Business news from Ukraine

ACCORDING TO RELEVANT MINISTER, FOREIGN EXCHANGE EARNINGS FROM EXPORT OF AGRO-INDUSTRIAL COMPLEX PRODUCTS FROM UKRAINE DECREASED 3 TIMES DURING WAR

Foreign exchange earnings from the export of agricultural products from Ukraine from March to May, during the three months of the war with the Russian Federation, are approximately comparable to the export figures for one pre-war month, Minister of Agricultural Policy of Ukraine Mykola Solsky said in an interview with AgroPolit.
According to him, in January 2022, Ukraine exported agricultural products worth $3.14 billion, in February – $2.54 billion, in March – $0.84 billion, in April – $0.9 billion, and in May – $1.21 billion.
“We see that foreign exchange earnings from the agro-industrial complex during the war fell threefold … That is, in March-May, agricultural exports amounted to $ 2.95 billion, while this was the traditional amount for one month (before the full-scale invasion of the Russian Federation – IF-U)”, Solsky emphasized.
As reported with reference to the Deputy Minister of Economy – Trade Representative of Ukraine Taras Kachka, Ukraine in the 2021/2022 marketing year (MY) exported 61.52 million tons of grain and oilseeds worth $22.2 billion.
According to him, wheat exports amounted to 18.7 million tons worth $4.8 billion, corn – 23.54 million tons worth $5.8 billion, barley – 5.74 million tons worth $1.3 billion.
Kachka added that the export of 4.3 million tons of sunflower oil brought $5.8 billion, 3.4 million tons of sunflower meal – $960 million tons and 421 thousand tons of soybean meal – $230 million.
According to him, 1.1 million tons of soybeans for $641 million, 2.7 million tons of rapeseed for $1.7 billion and 1.09 million tons of sunflower seeds for $616 million were also exported.

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RECOVERY PLAN FOR UKRAINE FORESEES AT LEAST $37 BLN INVESTMENTS IN AGRO-INDUSTRIAL COMPLEX

The Ukraine Recovery Plan for 2022-2032 includes a number of projects in the agro-industrial complex, the implementation of which will require an investment of at least $37 billion, including a project for the development of processing in the agricultural sector in accordance with the Green Deal principles, for which it is planned to raise $10.2 billion.
It is proposed to increase the production of starch, syrups, gluten, lecithin, protein, premixes, meat and milk as the key directions for the development of processing in the agro-industrial complex, according to a detailed document provided to Interfax-Ukraine by Secretary of the National Council for Ukraine Recovery Danylo Hetmantsev.
It is also planned to attract $4 billion of investments in the construction of an irrigation system on a total area of 1 million hectares, $7.7 billion in increasing the production of agricultural products with high added value, $1.6 billion in the reclamation of war-damaged lands, $5.5 billion in increasing livestock production and $1 billion to promote the transition of the Ukrainian agro-industrial complex to “green” development.
According to the document, it is planned to attract $6.5 billion by 2032 to restore 10,500 Ukrainian agricultural enterprises after the war.
The plan for the recovery of Ukraine specifies that the main problems of the Ukrainian agro-industrial complex are the low degree of agricultural products processing, the generation of insignificant amounts of surplus value by the agricultural sector, and the country’s dependence on “oversized imports.”
As reported, the Ukraine Recovery Plan is aimed at accelerating sustainable economic growth. The plan defines a list of national programs to achieve the key results.
In total, the program provides for the implementation of 850 projects during 2022-2032, which will allow Ukraine to enter the TOP-25 countries in the world in terms of the Human Capital Index and the Economic Complexity Index.

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PLAN FOR RESTORATION OF UKRAINE IN 2022-2032 INCLUDES NUMBER OF PROJECTS IN FIELD OF AGRO-INDUSTRIAL COMPLEX

The plan for the restoration of Ukraine in 2022-2032 includes a number of projects in the field of agro-industrial complex, including the construction of irrigation systems on an area of 1 million hectares, as well as the transformation of the country into an “export food factory” by stimulating and developing the processing of plant products.

The corresponding plans were posted on the Ukraine Recovery Plan website.

In addition, over the next decade, it is planned to develop the Ukrainian agro-industrial complex in the following areas: development of agricultural engineering, bioenergy independence, preservation of the agricultural sector under the blockade of ports, meat and dairy independence, fruits and vegetables of Ukraine, return of farmland into economic circulation, promoting the transition of the agro-industrial complex to “green” growth, development of reclamation systems, development of seed production, construction of factories for the production of hybrid seeds and prompt recovery of the agro-industrial complex after the war.

