Hardworking Ukrainians are beginning the spring planting their gardens and dachas. By working the soil, we rightfully count on the grace of God in the form of good crops. For the Ukrainian of the twenty-first century, homegrown potatoes have become almost the basic source of social protection.
Meanwhile, for the last decade fewer and fewer potatoes have been harvested in Ukraine. Last year saw an unusually poor crop: in 1999 only half as much spud was dug as in 1998. The drought was insurmountable: given the current status of the agricultural sector, even scientific fiction writers dare not dream about watering potato fields. But then, whose fields should be watered? Only 2% of the last year crop was grown by industrial methods and the rest were in private gardens without access to irrigation. That is, we have become a nation that feeds itself.
The government, not burdened with the food problem as ever, seems to not have even thought that there would come the time that the lack of concern for the potato will entail a much bigger problem: the quality seed stock is virtually being destroyed in this country. This is because household potato growing, which has become the only real potato cultivation, remains on an amateur level: due to the limitations of their garden plots, to name just one factor, our homebred potato heads cannot follow the right rotation and other agronomic rules, and selection potato is also not sown: they put in the ground whatever is left over from the previous crop. Thus, potatoes naturally accumulate diseases and chemicals (which the owners carefully sprinkle with a homemade broom every year to exterminate potato bugs), and degenerates. However, the problem that has arisen this year does not concern only quality but quantity as well: through the last year poor crop, a shortage of seed stock is experienced even by the specialized enterprises that continue to grow potatoes for the processing industry. As far back as at the end of the last year, the Ministry of Agricultural Policy, having calculated the quantity of potatoes needed for sowing, found that even if Ukraine makes maximum use of its internal resources, it still would be necessary to import 312,000 tons of seed potatoes.
In the first three months of this year, potato imports to Ukraine reached 2,287 tons. Even if we assume that all this was seed potatoes, it would not cover the deficit calculated by the ministry after last year’s poor crop. According to simple arithmetic, it seems quite probable that far from enough of the starchy tuber will be planted, let alone harvested, in Ukraine this year.
Of course, if we plant enough potatoes and of different commercial varieties suitable for processing, the crop would be adequate not only for household consumption, but would also provide work for the food processing industries, which, according to the MAP data, could bring an additional UAH 14.6 million in budget revenues. This year, the potato processing industries were for the most part idle because of lack of raw material. Thus, four of five of the starch producers we tried to contact have shown no sign of life.
Lidiya Lytvynchuk, chief accountant of Volodar-Volynsky Agricultural Cooperative (a former starch plant in Zhytomyr oblast) says the last time the enterprise produced starch was in 1996. Last year, due to the crop failure, they did not even start the production line, “for there were almost no potatoes at all, and the yield was hardly enough for food.” This year, the cooperative has leased up to 800 hectares of land, but it will be able to sow with potato on only 5 to 7 hectares. According to Ms. Lytvynchuk, the main problem is the lack of seed potatoes. Perhaps they will be able to sow a larger field in a few years, but currently the enterprise in trying to survive by producing other crops. Thus, there can be a shortage in domestic starch this year again, and thus again no obstacles to the business of the firms that had insight into our market conditions and began to import starch in 1999.
First deputy of the Ivankiv district state administration Yuri Mosiyenko recalls that once his region specialized in potato growing and “exported” within the USSR to other republics. However, in 1995, agricultural enterprises began to dramatically reduce potato acreage primarily because the population had en masse acquired garden plots leading to a fall in demand for potatoes. Last year, the regional agribusiness enterprises allotted 200 hectares for potatoes, while the population grew potato on 3,500 hectares. Mr. Mosiyenko says that the Polissya agribusiness establishments would like to regenerate industrial potato production, but face problems with seed stock: some did bother themselves with the problem last fall, and others cannot afford the price of the elite seed. Thus, the regional authorities through their own efforts and channels plan to import from Belarus fifteen tons of elite and super elite seed potatoes.
