CIS countries respond to market changes, says FAO, but on-farm investment remains tightly constrained

CROP HIGHLIGHTS
The aggregate 1996 output of cereals and pulses in the CIS is estimated at 133 million tonnes, 2 percent above last year's production.
CIS wheat production could rise by 10 percent this year to 70 million tonnes.
The 1996 paddy harvest is likely to remain stable, with lower average yields offset by the larger areas sown in the central Asian states.
Large-scale livestock production remains in recession and this is likely to continue for several years to come.
FAO says these estimates are preliminary and should be treated with caution

Economic reforms have helped agricultural production in many of the 12 countries of the Commonwealth of Independent States over the past year, says a special FAO report, that notes cereal and pulse output across the region has increased slightly despite drought in some parts.

Cereal and pulse output for 1996 was up 2 percent to 133 million tonnes, according to the report prepared by FAO's Global Information and Early Warning System. Harvests were substantially better in the Russian Federation and Kazakhstan, which offset poor yields in the Ukraine, the second-largest producer in the region.

"There are indications that the fall in grain production in many CIS countries may now have bottomed out," says FAO economist Marijke Drysdale. "However, weather continues to be the determinant factor, and production still remains 20 percent below the five-year average."

Policies to rein in inflation and the budget deficits, says the report, have resulted not only in price liberalization of bread in most countries but also in extensive privatization of the grain marketing system.

This has led to a growth in private investment in the wheat processing and distribution industry. "New bakeries with new equipment are opening for business on the street corners of many towns and cities, often supplied directly by farmers and small traders," says Drysdale.

Many farmers are now increasing their acreage under more profitable wheat and sunflower. Wheat is often sold to small traders who accumulate commercial lots. They then sell to milling plants and traders dealing in the domestic and export markets.

Farms are also becoming more cost-sensitive in all countries, but particularly in the Russian Federation, Kazakhstan and the Ukraine. Many are using scarce inputs more effectively, taking marginal land out of production, reducing post-harvest losses and, in some cases, making steady progress in farm management.

The growth in barter trade for agricultural inputs and the market penetration of imported pesticides and fertilizers are encouraging signs for increased output. However, without the restructuring of large state farms and land privatization, which would allow farmers to use land as collateral and gain better access to agricultural credit and crop insurance,production is likely to remain tightly constrained.

CIS special report


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