Despite the reduction in sown areas, this year weather conditions played into the hands of farmers - almost record grain yields are expected in Ukraine. However, due to Russian aggression, agricultural producers have few ways to export grain abroad, which means they risk continuing to operate at a loss.
The 2023 harvest campaign continues. Ukrainian farmers continue to harvest corn. The Ukrainian Club of Agricultural Business, citing data from the Ministry of Agriculture, states: as of October 18, grain and leguminous crops were harvested on an area of 7,737.9 thousand hectares with a yield of 46.0 c/ha, threshed - 35,597.3 thousand. tons of grain. In particular, the following have already been threshed in Ukraine:
- wheat - 4,694.5 thousand hectares (yield - 47.3 c/ha), threshed - 22,210.9 thousand tons;
- barley - 1,504.5 thousand hectares (yield - 39.0 c/ha), threshed - 5,863 thousand tons;
- corn - 884.4 thousand hectares (yield - 66.1 c/ha), threshed - 5,846.6 thousand tons;
- buckwheat - 127.7 thousand hectares (yield - 14.8 c/ha), threshed - 188.8 thousand tons.
- In general, the grain harvest in 2023 is estimated at 57.8 million tons. This is 6% more than in the same period last year (wheat - 22.2 million tons (+7%), corn - 28.3 million tons (+8%), barley - 5.9 million tons (+5%)), noted Focus in UCAB.
Both laughter and tears: farmers have reduced areas, and yields are breaking records
Despite the reduction in the total area sown with spring and winter grains by 980 thousand hectares than last year - to 10,895 thousand hectares, weather conditions ensured almost record grain yields (up to 52.1 c/ha). “From the point of view of agrometological conditions, the situation was favorable. There were timely rains, a lot of them in April. This led to a normal harvest. There were moderate temperatures in both April and May, and June was very favorable, and there was enough rain in July. Nothing terrible happened during these periods - large-scale drought events, for example,” Tatyana Adamenko, head of the agrometeorology department of the Hydrometeorological Center of Ukraine, told Focus.
Wheat harvested especially generously. “For wheat, we have a record yield in general in recent years - 47-48 centners per hectare,” agricultural market expert Maria Kolesnik comments to Focus. — Despite the fact that we have lost area, in fact this year’s harvest is 1 million tons more than last year’s. There will also be 1 million more tons of corn. Although a little more than 20% of it has been threshed, it is already clear that the yield is not bad.”
According to the expert, if we consume half of the harvested wheat domestically, corn is primarily an export crop. “Now they have begun to try to use it more within the country, but, according to all estimates, we should export at least 19.5–20.5 million tons this year. Despite the fact that the harvest is estimated at 28 million tons. Of course, this is not 40 million tons, as it was before the war. But its domestic consumption is extremely low,” Kolesnik noted.
Farmers hope to export up to 20.5 million tons of corn, since consumption of cereals within the country is scanty
Since Russia is using fictitious military exercises in the Black Sea to block Ukrainian exports, farmers are faced with the acute issue of exporting grain abroad, because it is simply impossible to process the entire harvest within the country, and there is no area necessary for long-term storage of grain.
Diplomacy and power: how Ukraine plans to sell grain
According to the Ministry of Agriculture, in MY 2023/24 (marketing year), as of October 18, 7,801 thousand tons of grains and legumes were exported from Ukraine. At the same time, as of October 21, 2022, this figure was 11,526 thousand tons. The lower numbers are explained by Russia's withdrawal from the grain deal in July of this year, as well as attacks on port infrastructure. Since August of this year, it has been possible to organize temporary routes for merchant ships. They leave the ports of Greater Odessa and head to Zmeiny Island under the protectorate of the Ukrainian Armed Forces. Then the ships enter the territorial waters of Romania, then Bulgaria, Turkey, and exit into the Bosphorus.
Unlike the grain deal, the terms of which were dictated by Russia, not only grain can be exported through temporary corridors. In general, today exports from Ukraine are available in the following ways: through the Danube river ports, by sea corridor, through the western borders of our country by rail and road. However, these channels do not meet the needs of farmers. So, if before the war Ukraine exported 6–7 million tons of grain monthly, then, for example, in September it was only 1.6 million tons. 60% of our grain now transits through Romanian territory.
