Ukraine’s grain sector losses could top $3.2 billion in 2023 due to war

By Pavel Polityuk

KYIV (Reuters) – Ukrainian grain and oilseeds crop sector losses could exceed $3.2 billion in 2023 due to the high cost of logistics as well as fuel and fertiliser price hikes, which threaten to reduce sown areas in the next and coming years, farmers unions said on Thursday.

Ukraine is one of the leading global producers and exporters of food and its agrarian sector has been traditionally profitable. Ukrainian authorities and farmers did not report financial results in 2022.

Before the Russian invasion, Ukraine shipped the bulk of its exports through deep-water ports in the Black Sea, which have been fully or partially blocked since February 2022.

Limited export opportunities, now centred on the small ports of the Danube River and the railway to Eastern Europe, have multiplied the logistics component and consequently reduced the price traders can offer farmers.

The port closures have also led to a sharp rise in the price of imported fuel, seeds, fertilisers and spare parts for agricultural machinery.

The Agrarian Council, Ukraine’s largest agribusiness group, said the cost of wheat production in 2023 was about $146 a metric ton, with an average selling price of $102. Farmers spend $149 to grow maize and they can sell it for $94.

The Council said that in 2023, even sunflower and rapeseed production would be unprofitable and only soybeans would give some profit to farmers.

Producers said the large losses have already led to reduced plantings for the 2024 crop.

“We planned to sow 2,000 hectares of winter wheat, but sowed only 1,000 hectares,” said Ruslan Holub, director of the “Tak” farm, which has more than 10,000 hectares in central and southern Ukraine.

“Farmers will determine the area they can sow based primarily on their financial capacity,” said Oleh Khomenko, the head of Ukrainian Agribusiness Club, a business association.

Farmers unions declined to forecast the area to be sown for the 2024 wheat harvest, while the Ukrainian agriculture ministry is still keeping its winter wheat sowing forecast at around 4.4 million hectares.

Not only financial difficulties, but also the unfavourable weather may significantly reduce the sowing area this autumn. Ukraine is a traditional grower of winter wheat, barley and rapeseed.

State weather forecasters said this week that prolonged absence of rain across most Ukrainian regions had created unfavourable conditions both for the ongoing sowing of winter crops and for the plants already sown.

They said the worst situation in terms of soil moisture was in the Odesa, Kherson, Mykolaiv, Kirovohrad, Vinnytsia, Cherkasy, Kharkiv regions where up to 20 cm of upper soil layers were completely dry.

Farmers have sown 3.02 million hectares of winter wheat as of Oct. 16, 2023 compared with 2.5 million hectares at the same date a year ago, agriculture ministry data showed.