BLOG

Ukraine: World food security defenders

08 June 202214 min reading

“The war in Ukraine has already affected about 25% of the world grain trade and has led to rising world prices, food inflation and declining access to food in Ukraine's and Russia's importing countries. If the situation with the war and the blockade of ports lasts, the countries in the Middle East and North Africa will in principle not have grain. And that means hunger. Therefore, international security standards should be applied to Ukraine as a guarantor of food security.”

Taras Vysotskyi
Ukraine's First Deputy Minister of Agrarian Policy and Food



THE EXPORT OF UKRAINIAN AGRICULTURAL PRODUCTS

In the pre-war period, Ukraine exported up to 90 million tons of agricultural products per year. In Asian countries - 49.1% ($ 13.7 billion), the European Union - 30.1% ($ 8.4 billion); African countries - 13.3% ($ 3.7 billion); countries of the former USSR (except the Baltics) - 5% ($ 1.4 billion).

Ukraine was the world's 1st largest exporter of sunflower oil, 2nd largest exporter of grain, 3rd largest seller of barley, 4th largest seller of corn, and 5th largest exporter of wheat. Leader in the production of nuts, canola, peas, millet, wheat flour, honey and other agricultural products. It was one of the top 10 largest meat exporters in the world.

The war in Ukraine has already affected about 25% of the world grain trade and has led to rising world prices, food inflation and declining access to food in Ukraine's and Russia's importing countries. In particular, wheat and sunflower oil.

The whole world is interested in resolving the situation, as the supply of wheat from Ukraine is more than 10% of the annual wheat consumption for 15 countries. For example, this is 28% of Indonesia's needs, 21% of Bangladesh's, and Egypt imports almost 80% of its wheat from Russia and Ukraine. Most of the products were sent through Ukrainian ports, which are currently blocked. As a result, before the start of the war in Ukraine, there were more than 20 million tons of products intended for export.


The capacity of railways, highways and river ports was a total of up to 250 thousand tons per month. Now, these alternative paths need to be increased at least tenfold. During March-May, 66% of agricultural exports went by rail, 25% by river ports and 9% by trucks.

Most goods go by rail to the borders of Poland, Slovakia and Hungary. European infrastructure is not ready for our cargo: there is a lack of locomotives, wagons, capacity, and port terminals. All Ukrainian goods need to be reloaded, as Ukrainian and European tracks differ in size. Ukraine exports goods by water through three river ports on the Danube: Izmail, Ust-Danube and Rhenish.

Today, EU leaders are currently working to create so-called separate green corridors through which grain that is not needed for domestic consumption could be exported quickly and uninterruptedly. This is a priority search for grain trucks; on the formation of routes where these grain trucks could be passed as a priority, rather than in the general queue; on speeding up the documentation of relevant goods, including customs, veterinary and other checks at the Ukraine-EU border 24/7. A number of EU member states have responded to our needs: Poland is speeding up border procedures and transporting Ukrainian products, the G7 countries fully support Ukraine's new chains, and Austria has recently lifted restrictions on Ukrainian carriers. Permits, which, together with the previously lifted restrictions by Slovakia and Italy, allow us to freely supply our agricultural products to Italy and its seaports.


All border countries have responded to the problem of grain exports from Ukraine to third countries and have either significantly simplified the procedures for registration of freight, or are actively working on it. In particular, liberal conditions for Ukrainian carriers have been introduced by Romania, Slovakia, Hungary, Lithuania, Latvia, Estonia, as well as Italy, Turkey, Bulgaria, Georgia, Denmark, Greece and, more recently, Austria.

Such joint efforts will allow us to export at least half of the volumes that went through our ports. Among other things, it would also help Ukrainian farmers prepare for the new harvest by freeing up domestic elevators. In addition, they would receive economically positive liquidity, which would have a positive impact on the economy in general and on our exchange rate in particular. And, of course, this would make a significant contribution to the world's food security, as it would restore the supply of significant amounts of food to various countries around the world. This would relieve tensions, both in terms of rising prices and in terms of food shortages, which are already occurring in many countries around the world.

For example, in view of the slowdown in wheat exports from Ukraine, East Asia began to look for alternative sources of supply, including India, and India, concerned for its own food security, limited wheat exports. And this is only the first signal. Other countries, especially the Middle East and Africa, will not be able to do without export supplies of Ukrainian agricultural products. Replace it with nothing physically, including supplies from the aggressor country of the Russian Federation or from any other.

Today it is not possible to find an alternative to such volumes and replace our products. This cannot be done physically, even in the next 3-5 years. The blockade of the ports of Odessa and Mykolayiv has already led to a significant increase in prices for agricultural products and its physical shortage around the world, especially in the Middle East and North Africa. If the situation with the war and the blockade of ports lasts, for example, up to six months, the countries of these regions will in principle not have grain. And that means hunger. 

