Ukraine: That's A Funny Looking Combine Harvester

Following the lead of Russia, who recently created the new state-owned United Grain Company, Ukraine have announced plans to do likewise.

A draft proposal by the Ukrainian Ag Ministry for the formation of the snappily-named Grain of Ukraine is now passing through the approval process in other ministries and departments.

The new company will apparently incorporate parts of the State Reserves Committee, the Agrarian Fund and the state-owned company Khlib Ukrainy.

Exactly what Grain of Ukraine will market is unclear at this stage, as to the best of my knowledge unlike in Russia, grain intervention in Ukraine is effectively nonexistent because the government has no money to pay for any.

If you dig a little deeper though, the move may not be that unusual at all. President of Russia's Grain Union Arkady Zlochevsky recently said that proposals to form a Black Sea Grain Pool between Russia, Ukraine and Kazakhstan will become a reality "sooner or later, it is only the question of time."

There's a Presedential election coming up in Ukraine in January, and at this stage the two favourites are Prime Minister Yuliya Tymoshenko, and former president Viktor Yanukovich.

Despite an expected field of 20 election candidates this is already being billed as a two-horse race. Yanukovich is currently the leader with 22-27% in the opinion polls, with Tymoshenko next on 13-16%.

Whilst Tymoshenko is pro the West and Europe, Yanukovich takes a completely different line saying: “my foreign policy priority will be the restoration of a fully-fledged partnership with Russia,” at his campaign launch.

Needless to say Yanukovich will be getting every assistance possible from Moscow to aid his election.

If Yanukovich does get the nod, there are plenty who think it will be the precursor for Ukraine splitting in two. With the Russian-speaking east and south becoming a protectorate of Russia and the west and north allied to Poland, Romania and ultimately the EU.

That would be unlikely to happen smoothly, and there would undoubtedly be lots of gunfire all round, with Russia ultimately picking up large tracts of fertile land in the east and a useful extra chunk of Black Sea coastline. Now wouldn't that be handy for a Black Sea Grain Pool?

In the shorter-term we could see Ukraine depart the stage as an international grain export power as quickly as it stormed it.

Suddenly the fact that they are exporting grain at an unprecedented rate, despite a sharply reduced crop this season doesn't seem that strange at all does it? The news that at the rate that they consumed/exported wheat in September, there will be none left in the country by the end of February makes eminent sense.

And already things didn't bode too well for next season's harvest, they could look a whole lot worse before too long.