Return from the Ukraine

[charliep]

Just an update on activities.

Back again and thought I should provide an update.

The project is to develop extension/farm advisory for 4 provinces/states (oblasts in the Ukraine). An issue that has been identified over time is the need to get agronomic and business management information to small/subsistance farms and to medium sized ones. The project is mainly funded by Canadian International Development Agency (CIDA) but is also supported by all three prairie provinces by in kind contributions (providing specialist advisors time to assist the offices in getting set up and to develop extension skills). All travel expenses are paid by CIDA.

My job was to work with the extension offices to develop a 5 year business plan and review their 1 year operating plans. A major part of this was to review alternatives for financing extension services - Ukrainian government has made commitments to provide funding but little if anything has happened. The extension offices are looking at alternatives such as applying for international grant programs, partnership arrangements and feed for service. Again to hightlight, no contact with farmers on this trip - worked with extension proffessionals only.

Government issues/confusion still exist there with a main stumbling block lack of progress on land reform. European farmers are starting to set up farms there but again, a slow process/full of risk.

Still lots of confusion/controversy about the size of the 2006 crop. Winter kill was a major factor but spring seeded crops were good. Government is still maintaining tight control over grain licences for internal food security (some would say control) reasons.

Weather was very warm when I was there (as in all of Europe)- temperatures above freezing whole time with highs 5 to 10 C. Winter crops look good in spite of the fact some were seeded late. Interesting to see if they get another cold January/February.

Challenges I could talk about include being grounded by fog at an airport and being forced to take a 6 hour taxi cab ride between cities in the middle of the night only to turn into 8 hours after a flat tire with a jack that didn't work and finally being replaced by a spare that I likely can be glad it was dark/I was not able to see how much (or little) tread was on the tire.

[charliep]

Should note that bio fuel is definitely the talk in the Ukraine as well. There were 2 or 3 ****seed crushing plants being announced when I was there although all small by our standards. Also interest in ethanol with the ability to produce corn an asset. Just getting started in this area but the virtual vacuum coming out of Europe to meet their bio fuel blend commitments will be a driver.

Only other issue to watch in the Ukraine is rural development. Using dairy as an example, a new 100 cow dairy with new technology and improved cow genetics/nutrition will likely replace the milk produced by 100 farm families with 2 to 4 cows each (where milk comes from now). I often tell them I am like Arnold Schwarzenegger in the terminator warning them of the future. Over the next 10 years (with a speed up caused by land reform), there will be significant increases in farm size/productively and a major shift of farm families off the land. Rural development/community business attraction will need to be a major focus to keep rural communities viable - similar to here.

[dalek]

Always heartwarming to see Canadian taxpayer money going to help improve the competitions future ability to put Canadian farmers out of business.

[wd9]

Dalek, plus 1.

Charlie, what benefit do you see for Canadian agriculture in doing this assignment? I'm sure you knew someone was going to ask.

[TOM4CWB]

dalek & WD9,

Giving to those less fortunate than ourselves is a duty... for some day we will need there help.

A hand up... is always better than a hand out.

Bless you Charlie... and your crew that made this possible. I hope you can help bring constructive progress to our freinds in the Ukraine!

[JohnKenneth]

information is power.

more important than future initiatives that may result from the project and, possibly, competitive pressures, we now have in our midst a skilled informant as to the goings on in this important region, who is always quick and direct in letting us know what it all means.

whether charlie had gone or not (and i'm with tom, it's our duty as citizens of the planet to help where we can in an outside our borders), these trends are underway. only now, we will learn better about what's going on and how best to position ourselves to deal with it.

[charliep]

I can answer the question from three perspectives.

The competition you worry about from the Ukraine will not come from the small amount of Canadian taxpayers money that is being spent to develop their extension services/help small and medium sized farmers. The competition will be from consolidation of farms and the adoption of western technology combined with access to money. When this happens (not if), Canada will be in a major problem from a competitiveness standpoint.

From a social conscious standpoint, how many Canadian farmers drive to town in a horse and wagon? How many farmers understand the true meaning of subsistance farming (just producing enough to feed your family)? How many farmers have zero equity/no land ownership? Have many farmer families do not have the ability to earn off farm income? A gentle reminder that much of our success in many ways can be attributed to Ukrainian pioneers who left their homeland because of persecution and struggled to survive in a hostile new world. The foundation for many farms in western Canada is this heritage.

A final comment is the real trade opportunity into the Ukraine is technology - not advice. This is a business to business transaction which government can impact but it is driven by profitability opportunities for both parties. As an example, minimum tillage/low disturbance seeding advantages are slowly being discovered in the Ukraine. Offsetting this opportunity for higher production is potential for a bio fuel industry.

