Friday, 24 October 2014

Ukraine wheat plantings may exceed the plan

The Ukraine Ministry of Agrarian Policy has declared winter wheat plantings may exceed the
original plan of 6.2mha due to favourable weather conditions and a good situation on the world market.

Before my kids came along I used to read books, one that has stayed in my memory and I occasionally quote from is Jeremy Paxman’s The Political Animal.

Paxman is an English journalist who worked for the BBC and his infamous interview when he asked the Home Secretary the same question 12 times in an unsuccessful attempt to get a straight answer gives you an inkling of what he’s like.

In his book he explains how he dislikes politicians because they would sell their grandmother to gain votes or parade their wife and kids in front of the press in a display of family unity the morning after they had been caught with their secretary if it meant it would save their job.

With that in mind let’s take another look at that statement from the Minister of Agriculture.

The Minister has declared that winter wheat plantings may exceed the original plan. 

That they might well do but what plan?  Prediction or forecast might be a better word although I think he may actually believe it’s a plan.

One of the biggest challenges Ukraine has is to shake off years of command led thinking which you can see in the steady flow of announcements and declarations about targets, plans and outputs.

The government pushes farms to follow policy but provides little incentive to do so, it uses threat that if you don’t do what we ask then we will cause problems elsewhere in your business.

For the last five or so years I have been told by local administrators that I must immediately farm livestock as it has been decided by central government and can I supply a business plan also immediately for the new dairy unit or pig farm.

(The trick here is to agree then do nothing, several months will go by until you’re called in to the office to be told off again, you apologies, say you’re working on it then do nothing, by the time it comes around again he’ll have been replaced and the whole cycle can start again.)

Favourable weather conditions? 

It’s been dry which means planting has progressed but that dryness needs some wetness to get crops up and ready for the winter.  Just because it’s dry and we are all planted up doesn't necessarily follow we would continue to plant more.  Generally that’s not how a farm works; we have a plan based on a rotation, machinery output, seeds and chems purchased, diesel ordered, budgets, cash flows, holidays and so on.

A good situation on the world market?

That’s not how I read the market; global grain surplus, multi-year low prices, input costs up.  My guess is the sensible route would be to hold additional winter plantings to see how the market develops by the spring and adapt accordingly.

In his book Paxman discovered that 60% of British Prime Ministers had lost one or both parents at a young age compared to the national average of 1%.
Not sure what that says about politicians but it screams something.

You can watch that Paxman interview here.