According to director of the Potato Growing Institute V. V. Kanonuchenko, despite the selection work being properly conducted in Ukraine, the supply of seed potatoes is a major bottleneck. “In three or four years we can produce seed material enough for the whole population,” he says. But the real work regarding high yields will start only when specialized potato producer is revived. This can happen no sooner than five years, the director predicts. The preconditions for such revival are as follows: it is the processing industry that must create its own source of raw materials, because if nobody except the population is interested in potato growing, the situation will remain at the level of what was grown has been eaten, and we will continue to import starch from abroad. By creating such a source, the processors usually act as creditors for commodity producers, who now cannot afford the elite sorts of seed potatoes they need at three hryvnias a kilogram.
But still, since we are a nation not isolated from the so-called world economic community (excuse my grandiloquence when discussing this humble product). Why not just import some seed potatoes? The more so as such situation has come to exist not due to an awkward agrarian policy, but owing to last year’s drought, an ironclad moral alibi. However, with existing customs duties, even an altruistic patriot would not hazard bring seed potatoes into Ukraine (not legally, at least — Ed.). Four years ago, when Ukraine suddenly felt nature’s grace in the form of a good second cereals crop, Parliament, aiming to protect domestic producers, adopted draconian tariffs. This measure, however, was a bit slow, for last year state-funded institutions had enough time to buy cheap Polish and Turkish potatoes. But further the customs duties became an effective barrier to potato imports. Last fall, to bring in elite sorts of seed potatoes to Ukraine one had to pay four times the world price; in other words, the duty rate is 400%, plus transport costs! Thus, even in lean years nobody imports any.
The question is: how flexible should be the state customs and tariff policies be, especially regarding agriculture, which in its current state cannot withstand whims of the nature with its continuously poor yields? At present, the duty rates are considered as a constant which cannot be changed, as if we are still back in bumper-crop 1996.
How big are the revenues from the tariff on potatoes? UAH 127,000 last year and UAH 23,000 for the first three months of this year. And if the processing industry started to operate, even with imported raw materials, the budget revenues would be UAH 14.6 million according to the MAP calculations mentioned earlier.
One progressive step by the Yushchenko Cabinet is to create a transparent decision-making scheme, on which The Day has already written and which really does prevent unofficial problem solving for the benefit of some business structures or another, that is, it limits backdoor lobbying. The Cabinet’s regulation of December 30, 1999, which is considered a major accomplishment in this field, stipulates that in order to not reduce revenues to the budget, no applications will be considered for granting privileges, in particular, with regard to customs clearance of goods. Thus, when early this year a group of lawmakers raised the issue of a temporary customs corridor for potato imports (by introducing a temporary zero duty rate for potatoes), the government used this regulation to shut itself off the problem.
But might something not be mixed up here? The paradox of the potato crunch is that the issue concerns the absence of flexibility in tariff policy for everybody, not privileges (because no exclusive supplier for potato purchase is identified, and no preferential business conditions are created). Why then does Russia, no less a spud-growing country, set a zero tariff, while we, despite our limited internal resources, so zealously protect our commodity producers that as a result we get idle processing plants?
Incidentally, the issue can be put differently: if the Cabinet deems it reasonable to solve this problem through tariff flexibility, why does it not propose some other solutions? This is not an obscure problem, suffice it to phone agribusiness entities or look through the petitions from the oblasts to the Agricultural Policy Ministry to purchase seed potatoes. Because, if the experts are right, the fall shows that not enough potatoes were sown, and the crop will not be that good, we will have to import potatoes all the same — this time not for planting, but for consumption. This would seem dubious protection and bode dubious future prospects for the processing sector.
Or maybe we will make do somehow: not enough will be planted, but something will be harvested anyway, provided the weather is good. And will agricultural policy in this country, where our once powerful agricultural industry has retained nothing except perhaps the best chernozem (black soil) in the world, be built further on the eternal principle of counting on nature’s good graces?
