Ukrainian Agribusiness Club together with UCABevent agency organized the second webinar for foreign partners on April 14, during which speakers shared their thoughts about the sowing campaign, current situation with export and agro difficulties which Ukraine faces at this moment.
- Roman Slaston, CEO of UCAB
- Petro Melnyk, President of UCAB
- Mykola Gorbachov, President of Ukrainian Grain Association
- Vadym Skrypnyk, Chief of agriculture department of Astarta
We offer to get acquainted with the main messages of the event:
- Export is one of the key topics right now. Before the war, Ukraine usually exported roughly 5 million tons of grains through seaports, and roughly from 500 to 700,000 tons of sunflower oil, which is also a very big deal for Ukraine in regard to export but also is needed by the global markets by the countries which import this oil from Ukraine. Right now we have the blockade of seaports, and we started to rebuild new logistic routes. And we'll see that the railway is the main possibility to export grains, and sunflower oil from Ukraine to the western border, and then to the European ports.
- And with the railway routes, Ukraine now has 10 railway routes, 10 rail crossing stations at the western border. The theoretical maximum capacity is at the moment 560 grain wagons per day, which is equivalent to 1.1 million metric tons per month. That's roughly 20% of what we had through the seaports. Of course, it's not enough. But still we are doing the best. Where all Ukrainian farmers and then grain traders and logistic operators, they are doing their best in fulfilling the needs of countries around the globe. Before the war, was only a 130 wagons per day.
- But the reality is like that we exported in March over 270,000 metric tons of grains, meal and soybeans, and 18,000 metric tons of sunflower oil. Now the situation is a bit better, but we're still at the let's say 50% or our theoretical maximum capacity of exports through the railway routes. And now we have during the April on average 269 wagons per day of grains, which might give us 560,000 metric tons per month in April.
- The railway still have big problems to solve. There is a need to change wheels on Ukraine border if we export to the EU, because of the difference in widths of the railway. We have lack of wagons, EU wagons which can actually on some routes come into Ukraine low the grain and then go back to EU to processing plants or other customers. There is another issue which is a limit opportunity of EU board because border stations were not built to get grain from Ukraine in such a volume, so they are overloaded.
- We still have problems with understanding the European Union of our procedure, it doesn't return procedure and veterinary procedure. For example, each of the railway should go with Veterinary and phytosanitary certificates across important points. If before we could easily arrange such documents in two-three days after the loading of the vessel, and now we would send these documents to the customer with the wagons. Because, for example, on a cross in Poland, if there is no document, they start to check each wagon, test each of the railway cars and make analysis. We didn't face this problem before.
- We can continue to export grain on the river. And Ukraine has small ports like in Izmail on the Danube, where we can load the barges. We increase the capacity throughput capacities there. Some companies start to build their small terminals. Per month we can load about 400,000 tons of grain. And we can increase it two times in the next two months.
In the last meeting with the Ukrainian railway state company, it was discussed that they can increase support capacity somewhere on a 50%. They've got on the reserve special lifting equipment which will help to change the wheels to European size and some private company will continue to build a small transloading terminal which will call like a Kovcheg.
“But we need the plan “A” which is unblocking Ukraine ports, and we are constantly saying and delivering that message that the whole diplomacy in EU, in Asia and Africa everywhere and Middle East should do as much as they can to put pressure on Russia to unblock Ukrainian seaports. This might soften the global crisis which may arise from hunger.”, – stressed Roman Slaston.
The impact of the war on agribusiness can be understood by the example of the Agricom Group, about which Petro Melnyk, CEO of this company, spoke about. It has business in two regions. It's in the Zhytomyr region and Chernihiv region. Behind the words of Petro Melnyk, “war had a significant impact on our business, but we handled it, and we now continue, we stopped already seeding, and we hope that we will fulfill our plans. But the big challenge was more to do with a technique in the Chernihiv region because our manufacture, which was built and opened just three years ago, was the most contemporary plant. It's a world which was designed completely by the Buehler company. So it was a fully automatic plant like really is a piece of art with technology of producing cereal flakes. So it was under occupation for more than four weeks. We didn't have any information about the situation on this plant. We just got information that one of our employees who have been involved in the process of security of this plant has been taken by the Russians troops and disappeared. And when we just got access to this plant, unfortunately, we saw they killed our employees. And it's one of the challenges which I have never predicted. Against one week has been taken to understand what happens with security situations. So just four days ago, our military check it, and yesterday I was there. We started our production successfully.
We have already started production, but it will be just 50% of capacity. Every day we meet new challenges with suppliers of raw material with finding the tracks, which will deliver this food from our factory to the central Ukraine. We focus now mainly on the Ukrainian market to fulfill all needs in Ukrainian markets.
Mined fields are also a problem. So we decided not to work at least 20% of our fields. That is not enough Ukrainian militaries, who can check fields this month. So we have bought the sum of special devices, which is checking the mines, but it's just for checking territory, whereas our infrastructure three days without stopping has been bombed. So we'll lose, I think, like 70% of our machinery Park. So, tractor combines trek, and many others, so 50% of our warehouses were destroyed”.
Vadym Skrypnyk also spoke about the situation with production in the agricultural sector:
“Today we are at the finish of seeding sugar beets. And also we are starting to seed process of sunflower in our unique pasture. We don't change seed structure. We don't change technology or processes. The main problem for us today it's logistics.
We will start studying all five of our plants, sugar beet. Another question is the balance of supply and demand. Many confectionery factories and others, which consumed sugar products and export, now are not able to do that. Some of them they stopped, and it is not clear when they will be able to work in full. Six or seven sugar processing plants will not work this year. We, as one of the biggest producers of sugar, must produce this product for Ukrainian people.
We will also not very good situation with gas because we need a lot of gas for this process, and we are hoping that our government will think about that, and we will have some gas for this production”.
There are also long-term problems in the agricultural sector. So Mykola Gorbachov predicts that if we still have this bloody war we will be in a big problem and our farmers will be in a big problem, because at the moment they spent the last money, it is so difficult to receive the credit lines. And after, if they will not sell their product, the next step will be even more interesting because if our farmers will become to the bankruptcy in two years, the company will have the right to purchase agricultural land. And the question arises who will be the buyer of this land, from where farmers will take the money, who will the owner of the agricultural sector in Ukraine?
Also, Vadym Skrypnyk added: “Seed structure will change next year. Because corn, sugar beets, sunflower oil also need to get fertilizers and that's why I think that will be more soybeans and winter wheat, winter barley maybe, and I think rapes it also will be decreased. So also some protection companies go out from Ukraine and also that companies who don't go out from Russia they will lose a marketing field because a lot of Ukrainian producers will not work with these companies. So as for me, the problems will be more next year than this year”.