Losses of the Ukrainian grain and oilseed agricultural sector could exceed US$ 3.2 billion this year due to rising logistics costs, combined with rising fuel and fertilizer prices. This could lead to a reduction in planted areas in the coming years, according to Reuters.
Although it is one of the leading global food producers and exporters, with a traditionally profitable agricultural sector, Ukrainian authorities and farmers have not reported financial results in 2022, according to the Oct. 19 report.
Before the Russian invasion last February, Ukraine had shipped most of its exports through deep-water ports on the Black Sea. However, they have been fully or partially blocked since the start of the conflict, as reported by Reuters.
Limited export opportunities, now centered on small ports on the Danube River and the railway to Eastern Europe, have multiplied the logistics component and consequently reduced the price traders can offer farmers, according to the report.
The closure of ports also led to a sharp increase in the price of imported fuel, seeds, fertilizers and spare parts for agricultural machinery, according to the report.
Ukraine's largest agribusiness, the Agrarian Council, was quoted as saying that the cost of producing wheat in 2023 it was about US$ 146 per ton, with an average selling price of US$ 102 per ton. Farmers spend US$ 149 per ton to cultivate corn, but they can sell it for US$ 94 per ton.
According to the Council, even sunflower and rapeseed production would not be profitable this year, and only soy would be profitable for farmers.
Producers said the heavy losses had already led to reduced plantings for the 2024 harvest.
Financial challenges and adverse weather affect grains in Ukrainian agriculture
“Farmers will determine the area they can sow. This decision is mainly based on their financial capacity,” said Oleh Khomenko. He is the head of the Ukrainian Agribusiness Club, a business association.
In addition to financial difficulties, unfavorable weather could significantly reduce the sowing area in Ukraine in the latter part of this year, according to the report.
According to weather forecasts, the Ukrainian state is facing a prolonged lack of rain. This harms the sowing of winter crops and the growth of plants already sown.
The areas most affected by soil moisture were Odessa, Kherson, Mykolaiv, Kirovohrad, Vinnytsia, Cherkasy and Kharkiv. Up to 20 cm of the top layers of the soil were completely dry, as reported by meteorologists.
The planted area of sunflower in Ukraine increased this year. The data is from the International Grain Council (IGC). They were published by Germany's Union for the Promotion of Oil and Plant Proteins (UFOP) on October 12.
Growth in Ukraine and challenges in the EU
Furthermore, sunflower seed yield in Ukraine is expected to increase compared to 2022. The IGC projected total production of 15.3 million tons. This would represent an increase of 8.9% compared to the previous year.
Sunflower acreage in the current “uncontrolled areas” of Ukraine accounted for a significant portion of overall production, according to the report.
In Russia, the harvest of sunflower seeds began in September. Production should remain at 16.4 million tons, the same as the previous year.
According to IGC data, global sunflower seed production was forecast to total 56.1 million tonnes in the 2023/24 marketing year. This would be 300,000 tonnes lower than the previous month's forecast.
The forecast reduction was mainly due to a smaller harvest in the EU-27, which is expected to total around 10.3 million tonnes.
Source: Oils & Fats International
