FSU cereals production ‘could be doubled’
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Emerging Markets

FSU cereals production ‘could be doubled’

Russia, Kazakhstan and Ukraine’s cereals output could double in the coming years, experts suggested

Cereals production “could be doubled” in Russia, Kazakhstan and Ukraine in the coming years if the right policies are adopted, a seminar on food security at the EBRD in Astana was told.

Policies focused on economic growth, reducing trade restrictions, reforming institutions and promoting investment are needed to “unleash this great potential”, Johan Swinnen, professor of development economics at Leven university, said.

“The good news is that in this part of the world there are more options to expand land use than elsewhere”, Swinnen said. Since 1992, the area under cultivation had fallen by 37% in Kazakhstan and by substantial amounts in Russia and Ukraine, and this land could be returned to use quite easily.

Climate change, which will reduce water availability and yields in southern countries, would raise both in the former Soviet Union, he pointed out.

Dina Umali-Deininger, sector manager for Europe and central Asia at the World Bank, said that investment in rehabilitation of Soviet-era irrigation systems was among the most efficient ways of raising agricultural production in the region.

“In Ukraine, for example, one third of the land that could potentially be irrigated is not,” she said, adding that public-private partnerships could provide finance for new irrigation systems.

Dealing with waterlogging and salination, which affects half of the 9 million hectares of irrigated land in central Asia was another priority, Umali-Deininger said. Access to better-quality seeds, the strengthening of legal property rights, access to working capital for farmers, and an improvement in long-range weather forecasting were also vital issues.

Andre Kuusvik, the EBRD’s Ukraine country director, told the seminar that the bank prioritized making finance available along the agricultural production, transport and distribution chain.

On Friday the bank joined signed a deal in Astana with John Deere, the US-based multinational agricultural equipment maker, to launch a leasing company in Russia to finance purchases by Russian farmers.

A five-year loan of up to 4.7 billion rubles will be available to help farmers “overcome one of their most critical problems, the shortage of modern and efficient farm machinery”, the bank said.

The former Soviet Union’s export potential could not be considered separately from its own food security problems, the seminar was told. Uzbekistan, Tajikistan and Turkmenistan have 76%, 51% and 50% respectively of their populations living on less than $2 a day, a standard poverty benchmark, Swinnen said. Vitamin A deficiency levels among children in Uzbekistan, Tajikistan and Kyrgyzstan are alarmingly high.

In Russia, food security has been put under pressure by a 17.5% leap in food prices between June 2010 and February 2011, the World Bank said in its Russian Economic Report issued last month. Extensive drought between June and October 2010 exacerbated the problem.

“Buckwheat prices led the surge”, rising 120% throughout the period, the Bank stated. Other prices that jumped especially high were those of potatoes (104%), oils and fats, and eggs and apples (20-25%).

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