The Ukrainian farm UA2500ZH
in the context of its region
Authors: Kathrin Strohm
Andriy Tovstopyat
Simon Walther
May 2010
Arable farming in Ukraine
Share of wheat in the arable land
of each region 2009
Land use in Ukraine 2008
Land use in Ukraine 2008
Settlements and roads
4.1%
Other
5.4%
Agricultural land use in Ukraine
NEU
Mio ha
Water bodies
4.0%
Forest
17.5%
Share of rapeseed in the arable
land of each region 2009
Agricultural land use in Ukraine
Agricultural crop land
45.0%
24.0
22.0
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
1990
wheat (w + s)
rapeseed
1995
barley (w + s)
soybeans
sunflower
rye (w + s)
corn
sugarbeet
2000
potatoes
corn silage
2005
2009
Source: State Statistics Committee of Ukraine
Rotational fallow
8.9%
Orchards & vineyards
2.0%
Pastures & hayfields
13.1%
Source: State Statistics Committee of Ukraine
Source: UCAB based on SSC of Ukraine
Ukraine can be divided into three distinct
agro-climatic zones. The Steppe Zone in the
South has highest temperatures. Wheat is
grown across Ukraine with hot spots in the
central and western regions.
On 45 % of its territory Ukraine cultivates
mostly grains, oilseeds, potatoes, legumes
and field vegetables. Besides this agricultural
land, another 13 % are used as pastures and
to produce hay. In 2008, a substantial amount
of nearly 9 % was rotational fallow. This area
could be brought into production once economic conditions would trigger such a process and land use intensification would be
needed.
The graph displays the downturn of the Ukrainian agricultural sector in the transition period,
starting from early 1990s. Since 2000, the sector has been recovering again, new long overdue investments were made, more land cultivated and higher yields obtained.
In 2009, wheat, barley and sunflower were the
major cultivated crops in Ukraine. Since the
1990s acreage of corn silage dramatically reduced as livestock numbers gradually declined.
Due to low prices and a difficult market environment, sugar beet production also dropped. On
the other hand, the harvested area of sunflower,
corn, rapeseed and soybeans has been on the
rise during last 10 years.
Source: UCAB based on SSC of Ukraine
The typical farm UA2500ZH is located in the
south of Zhytomir region at the edge between
the Forest Zone in the North and the Forest
Steppe Zone in the center with highest yields.
Rapeseed which currently covers a maximum
of 1 million ha is predominantly grown in the
western region.
The typical farm UA2500ZH in the region Zhytomir
Farm structure – Zhytomir oblast (2008)
- based on gross
Farm classification
Zhytomir
oblast (2008)
Farm classifi
cation
Zhytomir
oblast
(2008)
revenue shares
- based on gross revenue
shares
Farm structure - Zhytomir oblast (2008)
To obtain reliable data on the traditional “post-kolkhoz”
Number of farms
800
80 % farms is a real challenge. Therefore, in a first attempt
% of farms
only individual farms within agroholdings – top per% of farming area (est.)
600
60 %
% of farming area
forming in the national context – have been chosen to
400
40 %
be used in the agri benchmark comparison.
200
20 % Though 20 years have passed after the collapse of the
0
0%
communist regime, the structure of Ukraine’s farms
0-50
50-100 100-500 500-2,000 > 2,000
is still very much influenced by its history. There are
Size of farms in ha
thousands of small household land plots mostly for
Source: Own calculations of UCAB based on SSC data
subsistence needs, a large number of small individual
farms (usually around 100 ha), about 8,000 bigger “post-kolkhoz” farms (often around 2,500 ha) that
bring the biggest share of the national output and a few dozens of agroholdings, comprising several
thousands of hectares. This structure is also reflected in Zhytomir oblast (ZH). The Ukrainian Agribusiness Club (UCAB) estimates that 41 % of the agricultural land in ZH is cultivated by farms larger than
500 ha. Therefore, agri benchmark considers 2,500 ha as farm size for this region.
70 %
100 %
60 %
Number of farms
22
20
18
16
14
12
10
8
6
4
2
0
-2
-4
-6
-8
°C
h, mm
Zhytomir region, approximately 500 km
away from the
Black Sea, has
3
a moderate climate and good
soils. Average
temperatures
Jan Feb Mar April May June July Aug Sep Oct Nov Dec
during winter
Precipitation (mm)
Duration of sunshine (h)
Temperature (°C)
can fall below
zero, while July
is the hottest month with up to 19°C on average. Precipitation is distributed in a favorable way, with highs (90 mm/
month) during May-June and November.