In addition, among the priorities are the comprehensive planning of spatial development and land use in the territory of communities and mapping the territory of Ukraine and the implementation of the national geospatial data infrastructure.

According to the data on the project website, the Ukraine Recovery Plan is aimed at accelerating sustainable economic growth. The plan defines a list of national programs to achieve key results.

In total, the program provides for the implementation of 850 projects during 2022-2032, which will allow Ukraine to enter the TOP-25 countries in the world in terms of the Human Capital Index and the Economic Complexity Index.

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AGRO-INDUSTRIAL COMPLEX OF UKRAINE RECEIVED $ 23.3 BLN OF INDIRECT LOSSES DUE TO RUSSIAN INVASION – STUDY

The total amount of indirect (indirect) losses inflicted on the agricultural industry of Ukraine as a result of the full-scale invasion of the Russian Federation amounted to $ 23.3 billion for the period from February 24 to June 9, while the country suffered the largest losses (51%) due to the blockade of its seaports to reduce the cost of agricultural products – $ 11.9 billion.
The relevant data was published on Wednesday in the analytical study “Overview of indirect losses from the war in agriculture in Ukraine”, prepared by the Center for Food and Land Use Studies of the Kyiv School of Economics (KSE Institute) in cooperation with the Ministry of Agrarian Policy and Food of Ukraine.
The organization recalled that the day before it presented a study estimating the direct losses of the agro-industrial complex of Ukraine due to Russian aggression at $4.3 billion. According to the document, direct losses reflect the complete or partial destruction of tangible assets, while costs that producers are forced to bear because of the war.
It is noted that half of the indirect losses of the Ukrainian agro-industrial complex fell on the reduction in the cost of agricultural products due to its accumulation in the country caused by the blockade of Ukrainian seaports by the Russian fleet – $ 11.9 billion. Other factors were the reduction in crop production – $ 9.6 billion (43% of total losses) , an increase in the cost of production factors – $ 0.86 billion (4%), a reduction in the livestock sector – $ 0.68 billion (3%) and a reduction in the yield of perennial crops – $ 0.09 billion (> 1%).
“Due to the blockade of ports by the Russian Navy, Ukraine faced an oversaturation of the domestic market of export-oriented products and an almost fourfold increase in the cost of export logistics. This led to a decrease in prices within the country for the main export-oriented crops by more than 30%,” the statement says. in the KSE study.
As an example, the organization cites food wheat, the price of which in Ukraine on the terms of EXW (self-delivery) during the war with the Russian Federation decreased by 35% – from $297/ton to $192/ton, while over the same price period the world price for it increased post twice.
According to the study, the reduction in the wheat crop in 2022 is expected to be 33% compared to the baseline scenario, which corresponds to $2.03 billion of indirect losses, the reduction in the sunflower crop – 32% ($2.43 billion of indirect losses), barley – 31% ($0 .56 billion), corn – 18% ($1.29 billion). Lost income due to a reduction in the harvest of other crops is estimated at about $3.3 billion.
“With the start of the Russian invasion, Ukrainian agricultural producers also faced higher cost of production factors, including higher prices for fertilizers and fuel. The cost of fertilizers has increased by 37% since the beginning of the Russian invasion, while the price of diesel fuel has increased by about $0.39/liter. Total losses due to increased production costs are estimated at $859 million,” KSE stressed in the study.
According to her, the losses due to the reduction in the yield of perennial crops in 2022 are estimated at $89 million. Considering that it takes an average of five years before the fruiting period of new perennial plantations, indirect losses from the destruction of perennial plantations will amount to $222.4 million over five years.
“Calculation of indirect losses helps to understand not only the scale of the industry’s decline, but also the need for a full resumption of production. A significant part of the lost income was used to cover the costs of the subsequent sowing campaign and the purchase of feed for livestock. Without partial compensation for losses, farmers in the regions most affected by war, will not be able to resume production,” KSE quotes its expert Roman Neiter.

