BLOG

Ukraine’s grain sector expected to lose $3.2 billion in 2023 amid war and export challenges

02 November 20233 min reading

Ukraine’s grain and oilseed sector is grappling with unprecedented challenges, as the country faces staggering losses that could exceed $3.2 billion in 2023. These grim projections are attributed to a combination of factors, including the ongoing war, high logistics costs, and steep price increases for fuel and fertilizers. As a result, farmers are being forced to contemplate a reduction in sown areas in the coming years.

Ukraine, a global leader in grain production and exports, has traditionally enjoyed a profitable agrarian sector. However, since the Russian invasion in February 2022, the nation’s primary export routes through deep-water ports on the Black Sea have been partially or fully blocked, severely limiting export opportunities. This has substantially increased logistics costs, and in turn, driven down the prices offered to farmers for their produce.

Additionally, the disruptions in the ports have led to a surge in the cost of importing essential agricultural inputs such as fuel, seeds, fertilizers, and machinery spare parts. The Agrarian Council, one of Ukraine’s largest agribusiness groups, revealed that the cost of wheat production in 2023 has reached around $146 per metric ton, whereas the average selling price is only $102. Similarly, farmers spend $149 to grow maize but can only sell it for $94, resulting in significant losses. The Council went on to state that even the production of sunflower and rapeseed in 2023 has become unprofitable, with only soybeans offering some respite for farmers. These substantial losses have already led to a reduction in plantings for the 2024 crop. 

The industry is not only grappling with financial difficulties but also adverse weather conditions that may further reduce the sowing area this autumn. Ukraine, a traditional grower of winter wheat, barley, and rapeseed, faces additional challenges as prolonged droughts in many regions create unfavorable conditions for sowing and the growth of winter crops.

UKRAINE SHIPS OVER 8 MILLION TONS OF GRAINS

Despite the challenges and losses, Ukraine’s agricultural sector has displayed resilience in terms of production. As of October 26, the country had harvested grains and pulses from 81% of the forecasted 8.85 million hectares, with total production reaching 43.37 million tons, according to the Ministry of Agrarian Policy. In the current season, Ukraine has exported 8.02 million tons of grains and pulses, with 1.267 million tons shipped in October. This season’s exports included 4.069 million tons of wheat, 656,000 tons of barley, and 3.175 million tons of corn.

In response to the challenges posed by the Black Sea port closures, Ukraine initiated a “humanitarian corridor” for ships bound for African and Asian markets in August. This move was aimed at circumventing the de facto blockade in the Black Sea, which resulted from Russia’s exit from the deal that had ensured the continuity of Kyiv’s seaborne exports during the war. Since its launch in August, approximately 700,000 tons of grain have been shipped via this new route, offering a glimpse of hope for Ukrainian grain exports. Prior to Russia’s full-scale invasion in February 2022, Ukraine typically shipped up to six million tons of grain each month from its Black Sea ports.

Articles in News Category
14 July 20207 min reading

Bühler GO!2020 highlights collaborative innovation in the food industry

Outside view of Bühler’s brand-new Food Application Center in Minneapolis. Together with its cu...

15 October 20201 min reading

Prices of wheat flour increased further in Pakistan

Prices of wheat flour, a key staple food in Pakistan, increased further in September, reflecting ...

08 October 20205 min reading

Breakthrough study confirms global food production poses an increasing climate threat

Breakthrough study confirms global food production poses an increasing climate threat The signif...