300
280
260
240
220
200
180
160
140
120
100
80
60
40
20
0
Region
Zhytomir oblast
Type of farm
Mainly cash crop
Other enterprise
Livestock and milk production
Limited liability company; one farm
belonging to a larger agroholding
Conservation tillage, with reduced
stubble breaking and mulch-seed
Legal status
Tillage system
Natural conditions
Relief (hills, upland, plains)
Plains
Elevation (m above sea level)
90
Soil type
Black soil
Climate
Moderate
Main growing season
April - September
Average precipitation per year (mm) 600
60 % during October – March,
Rainfall distribution
rest during summer months
Duration of sunshine or cumulative
temperature
Between 40 and 280 hours per
month, depending on the season
30 %
20 %
10 %
0%
Cash crop
The absence of an agricultural land market
is a major challenge to Ukraine’s agriculture. A moratorium still inhibits to trade land.
Therefore, the pre-panel typical farm UA2500ZH does not own any arable land but
rents its entire crop land at 300 UAH/ha (~
38 USD/ha). Renting contracts are signed
on average for 5-10 years and thus provide
a solid basis for planning and strategic decisions. On average, the fields of the farm are
90 ha large which is an asset for mechanization and to realize economies of scale.
Being a “post-kolkhoz” farm, UA2500ZH
employs many workers till today, in total
143. However, 57 of them work for the dairy
and livestock production sectors and thus
are not allocated to cash crop farming. 25 %
of the remaining personnel work in leading
positions (as agronomist, engineers, accountants and directors) whereas the rest is
employed as drivers, secretaries, assistants
and security guards.
Crops & animals
Type of farm
% total farms
% total agricultural land
Source: Own calculations of UCAB based on SSC data
According to
UA2500ZH: avg. 2008-09
the official
8.0
Zhytomir oblast: avg. 2007-2009
7.0
statistics the
6.0
pre-panel typi5.0
cal farm UA4.0
3.0
2500ZH had
2.0
much better
1.0
yields than the
0.0
Corn
Winter Summer (Summer) Winter
Corn Fodder
local averages,
wheat
wheat barley rapeseed silage
grass
which were cal(*10)
(*10)
culated across
Source: State Statistics Committee of Ukraine, UCAB and
agri benchmark 2010
all farm types
and structures. Since the farm uses more fertilizer than on
average, modern seeds and machinery it could realize 80120 % more wheat, barley and rapeseed. In corn the difference was not as big (20 %).
9.0
Description of the typical farm
General information
40 %
Comparison
of average yields
Comparison of average yields
t/ha
Mean climate
– 2006 Zhytomir
Mean climatedata
data 2001 -2001
2006 Zhytomir
50 %
Having their roots in the Soviet
age many of today's agricultural
enterprises are mixed farms, i.e.
they generate about two-thirds of
their total revenue from crop and
the rest from livestock production
(milk or meat) or the provision of
services.
Also UA2500ZH was selected in
such as way that it contains livestock production including the provision of fodder crops.
Gross margin
comparison
Gross margin
comparison (USD/ha)
When comparing
gross margins, the
800
Zhytomir oblast 2008
huge difference be600
tween UA2500ZH
400
and the farm aver200
age of Zhythomir re0
gion becomes even
Rapeseed
Corn
Barley
Winter wheat Corn silage
more apparent. In
Source: Own calculations of UCAB based on SSC data, agri benchmark 2010
all crops the agroholding performs excellent. This is because of higher yields (see
left) and due to better and more efficient management. However, the results displayed in the graph need to be qualified since
gross margin for the agri benchmark farm is calculated across
two years while Zhytomir oblast data was available for one year
only, 2008. Further, in October – December 2008 when most
“normal” farms had to sell their harvest to pay loans, they could
realize only very low prices (50 - 60 % lower than 3 months earlier).
1,000
UA2500ZH: avg. 2008-2009
USD/ha
1,000
UA2500ZH – winter rapeseed
after winter wheat
Crops grown by UA2500ZH
Crops grown by UA2500ZH
Alfalfa
Fodder grass
Winter wheat
Corn silage
Summer wheat
Corn
Winter rapeseed
This graph visualizes the production system of winter rapeseed, grown after winter wheat. After stubble
tillage and seedbed preparation, seeding in August
is accompanied with fertilization (N, P and K) and
followed by an herbicide application in September.
Starting end of February, nitrogen is given three
times. Fungicides and insecticides are applied during April and June before rapeseed is finally harvested in July.
The farm does not have a fixed
crop rotation (yet). In total, 7-8
crops are cultivated: winter and
summer wheat, corn and rapeseed
mainly as cash crops for the market whereas fodder crops (fodder
grass, alfalfa, corn silage) are used
internally in the livestock production.