Interview: Namık Kemal Parlak

In a recent exclusive interview with Miller Magazine, Nikolay Gorbachov, President of the Ukrainian Grain Association, provided insights into the country’s grain export strategies amidst challenging geopolitical circumstances. He sheds light on the pivotal role of the Ukrainian humanitarian corridor, discusses various initiatives aimed at maintaining grain exports, and provides forecasts for the upcoming season.

Despite facing immense challenges, Ukrainian farmers continue to sow their fields, displaying remarkable courage and determination. As Nikolay Gorbachov, a prominent figure in the Ukrainian grain industry, puts it, “They’re truly courageous and resilient!” In the interview, Gorbachov emphasizes the pivotal role played by the Ukrainian humanitarian corridor in elevating export shares through Black Sea ports. He notes that this corridor doubled Ukraine’s exports from 2.6 million tonnes of grains and oilseeds in July to an impressive 6 million tonnes by December of the previous year. Gorbachov stresses, “The opening of the Ukrainian maritime corridor was a real game-changer for Ukraine.”

Moreover, he elaborates on the strategies employed by the Ukrainian grain industry to navigate transportation challenges and geopolitical uncertainties. Looking ahead, he provides forecasts for Ukraine’s grain production, anticipating a potential decline due to factors like reduced crop areas and logistical challenges.

Here are Gorbachov’s answers to our questions: 

The resilience of Ukrainian farmers amid ongoing conflict is incredible. As a leader in the Ukrainian agricultural industry, what message would you like to convey to Ukrainian farmers and the world in recognition of Ukrainian farmers’ commitment amidst such challenging circumstances? 

Nikolay Gorbachov
President of the
Ukrainian Grain Association

It’s so inspiring to see Ukrainian farmers continuing to sow despite the challenges they’re facing. They’re truly courageous and resilient! But they also need our support. They need fuel, seeds, plant protection products, and mineral fertilisers. And they need to know that they can sell their crops at a fair price, especially if they are risking their lives. This means ensuring all export routes from Ukraine are accessible, especially the maritime corridor.

Below you will find Nikolay Gorbachov’s exclusive interview for Miller Magazine’s May issue. Please analyze the text and write the whole text as a well-organized, well-written smooth text. Please quote Nikolay in the text at least four times.

Ukranian grain exports have surpassed early market expectations. The establishment of a Ukrainian humanitarian corridor has played a crucial role in elevating export shares through Black Sea ports. How has this corridor contributed to Ukraine’s grain export capabilities?

 The opening of the Ukrainian maritime corridor was a real game-changer for Ukraine. It allowed to increase its exports from 2.6 million tonnes of grains and oilseeds in July to 6 million tonnes in December last year. In other words, exports more than doubled per month! And we continue to export almost 6 million tonnes of grains and oilseeds per month.

Could you elaborate on the other strategies or initiatives implemented by the Ukrainian grain industry to maintain exports? What steps are being taken to ensure the reliability and security of Ukraine’s grain exports, particularly in light of transportation challenges and geopolitical uncertainties?

During the blockade of Ukrainian ports, Ukrainian companies actively began to develop exports via the Danube ports by barge to the port of Constanta or by coaster to Mediterranean ports. Appropriate infrastructure for transshipment, storage, etc. was built. This has allowed us to significantly increase exports via the Danube. For example, between July 2023 and April 2024, approximately 14.7 MMT of grains, oilseeds, oils, and pulses were exported.

The sea route remains the most efficient and cost-effective method for transporting Ukrainian grain to countries in need. We owe this to the Ukrainian armed forces, which were able to push the Russian Black Sea fleet farther to the Russian coast. The Russian fleet is now afraid to go to sea and impede free navigation and trade in the Black Sea.

The joint development by Ukraine and partners of the insurance mechanism has resulted in a slight decrease in the cost of freight to Ukrainian ports. However, it is still significantly higher than pre-war levels. There is still work to be done.

How do you envision the role of overland exports in Ukraine’s grain trade strategy?

The overland logistics of Ukrainian grain exports was of the utmost importance at the beginning of the war. Russia completely blocked Ukrainian ports, causing a price surge and food security crisis worldwide. The Ukrainian side and its partners did everything they could to increase transshipment capacity at the border to transport grain to the ports in the West. However, the European infrastructure was simply not capable of handling the volumes of grain exports that Ukraine was shipping through its own ports. It was therefore vital to develop the Danube route and resume exports through Ukraine’s Black Sea ports.

At the moment, Ukraine exports almost 90% of its agricultural exports via Black Sea ports and the Danube. And only slightly above 10% by railway and trucks.

Russia is expected to export a post-Soviet era record percentage of its wheat crop. How do you assess the competition between Ukrainian and Russian grain exports, and what implications does this have for Ukraine’s grain industry?

Russia is harvesting crops in the Ukrainian-occupied territories and exporting them, in effect selling stolen grain under the guise of its own. Of course, it can thus dump the prices trying to push Ukraine out of some markets, for example, in North Africa. This allows Russians to displace not only Ukrainian grain, but also European grain. After all, their ports are working, no one is shelling them.

Could you elaborate on the significance of grain and agricultural exports for Ukraine’s economic stability, especially in light of recent geopolitical challenges?

In 2023, the share of agricultural exports was over 60% of total exports from Ukraine. These figures are a clear indication of the vital role that agricultural exports play in the country’s economy during this challenging period.

The European Union has reached a provisional agreement to grant Ukrainian food producers tariff-free access to its markets until June 2025, with new limits on imports of grains. How do you assess the potential impact of these new limits on Ukrainian grain producers and exporters?

The EU’s decision to extend the preferential trade regime with Ukraine for another year is a positive step. However, I believe that any restrictions on Ukrainian products should not affect grain and oilseed exports to the EU. Ukraine has consistently exported about 25-30% of its grain and oilseeds to Western Europe, and this trend will continue.

Could you provide your forecasts regarding Ukraine’s grain production and export potential for the upcoming season?

The Ukrainian Grain Association is feeling pretty pessimistic about the potential harvest in 2024, estimating it only at 76.1 million tonnes of grains and oilseeds. While in 2023, it was 82.6 million tonnes of grains and oilseeds. The current forecast is based on the average weather conditions over the last 5 years, so the improvement or deterioration of these conditions in spring and summer may make adjustments.  We’re bracing ourselves for a potential decline in the harvest in the new season. This is likely to be caused by a reduction in the area under crops, mainly grain, due to low global prices and relatively expensive export logistics.

I would like to stress that we do not control nearly 6 million hectares, which are under Russian occupation or near the front line, and it is exactly on this territory that the Russians are carrying out their illegal activities. So, we cannot use them to increase grain production and ensure world food security.

What do you foresee as the main challenges for Ukraine’s grain industry in the coming years?

The biggest challenge for the Ukrainian grain industry is the war, shelling, destruction, and contamination of farmland with explosives. We will have to deal with these consequences, but we will survive and win.