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MINISTRY OF AGRARIAN POLICY OF UKRAINE WILL LEND TO PROCESSING INDUSTRY OF AGRO-INDUSTRIAL COMPLEX

The Ministry of Agrarian Policy and Food of Ukraine initiated the allocation of UAH 3.39 billion of portfolio guarantees to four state-owned banks for lending to the processing industry of the Ukrainian agro-industrial complex.
As reported on the website of the agency on Wednesday, this measure will stimulate the processing of agricultural raw materials within the country, large reserves of which are difficult to export in the context of a halt in Ukrainian agricultural exports due to the blockade of its key seaports by Russian warships.
“Given that our seaports are blocked and we cannot export our grain in the required quantity, we will focus on the processing industry. As a result, enterprises operating in this area, thanks to portfolio guarantees, will be able to buy a certain stock of their products from agricultural producers , and the latter, in turn, will be able to repay part of the body of the loan,” Bagrat Akhidzhanov, director of the financial and economic department, quotes the Ministry of Agrarian Policy.
According to him, lending to agricultural processing will provide the maximum possible financial resource to the entire sphere of the Ukrainian agro-industrial complex.
In addition, it is specified that the ministry has already developed a plan for further financing of farmers in June-August.
“The Ministry of Agrarian Policy has a number of developments in lending to the agricultural products processing industry. Yes, we have already initiated changes to Decree No. 723 to expand the list of those who can receive loans under state guarantees by including processing enterprises in this list,” the statement reads. message of the words of First Deputy Minister Taras Vysotsky.
As reported with reference to the Minister of Agrarian Policy Mykola Solsky, the main factors for the development of agricultural processing in Ukraine are the opening of European and world markets on an ongoing basis, as well as affordable financing for farmers.

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GROUP DF: AGRO-INDUSTRIAL COMPLEX PROVIDED WITH NITROGEN FERTILIZERS FOR SOWING

The current surplus of nitrogen fertilizers in the Ukrainian market reaches about 200,000 tons, which indicates that the Ukrainian agro-industrial complex is fully supplied with them for the spring sowing campaign, Oleg Arestarkhov, head of corporate communications at Group DF, said in a comment to the Interfax-Ukraine agency.

“The issue with nitrogen fertilizers for Ukraine is completely closed. According to our estimates, as of March 30, their current surplus reaches about 200 thousand tons. There are significant reserves of fertilizers, and Ostchem continues to process all solvent requests from farmers and ship products without any problems,” Arestarkhov emphasized. .

According to him, the company closes the current demand for nitrogen fertilizers within the country.

“The only thing is that in some regions there are logistical problems with delivery due to hostilities,” said a representative of Group DF.

At the same time, he noted that supply chains are constantly being restored. “We are doing everything possible to completely update the logistics. Ukrzaliznytsia is helping us a lot, our logistics company (Nika Trans Logistics, part of Group DF – IF) is working, which delivers fertilizers, our Ukragro NPK warehouses are working,” he said. Arestarkhov.

He added that domestic Ukrainian consumers were and remain a priority, 95% of all fertilizers produced by Ostchem are shipped to the domestic market.

Commenting on the issue of exports, Arestarkhov noted that the government’s permission to export fertilizers in the amount of 70,000 tons per month will in no way affect the security of Ukrainian farmers on the part of the Ostchem holding. The head of corporate communications said that the export of fertilizers by the Black Sea is now impossible due to risks. “Road and rail transport will be the main ones, it is safer, although more expensive,” he said.

According to him, all Ukrainian companies, who wanted to, have already bought fertilizers. “We have not refused anyone. And now we are not refusing anyone. The strongest demand is for saltpeter and UAN. The volumes that we promised to ship to end consumers and contracted, we have shipped and are shipping. You see, now is a very responsible period for the country, and we are clearly aware that this is not just the fulfillment of the agreements concluded by Ostchem, this is a matter of Ukraine’s national food security,” summed up the representative of Group DF.

According to his estimates, the price of nitrogen fertilizers will not fall in the near future. “I don’t think there will be a fall in the near future, it’s unlikely. Rather, on the contrary. Although the winter period is over, the price of gas, which is the main raw material for the production of nitrogen fertilizers, for obvious reasons, remains too high at European hubs. Many factories in the world are stopped, and fertilizer producers that are working will not trade fertilizers at a loss, at a price below cost,” he explained.

Arestarkhov added that the balance between supply and demand is seriously disturbed in the world ammonia markets, and the problems affect not only nitrogen fertilizers, but also potash fertilizers, which are complex.

“The new price levels are something that many farmers are already accustomed to. It hurts businesses. Margins are falling for both fertilizer and agricultural producers. It will take time for global fertilizer markets to get out of the turbulence zone and return to a state of stability, balance and predictability Only peace and the solution of all geopolitical issues can stabilize the markets. Everything else is derivative,” the representative of Group DF emphasized.

Group DF is consolidating the assets of businessman Dmitry Firtash in the gas distribution, chemical, titanium and port industries, as well as in agriculture and media.

The nitrogen sub-holding of Ostchem includes Cherkasy Azot, Rivneazot, Severodonetsk Azot Association, as well as Stirol in the occupied Gorlovka (Donetsk region).

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