“The Ukrainian corridor, which is in our 12-mile zone, it works, it’s difficult, but it works, thanks to our Defense Forces. Since September, about 25 ships have come to load, and they have already supplied almost 1 million tons,” said Dmitry Solomchuk, a member of the Verkhovna Rada Committee on Agrarian and Land Policy.
If before the war Ukraine exported 6–7 million tons of grain, then in September of this year it was 1.6 million tons.
Such volumes are, of course, insufficient. “The main problem is infrastructural: how to transport to the Romanian ports. Either we export it via the Danube, or by rail. By rail - this is a track, it must be overloaded, which means large costs. And if we are talking about exports across the Danube, then at the beginning it is only by river vessels, then the river vessels arrive at Romanian ports, and then they must be reloaded at sea, but the capacity of such river vessels is weak. These are small ships, and they need to be reloaded onto large bulk carriers. These are expenses again,” Alexander Shnyrkov, an expert on international economics, told Focus.
Due to constant shelling by the Russians, export volumes by river routes have decreased. “River river exports along the Danube are occurring, but at a slightly lower level than they were during the period when there were no shelling of ports and destruction of infrastructure. We are waiting for additional air defense systems to ensure the security of this region and increase capabilities,” Solomchuk said.
Despite offers from partner countries to help with logistics, the sea route through the ports of Greater Odessa remains the most profitable for farmers. “There were proposals to expand logistics from the countries of Lithuania, Latvia, and Croatia. But we must understand that we do not financially support logistics in these areas. After all, today it is unprofitable to sell via the Danube, although via the Danube it is not so far to Romania. If you lead to the Adriatic or Baltic, this will significantly increase the cost of logistics, and, accordingly, the costs that producers will bear. Grain producers today are operating at a loss, and we cannot afford longer, expensive logistics. Today, in order to start shaping the price, we need exports from the Black Sea. The ports of Greater Odessa are key for farmers,” said Denis Marchuk, Deputy Chairman of the All-Ukrainian Agrarian Council, in a conversation with Focus.
Export by the Black Sea through the ports of Greater Odessa remains the most cost-effective logistics solution for farmers
There are still some doubts that it will be possible to export the entire volume of agricultural products intended for this within a year. However, business and the government are actively working to expand export channels, UCAB noted to Focus. “The fact that Poland, Ukraine and Lithuania agreed that grain should be checked not at the Ukrainian-Polish border, but at the border with the Baltic countries, and will continue to be exported through Baltic ports will speed up exports. Although there is a problem in the availability of cars needed in European countries. Because we must also participate in the transit routes so that all this is exported. There is limited capacity there. Of course, this affects export volumes,” Kolesnik noted.
The priority for the authorities in the issue of grain export remains ensuring the safety of ship traffic, noted experts interviewed by Focus. “Given that our military is increasing its dominance in the Black Sea, there is hope for improvement,” added Maria Kolesnik.
Save and earn: what farmers hope for in the 2023 season
Due to problems with exports, Ukrainian agricultural producers are actually working at a loss. “The situation for farmers with the sale of products today is extremely difficult. Due to the lack of logistics, it costs a lot of money. Prices are very low, especially in de-occupied areas... It is very difficult to take them out of them. Therefore, even after selling the products, they cannot cover the rent for the shares,” says People’s Deputy Dmitry Solomchuk.
And world price prospects for grains, unfortunately, are not encouraging. “The price in the world, under pressure from the overall volume of grain, will most likely decline,” predicts Maria Kolesnik. “Due to the fact that supplies from Ukraine are associated with additional risks, accordingly, there will be a discount on Ukrainian grain, and transportation will be more expensive for Ukraine; accordingly, for farmers, the purchase price will take into account all these risks and, therefore, will be lower.”
Experts do not predict problems with a lack of grain storage capacity
Ensuring the storage of the harvested crop against the backdrop of export restrictions and attacks on elevators is another challenge in the 2023 season. However, experts interviewed by Focus are convinced that there will be no catastrophe. “There is enough capacity for this harvest,” VAR commented to Focus. — The difficulty arose in 2022, when we actually exported nothing for six months, and we produced a new harvest. And under these conditions, we have one way or another the opportunity to export 3–3.5 million tons.
Thus, it allows the storage to be filled and used moderately. If there is a difficulty, we have the experience of the previous year, when polymer hoses were distributed to commodity producers. If such a need arises again, the Ministry can help through its partnership with the World Food Organization.”