I always amazed by the attitude in Canada that someone elses failure is our measure of success. Perhaps we all need to realize the world is changing and the ability to adapt will be the main driver of success.

[charliep]

If you are worried about competition, I would look at Kazakhastan versus Ukraine. There is a group in this country that buys 50 brand new minimum till seeders (not small ones) every year from a Saskatchewan manufacturer.

If the answers seemed rehearsed, it is because I get asked this question a lot. Will also be my last trip on this project which makes me somewhat said not because of the travel/project (could also share some of the downsides and frustrations) but because of the extension people. They are tremendous to work with and struggling very hard to create a better life for rural people (their passion).

[peaqueen]

World Grain trade:
Peas out of Ukraine into India
230 to 250$ per MT.
Peas out of Canada 300 ish to get 5.00$ to the grower.

(I could ask about wheat prices trading today, but we know that is a highly guarded secret in the world.)

Better be sure to have more policy geared at Bio Fuel in Canada Charlie.
As you are teaching them all too well, and they have huge potential to produce more and better I am told.

[peaqueen]

PS
Let me tell you a story: Charlie.
I used to be in Horticulture. I imported plants from Holland. They were cheaper than CDC supplies by a country mile and way ahead of us in their ability to mass produce cheap plants.

I asked if I could come & learn so I could produce plants cheap in Canada.

They said:
You are welcome to come and visit.
We will show you around, but we will not show you our technology. In Holland we export plants, not our technology. If we teach you to do this you will not buy from us.

Yes, eventually we learned their methods as technology does move aroudn the world even when unassisted, but it took us longer without their willing help.

In some industries they even need to spy to gain trade secrets!

Charlie, if Canada wishes to subsidize our grain prices, and pay us for our first world costs c/w with union wages we would gladly be benovolent about teaching our competitors. Under that scenario we know our income is protected.

But in todays world when Ukraine produces peas into our market at as much as 70$ a tonne lower than we can
(or 2$ a bushel CDN to the grower)
my friend, they are our competitors.

So better plan the bio fuel initiatives Charlie!

[charliep]

I can't disagree with your point on technology. In the new global market which includes internet, it is hard to keep basic technology secret.

On the grain, there is a need for more discipline among the newly emerging grain exporters. The issue in the Ukraine is cash flow and grading standards that don't necessarily mesh with the world. Farmers have to sell for cash, grain storage facilities are poor and the Ukraine typically dumps onto the market in the fall. Working with them to understand quality needs of customers/value and improved systems of storage all will contribute to more disciplined marketers versus simple dumping.

On the bio diesel/ethanol front, I would argue increasing Ukrainian production is a good thing for Canada. The Ukraine has heavy reliance on Russia for fuel - not a good thing is you are wanting to be independent from your former master. Much can and will be used domestically. There is a protein deficit in the Ukraine for livestock so this product has a home.

In terms of Europe, I don't think anyone knows/understands the impact of their bio fuel commitments. Oilseed production around the world is going to have to be going full out just to meet this need. If Europe falls far enough outside meeting this target (realizes unachievable), then they are likely to back off on the policy. To create the bio fuels industry, the big push should be on the demand side. Right now the demand side is based on government regulation (Europe) and subsidies (US 50 cents and US $1/litre subsidies). If the above incentives were taken away, bio fuels would not make progress in either one of these countries. World oil prices are still too cheap.

[cottonpicken]

If the situation was reversed would they help us?

[cottonpicken]

Why is farming different from any other industry?

[TOM4CWB]

Cottonpicken,

Food is different from consumable products that are not necessary for staying alive.

It is a honourable goal and person who helps teach someone, to learn how to feed a hungry world...

Global terrorism is based often on the premise that the "western world" is all about "profit" on the backs of the hungry & poor people of this world.

Thanks Charlie for helping break this perception by giving of your knowledge and skills to those less fortunate than ourselves!

Developing Global Peace is much more important than a few $$$ especially to our next generation of Canadian farmers!

We will be required to transition at some time any way... lets put a plan together and all do better!

[charliep]

Have by passed a couple of questions so will try to answer.

wd9 - How much value to Alberta/Canadian farmers? Not a lot right now although there is room for trade linkages over time? Livestock genetics, equipment, seed varieties, etc are all potential trade activities. I have also had interest from Canadian farmers who are considering setting up there (I owe someone an email who is following but seem to have lost). Lots of barriers and risks but is doable.

Cottonpicken - Would they help us out? The answer is no at the moment at the government and business level - you have to watch the government controversy which means they are having enough trouble looking after themselves. Longer term there will be opportunities to trade information. They are a very talented and resourceful people.

I'll have a question of you. How many would enjoy the opportunity to sit across the table from farmers in the Ukraine of a similar size/enterprise structure and share information?