Agriculture

In the Verkhovna Rada, a bill will be considered to provide state support for the insurance of agricultural production and of farmers' incomes. This is a subsidy in form of a 50% reduction in insurance premiums assessed on an insurance contract covering agricultural production risks. The Ministry of Agriculture proposes to allocate UAH 100 m from the budget to support this project in 2010.

The Government has increased the minimum price for sugar in the 2009/2010 marketing year (September-August) by 20% to 4,5 UAH thsd/t (including VAT)(542 $/t), up from the previously approved 3,75 UAH thsd/t. At the moment this document is not yet signed by the Prime Minister. The Cabinet also raised the minimum price for sugar beets from 220 UAH /t to 258 UAH /t (including VAT).

syndicated bank loan of $ 40 million, aimed at refinancing the company-owned grain terminal in Illichevsk. A week earlier the company announced a repayment of short-term loan of $ 50 million, received for financing the terminal. Several weeks ago, trading company "Kernel-Trade" attracted a syndicated term loan of $ 170 million to finance operations at the interest rate (Libor + 5,0%) / 0,98.

Shareholders the largest Ukrainian poultry producer, Myronivsky Hliboproduсt [MHPC LI] during extraordinary shareholder meeting on October 5 decided to buy back 2.5% shares from the market. The buy-back program will endure 1 year from the date of adoption. Shares will be purchased at market price, but in the range of 1-15 dollars per 1 share.

Next year sugar shortage may hit 40% in 2010 in the Ukrainian domestic market. The reasons are the reduction of crops, reducing the quality and yield of beets, and hence the shortage of sugar. Processing this year's harvest will yield no more than 1,3 million tons of sugar, while the market demand is estimated to be 2-2,2 million tons.

The Ministry of Agricultural Policy forecasts an increase in grain crops (including corn) in 2013 to 51 million tons, up 20% over the current 2009FY harvest of 42.565 million tons. Gross harvest in 2010 is projected at 43.5 million tons. By the end of this year 11 million tons of sugar beet will be harvested. In 2010 gross production of this crop is planned at 15 million tons and 2013, 16 million tons.

The Ministry of Agrarian Policy of Ukraine has drafted a decree of the Cabinet of Ministers of Ukraine, under which sugar mills will be able to attract interest-free loans from the Ukrainian budget, secured by future production. The size of the loan cannot exceed 80% of the value of the collateral.

One of the largest Ukrainian dairy producers, Ukrproduct Group [UKR LN], reported unaudited 1H09 interim results. Net sales declined by 6.5% y-o-y to GBP 22.1 mln (+8.3% y-o-y in UAH terms), EBITDA decreased by 17,5% to GBP 1.7mln (+4.6% in hryvnia) and net income was down by 38,2% to GBP 0.6mln (-28.4% in hryvnia).

On Friday, Minagropolitics announced that in the 2008/2009 marketing year (MY) export of sunflower oil from Ukraine grew by 58,5% compared to the previous MY, to 2,1 million tons, or $1,57 billion, which is the best figure in Ukrainian history. Export of sunflower seeds increased 10,1 times, to 769 thousand tons, or $191,8 millions.

Ukrainian producer of oilseed and grain company Landkom International has increased its gross harvest of oil crops in 2009 by 74,6%, or 16,845 tons to 39.437 tons in comparison with 2008. In the current year the land under the oil crops was 14.630 ha, and its average yield 2.7 tons per hectare. The entire harvest of oilseeds has been sold at an average price of 327 dollars / ton (including VAT).