Therefore, international security standards should be applied to Ukraine as a guarantor of food security. Russia's war against Ukraine has shown the need to change approaches to the guarantors of food security, which is Ukraine. There are currently no international guarantees that this food is supplied systematically. There should be mechanisms in place to ensure the safety of exporting countries, the ability to transport products, avoiding any port blockages and delays in exporting products. After all, every year we feed, in addition to ourselves, about 400 million people, most of whom may face hunger.

Transportation of agricultural products by rail or road, as is currently the case, makes logistics more expensive. Now, in order to deliver products, for example through Polish ports, it is necessary to cover a distance three to four times longer. Therefore, it causes more expensive products. World prices for agricultural products have risen, in some positions - up to 30%.

At the same time, as a rule, the countries that import our products have a low level of welfare - they are sensitive to prices. Therefore, in addition to the fact that physically products are becoming less for them, it is even less available due to rising prices. Ukraine has made it clear in the international arena that it does not stop or block exports. Everything we do not need for domestic consumption, we are ready to supply. Moreover, on our initiative, new checkpoints, new terminals, and new facilities at the western border are now being opened from the wheels to increase these exports. We want to fulfill all our commitments to our partners, which have been formed in recent years and which we have never failed.

WAYS TO UNLOCK EXPORTS

Military convoys, which are often used in international practice, can be one of the options for resuming grain exports through Ukrainian seaports. Yes, the military is escorting cargo to the shores of Somalia, where there is a high risk of piracy, and to North Korea. 

Another factor is to provide Ukraine with a sufficient number of anti-ship weapons that can be deployed here and guarantee a rebuff to the Russian navy. The Government of Ukraine continues active negotiations with international partners on the export of Ukrainian grain by sea.

The topic of ensuring international food security, which cannot be implemented without the export of agricultural products from Ukraine, is discussed daily. We do this with international organizations, such as the United Nations, as well as directly with the EU, Britain, and the United States, with countries that import our grain. Everyone has already understood that there are literally a few weeks to unlock ports, including by military means, and resume exports. Because although there are alternatives that allow you to export, but it is a small amount compared to ports.

FOOD SECURITY OF UKRAINE

National food security is under the full control of the government. Last year, we ended with a record harvest of cereals, legumes and oilseeds in the amount of 106 million tons. Farmers harvested 86 million tons of cereals and legumes and 22.6 million tons of oilseeds. In 2020, 83.8 million tons of major crops were harvested in Ukraine from an area of 24.1 million hectares. In particular, 65.4 million tons of grain and legumes were threshed from an area of 15.3 million hectares. According to the State Statistics Service of Ukraine for 2021, the index of agricultural products compared to the same period last year amounted to 114.4%.

At the end of the marketing year 2021/2022, Ukraine can potentially reach the balances of stocks: wheat - 5.6 million tons, corn - 6.7 million tons, buckwheat - 11 thousand tons, millet - 48 thousand tons, oats - 176 thousand. tons, sugar - 520 thousand tons.

We are fully provided for our domestic needs with milk and dairy products, cereals, legumes and oils, eggs, meat and meat products. We will remind, on the average in 2021 the country at the expense of own production Ukraine satisfied need of the internal market:

• In milk and dairy products by 99.1%,

• Meat and meat products - by 110.1%,

• Grains - by 323.3%,

• Eggs - by 125%,

• Fruits, berries and grapes - by 75.9%,

• Vegetables - 104.6%,

• SunOils - we consume 7% of total production.

In Ukraine today, there are a total of about 25 million tons of grain and oilseeds. If we talk about the temporarily occupied territories, there were about 1 million 300 thousand tons of grain left at the time of the occupation. In terms of providing food for all 40 million Ukrainians, we have enough reserves in the controlled area.

If you compare the areas that are currently temporarily unavailable in these areas, it turns out about minus 30%. And to provide food for all 40 million Ukrainians, the required sown area is about 35%. That is, we have at least 70% of the area available in the controlled area. And only half of them are needed to provide food for all 40 million Ukrainians.

Immediately after the start of the war, licensing was introduced - export control. Basic products - wheat, buckwheat, oats, sugar, eggs, poultry - can be exported only after approval from the government, the Ministry of Economy.

The government closely monitors the balance sheet, estimating how much we need for domestic consumption, plus a 3 to 6 month reserve, depending on the type of product. And only if there are products above this balance, then we issue this license. This regulation will last at least until the end of the war and a certain period after its end, until the stabilization of markets.

Large applications for licenses are rejected by the government in order not to create a monopoly and maintain the maximum number of agricultural producers, and to have maximum competition.

In addition, as farmers prepare for each block of work in advance, before the war, on the eve of the start of spring field work, they were provided with 85% fertilizer. But soon there will be summer field work to fertilize the soil and autumn. The situation there is more complicated, but still under control. We are currently working to ensure that there is enough fertilizer for the next field work. 

