazakhstan have been hit by the same drought. News from China is also worrying. The United States, on the contrary, will have poorer crops because of too many rains.
All these factors show we must be ready for global price hikes. Each country will have to take some measures aimed at protecting their food markets. The government of Ukraine is also adopting such measures.
It has 250,000 tons in its reserves but will spend UAH 100 million to buy 750,000 more tons to satisfy our needs. The government is also going to introduce compensatory mechanisms to make sure farmers are not affected by the weather. Millions of hryvnias will be spent on this aid and many other financial measures. This is the first time our farmers feel such care.
The greatest challenge facing the cabinet of ministers now is how to protect the nation from rising prices. The government has always used non-market methods for this. In 2006, it banned grain export to protect Ukrainian farmers. The ban, however, had a negative impact on international traders, who had bought grain but could not sell it. The U.S. ambassador to Ukraine even made a statement because traders had lost up to USD 100 million. The cabinet lifted the ban to export forage grain as soon as the situation improved. The decision was made but then the drought hit the country, making it difficult to implement. Hopefully, the problem will be resolved soon, as the government now wants to stabilize the grain market through market means. It has almost stopped selling grain from the state reserve to regulate the prices and also plans to lift its grain duties to balance supply and demand, import and export. This will contribute to Ukraine's image as reliable partner, even though Prime Minister Viktor Yanukovych says his cabinet may impose new grain quotas in case of emergency.
No matter what grain traders say, the population will support those quotas because we have monuments to honor the victims of the Great Famine erected throughout the country and have always worshipped bread.
It is difficult to predict whether the government will be effective in its bid to regulate the prices. Hopefully, it will work really hard on the eve of early parliamentary elections. One can confidently say that it will redistribute grain between the country's drought affected regions and those which had more rains and therefore richer crops. This will be enough to stabilize the food market. This mechanism has been used quite many times and proved effective, saving the economy and millions of people.
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