23 August 2017

Ukraine dealing with political upheaval

Ukraine’s position as an exporter has been against a background of political upheaval.

“Ukraine’s political and economic crisis that erupted at the end of 2013 led to a significant devaluation in the local currency (Hryvna – UAH) and a number of trade-related problems associated with the devaluation’s inflationary tail-end effect,” the USDA attaché in Kiev reported. “The National Bank of Ukraine (NBU) for years sought monetary policies aimed at maintaining stable exchange rates. The target currency for this approach was the U.S. dollar, despite the fact that trade with the U.S. was not significant compared to trade with the Russian Federation before 2013, or the current trade with the E.U. Significant political and economic shocks undermined UAH stability in 2014, resulting in an abrupt devaluation that is still continuing, although at a moderate rate, into the beginning of 2017.”

Since the beginning of 2016, the Ukrainian currency stabilized with a trend toward small levels of devaluation, the attaché said.

“This has made domestic prices more predictable and decreased transaction costs to farmers, input suppliers and traders,” the attaché said. “This manageable level of devaluation favors grain exports as well as allows farmers to stabilize their business models. That economic stabilization has translated into increased volumes of agrochemical and seed imports in 2016. However, the unstable economic situation in the country that began at the end of 2013 had an impact on crop structure. Over the last three years, farmers decreased total areas under grains, which provided lower profitability, while giving way for further growth of areas under oilseeds that normally offer higher profitability for farmers.”

Source: http://www.world-grain.com