Mykhailo Sokolov, Deputy Chairman of the Ukrainian AgriCouncil (UAR), said that the problem with the export of Ukrainian agricultural products can only be solved by lifting the blockade on seaports. Otherwise, the agrarians will not be able to receive income and pay off the previous loans, and will be forced to close their business, ubr.ua reports.
«The war is unlikely to cause food supply problems in Ukraine, but it has already led to the opposite calamity — agricultural commodities export impediment. As it turned out, seaports, which Russia began blocking even before active hostilities, have no alternative to exporting grain to international markets. As a result, the sea blockade may cause a collapse of the Ukrainian agriculture sector, which is key to its economy. Due to the lack of sales of the last harvest, the agrarians will not have enough money for the new crop and further activities,» he reports.
It should be noted that Ukraine used to ship 98% of total grain exports through ports. It is impossible to redirect and transport this volume by railway and road transport. According to Ukrzaliznytsia, its export capacities amount to 20 thousand tons a day. Even if they are doubled, it will be about 12−15 million tons in annual terms. At the same time, the usual volume of agricultural exports from Ukraine is 50−60 million tons.
«It will not be possible to double daily volumes. According to UAC estimates, the maximum export by railway could reach 700 thousand tons per month. At best, it could be increased by a million tons due to shipping to Europe through the Danube, the opening of which is currently being discussed. But even with the Danube route, which will not be opened in the next few days, Ukraine will be able to export 20.4 million tons of grain per year,» Mykhailo Sokolov comments.
At the same time corn, according to the Ukrainian Grain Association the corn crop, the only crop that was not exported by the beginning of the war, reaches 14−15 million tons (in general 32 million tons of corn were planned for export with the total harvest of 38 million tons). We should add 8 million tons of wheat — Ukraine produced 33 million tons of this crop in 2021, of which it exported 18 million tons. Domestic market consumption is usually about 7 million tons of wheat.
«In total, the harvest surplus available in Ukraine, which could have been exported without damage to the domestic market, reaches about 34 million tons. However, its exporting is impossible due to the closed ports. According to the calculations of the authorities, 50 billion hryvnias are needed for the sowing campaign. This amount is sufficient to finance the sowing campaign, but there have been difficulties with the issuance of loans in practice so far — the banks involved in the program were not mentally prepared for the war and continued to negotiate loans according to the peacetime patterns», Deputy Chairman of the UAC said.
On one hand, the procedure for getting a loan remains long and bureaucratic. On the other hand, farmers who work in active areas of fighting — Chernihiv, Kyiv and Kharkiv regions, in the south of Ukraine — generally faced a categorical loan rejection solely because of their being in these regions.
«There is enough money allocated by the state, but in practice they do not reach the farmers quickly, and the sowing campaign is about to begin. We have already raised this issue with the Ministry of Agrarian Policy, so that at least the state banks could change this policy,» Mykhailo Sokolov said.
In addition, if the ports continue to be blocked, it will be impossible to export all the previous harvest out until the next one. It will be a very big problem.
«Ukrainian capacities for simultaneous storage of grain reach only 50 million tons. The amount of unexported old crop (34 million tons) and planned volumes of new crop (at least 70 million tons) may double this level. Grain storage capacity can be increased with the help of alternative storage technologies, so-called „grain silos“ made of polyethylene, but only the removal of the blockade from seaports can radically change the situation. Otherwise the agrarians will not be able to get income, pay off the previous loans and will be forced to suspend operations», Mykhailo Sokolov summed up.