Early indications point to a reduced grain harvest in 1998. The area sown to winter grains (mainly wheat and rye) is about 1 million hectares lower than in the preceding year in response to adverse weather during the 1997 grain harvest as well as shortages of working capital, fuel and machinery. In addition, winterkill, already anticipated to be about 10 percent of the area sown, is expected to be higher than last year. The area ploughed in the autumn ready for spring sowing also fell adding to the burden of spring fieldwork. Finally the large, but low-quality grain harvest of 1997 has resulted in a surplus of feedgrains and lower prices for producers, further reducing credit viability and the availability of working capital.
The 1997 grain harvest is officially estimated at 35.4 million tonnes, but is probably closer to 37 million tonnes, given the ample motivation to increase earnings and working capital (barter) by under-reporting production. At 37 million tonnes, output is about 40 percent higher than FAO�s estimate for output in 1996 in response to a sharp increase in the areas sown, better weather and increased use of inputs. Output of wheat is estimated by FAO at 19 million tonnes, some 4 million tonnes more than FAO�s estimate for the preceding year. Production of coarse grains increased by almost two-thirds to 16.7 million in response to an increase in the sown area, better yields and a sharp increase in maize production, officially estimated at 5.3 million tonnes (1.8 tonnes in 1997). Output of rice declined to 65 000 tonnes (1997: 82 000 tonnes) while that of pulses increased somewhat to 1.2 million tonnes, remaining well below average owing to poor growing conditions at planting.
The recovery in agricultural production and export competitiveness remain limited by the lack of significant progress in genuinely privatizing agricultural production and marketing. Despite the ongoing privatization of about 50 grain elevators, the state remains heavily involved in production, trade and marketing. Numerous and costly barriers to the free flow of grains, limited demand for feed-quality grain in the CIS and keen competition for export markets from the Russian Federation and other countries, could limit the country�s exports this year to about 1.7 million tonnes compared to 1.8 million tonnes in 1996/97 and 3.6 million tonnes in 1995/96.