Ukraine crisis puts British farmers in peril

After a turbulent fortnight in Ukraine, an expatriate agronomist is asking himself: Should I stay, or should I go?

“We have gone from having a functioning government, to having people shot in the streets of Kiev, to the president fearing for his life, to an interim government being elected and Russia invading Crimea,” says agronomist Mike Lee.

“It’s been a mad couple of weeks, even by Ukraine’s standards. It’s a bit of a basket case here all the time.”

Ukrainians are feeling “twitchy”, he adds, but up until this week there has been no real impact on daily life.

See also: Wheat price jumps on Ukraine fears

“The police force has gone and the security services have been disbanded. The government is semi-functioning. But everyday life is going on as normal. People are going to work and buzzing around in their cars.”

Mike Lee

At the moment, Mr Lee, who left his job as an agronomist in the UK to live and work in Ukraine six years ago, says the farming business comes secondary to the welfare of his wife and two young children.

“The biggest question on my mind is: ‘Where do we go if my family needs to leave,’ he adds.

“The Polish border is 40 minutes away from where we are in Lviv. There’s been a couple of weeks when we have nearly crossed the border.

“But we’re hearing lots of stories that the borders are blocked and reports of policemen being shot dead are unsettling.

“We’re keeping a close eye on things. The safety of my family is paramount.”

War on the horizon?

British farmer and agronomist Robin Jewer, a regular contributor to Farmers Weekly’s machinery section, is also based in Ukraine. But Mr Lee understands that Mr Jewer has fled the country amid deepening fears of a war with Russia.

Last week, Mr Lee wanted to take his three-year-old son to his weekly painting class. But he decided against the idea after the militia club was firebombed next door.

“I thought we’d better give it a miss for one week,” he says.

Now he is turning his thoughts to whether it’s a good idea or not to invest further in the farming business this spring.

The cracks are already beginning to appear.

Grain payments

Mr Lee, a managing director of a private investment group, which manages three farms in three regions of Ukraine covering 20,000ha, says buyers who would usually pay up front are “taking liberties” and trying to take grain without paying.

Now his business is demanding that payments are made in advance of releasing any grain.

“We surrounded their combines and said: ‘We won’t release them until you pay us’.”

Mr Lee says some suppliers are also asking for cash up front, especially fuel and fertiliser companies.

Banks are also not releasing cash easily and bank transfers are taking much longer, sometimes staggered over several days.

Although most people are going on about their daily life as normal, things feel surreal and there is a sense of foreboding.

At the end of April, his company is due to start planting maize, sunflowers and soya.

“But we’re hearing lots of stories that the borders are blocked and reports of policemen being shot dead are unsettling.”

Currency slump

But the decision to invest further in the business this spring is far from straightforward.

The value of the Ukraine currency, the hryvnia, has slumped to a record low against the US dollar.

The exchange rate and interest rates are yo-yoing, almost with every political development.

Grain prices historically pick up in March, but the prices have dropped significantly on last year, after they slumped by 20-40% in July to August last year.

“I see the real impact coming now, because we are approaching the planting season,” he says.

“If nobody is supplying credit, are the suppliers going to be available?” he asks.

“We don’t know how it’s going to impact. We will likely see a problem occurring in farming.”

He anticipates that credit availability will become tight and costs will increase over the coming weeks.

“Fertiliser supply is notoriously difficult even at the best of times, as there is a monopoly on fertiliser by one of the oligarchs,” he says.

“You have to pay for fertiliser six weeks up front and then it’s delivered. Now we have this credit problem, there is uncertainty about what the implications will be.

“Moving hundreds of tonnes of fertiliser usually on a rail wagon could become a logistics issue.”

For now, Mr Lee has decided to sit tight and reassess the situation as it unravels.

“We go planting on 1 May and that date will not change,” he says.

“We need to start spending money and buying things in. But first we need to do a risk assessment.

“But will the investors want to start investing money into an area of business we may not be here to harvest due to political reasons?”


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