Tuesday, 26 April 2011

Buckwheat; is chasing the market the right policy?

For the last eight months or so farmers, agronomists, investors and taxi drivers have all been telling me to grow buckwheat as the price is going through the roof.

That may well be, instinctively I have always felt the urge to pretty much do the opposite to what everyone else is doing.

If everyone is growing buckwheat on the back of promised high prices then my reaction is to leave them to it and the figures seem to back me up.

Ukraine’s buckwheat consumption stands at about 150,000MT.

In 2009 farmers grew 273,000HA and produced 189,00MT of the stuff; in 2010 planting was down to 215,000HA and they produced 133,700MT.

Last year planting was down but so was yield in the unprecedented heat and drought.

If this coming season we see the plantings the same as 2010 but yield are at 2009 levels then total buckwheat production will stand at just shy of 149,000MT.

That’s very close to domestic demand.

But we know the government is actively “encouraging” growers to plant the stuff so let’s assume plantings are up by say a conservative 10%, then production will at 163,700MT, well over domestic consumption.

There’s a fine line between shortage and surplus and state market mechanisms are generally just too blunt a tool to get the job right, ask the EU.