Ukrainian Agribusiness Club together with UCABevent agency organized the webinar for foreign partners, during which were discussed the main problems of the agricultural sector that arose due to the war with Russia.
- Roman Slaston, CEO of UCAB
- Alex Lissitsa, CEO of IMC
- Dmitry Skornyakov, CEO of HarvEast
We offer to get acquainted with the main messages of the event:
- Ukraine's role is pretty big in the global market. Ukraine is known as the breadbasket and the country which has 25% of the most fertile soils in the world. Agriculture products from Ukraine are exported to more than 150 countries around the globe. Ukraine feeds more than 400 million people around the world.
- Countries that export our products, countries from the Middle East, from North Africa and from Asia, are quite dependent on Ukrainian food supply. Also, many of those countries have quite low income per capita. So an increase in prices for basic food will have a significant impact on those countries. And the threat of global hunger is actually quite big in those areas.
- Ukraine usually exported 5-6 MMT per month of grains through seaports and 500-700 KMT per month of sunflower oil before the war. 98% of Ukrainian food export is making through sea logistic. Now seaports are blocked (Danube ports are insufficient) and commercial vessels are under attack of Russia. Ukraine redirected export flows to western border with EU countries via railway and trucks to EU Baltic and Black Sea ports. Capacity — only 0.6-1 MMT/month. Current stocks of grains for export — 20 MMT (18-24 months w/o seaports!!!). New crop will have no available storage. Years and billions of dollars will be wasted. If we have no export, then we have no no money and no further crops of wheat.
- The sowing campaign began in Ukraine despite everything. Ukraine is going to plant around 14 mln ha (70%) of spring crops area in 2022. Biggest loss is in north-east, east and south of Ukraine. We have the highest concentration of sunflower production in the south of Ukraine. There were pretty big production of corn in the north-east of Ukraine. So we definitely will see a loss not only in the areas but in yields too.
- The lack of capacity for export leads to the fact that we see that many farmers try to seed less and plant less corn, but switched to soybean and sunflower because they foresee that it might be a logistic problem quite a long time.
- Diesel fuel and finance are two main problems which our farmers face right now. Finance is a pretty big issue because many suppliers review the financial terms or terms of supply, and now they want 100% prepayment. And as for diesel fuel, we had like 70% of supply from Belarus and some from Russia before the war. And now we are trying to get supply from the European Union.
So the world will face starvation, hunger riots, refugee migration without Ukrainian food supply. There is no sufficient alternative to cover the gap.
If the war does not stop, then inflation in many countries will escalate further due to high food prices. Ukraine today and further crops are under risk of failure. And unblocking of Ukraine seaports is the key for World food security.
“We already saw in February, that FAO price index for food rose. Prices increase in vegetable oils and dairy as well. And I suppose that in March this index will be even higher. Russia's invasion is the key reason why the price is rising right now. And I think that we still do not see the all consequences and that the price increase might be further when we will come to the harvest and the situation will only be unsolved, then we will face much harder problems,” – predicts Roman Slaston.
Actions to be taken urgently to try to resolve the situation:
- International pressure on Russia, escalation of the problem via major food buyers (China, Turkey, Egypt, Saudi Arabia...)
- Embargo and blockade of Russian sea exports
- Provision of powerful anti-ship weapons to Ukraine
- Support by US Navy and Royal Navy (UK) to clear Black Sea from mines (minesweepers)
Alex Lissitsa stressed: “I think many countries have even not understood how deeply food security worldwide depending on Ukraine. Ukraine became a big player, the global player on the global markets. The politicians of many countries discuss hunger, the effect of this. But actually the only one solution here is to stop the war, to stop Putin, to stop Russia.
What we have is not that usual planting season, and it's not the usual talking about the selling, buying and purchasing. It's not a business as usual. We talk about surviving of companies. We talk about surviving people, especially living in the rural areas and the border areas. And we talk about survival as a country, as a nation”.
Also, Dmitry Skornyakov added: “We need years to take out the Russian mines out of our fields. So, for example, our company has 130000 hectares. Out of which 92000 around Mariupol. My fields are occupied by a Russian, and they started to steal everything. And in this territory, we lost all machinery, grain. I'm not sure if they want to work in this area, but I'm pretty sure that this area cannot produce any grain for quite a long time. So I am pretty sure that many companies in Ukraine won't be able to get the potential of their land”.