NEGOTIATION WITH EUROPEAN PARTNERS FOR FINANCIAL ASSISTANCE TO FARMERS

More than 30% of Ukraine's territory is dangerous for production or under occupation. Part of the agricultural land is damaged and mined, and the infrastructure of the agricultural sector is damaged. Seaports are blocked, logistics and economic chains are broken. Ukrainian farmers need an uninterrupted supply of fuel, seeds, fertilizers, plant protection products, spare parts, etc. Employees of enterprises are involved in service in the Armed Forces of Ukraine, territorial defense and volunteer work. The Ministry of Agrarian Policy and Food of Ukraine is negotiating with European partners to provide financial assistance to Ukrainian farmers.

ABOUT SOWING

Sowing in Ukraine continues, 98.5% of last year's wheat was sown, 95% of the area projected for spring rape has already been sown. Vinnytsia, Volyn, Dnipropetrovsk, Zhytomyr, Zakarpattia, Kyiv, Poltava, Mykolaiv, Rivne, Ternopil, Khmelnytsky, Cherkasy, and Chernivtsi regions have finished sowing spring wheat. In general, sowing of spring cereals and legumes was completed by 78% of last year's figures. Vinnytsia, Volyn, Zhytomyr, Kyiv, Poltava, Rivne, Ternopil, Khmelnytsky, Cherkasy, and Chernivtsi regions have increased the area under spring wheat from 5% to 10%.

As of May 26, 2022, the projected sown areas of the main spring crops for the 2022 harvest in the territory controlled by Ukraine are 14,158.5 thousand hectares, which is 2,757.8 thousand hectares less than last year (16,916.3 thousand hectares). Ha). According to structural subdivisions, sowing of spring crops is carried out by 23 regions of Ukraine, except for Luhansk, where fighting is taking place almost on the whole territory.

The projected production of cereals and legumes in 2021/2022 MY in the amount of 90.9 million tons will be provided, in particular, through the production of wheat - 33.9 million tons; corn - 44.4 million tons. Of the total harvest of cereals and legumes - 19 million tons will be used for domestic consumption and 49.2 million tons for export.

THE SITUATION IN THE TEMPORARILY OCCUPIED TERRITORIES

Unfortunately, farmers have very limited opportunities to sow. Many farmers are forced to re-register and be forced to work under the rules of illegal armed groups of the aggressor country. Therefore, a much lower percentage of areas are eliminated in the temporarily occupied territories. We are confident and sincerely believe that these territories will be liberated and Ukrainian farmers will be able to safely harvest their crops for the benefit of themselves and our state.

After all, it was clear how Russian troops bombed oil depots en masse, in particular in order to disrupt the sowing campaign in Ukraine. Russia's goal is to destroy Ukraine's economy, provoke mass food shortages and famines in Ukraine and the world.

Ukraine cannot guarantee that Ukrainian grain and foodstuffs invested in Russia from the occupied territories will not support Russian-friendly terrorist organizations. Before the war, there were 1.3 million tons of grain in the occupied territories (Luhansk, Donetsk, Kherson, Zaporizhia regions). Today, this grain is being exported en masse to the temporarily occupied Crimea and Russia.

To date, it has been recorded that the occupiers exported more than 500,000 tons of grain in Kherson, Zaporizhia, Luhansk, and Donetsk regions. Plus it is known about the export of tens of thousands of tons of sunflower oil. Unprecedented thefts continue. We are monitoring the situation. We document everything. And we will definitely fight on all fronts for the return of the stolen and full compensation for the damage.

ABOUT THE SITUATION IN ANIMAL HUSBANDRY

According to the Ministry of Agrarian Policy, the industry has lost up to 10-15% on average. These are temporarily occupied territories or those where active hostilities continue. Our livestock products are always produced in excess of domestic consumption - some were exported. Therefore, this is not a critical amount of loss for food security. We have enough capacity to fully supply Ukrainians with meat of various kinds, as well as dairy products and eggs. However, of course, this is a difficult situation for those farmers who have directly suffered these losses. All damages are documented, and claims for full compensation from the aggressor will be made so that all livestock complexes can be restored.

Articles in Article Category
07 February 20186 min reading

Test series with enriched pasta : Cooked pasta retains up to 80 percent of added B-vitamins

“Although some of the vitamin B added to pasta gets lost, vitamin-fortified pasta remains important...

13 July 20206 min reading

Diorit four-roller mill now also with longitudinally split

Nicholas Trounce Head of Product Management Milling Solutions Bühler Switzerland Nicholas.troun...

13 September 20177 min reading

For those who are stranger to the diagram technique...

“Before CA. 150 years, a Hungarian miller ground the wheat between two steel cylinders and this l...