The head of the Odessa regional military administration Oleg Kiper in August 2023 by his order strengthened customs control in the region when exporting agricultural products for export, at the same time on the market of export of agricultural products appeared about 40 companies with signs of fictitiousness, reported hromadske in the investigation “Grain Baron”.
The publication noted that through the ports of Odessa in 2023 passed 85 percent of the country’s agro-exports.
When analyzing the data of the Ukrainian customs, access to which is provided by the international service ImportGenius, journalists found 40 companies with signs of fictitiousness, which entered the agro export market after the Odessa OSA established “manual control” over it.
These companies started exporting grain after August 2023. They have never engaged in exports before, were founded or changed owners in 2023, are not part of well-known agroholdings and do not own land.
“The largest by export volume of these firms has the same phone number as another 139 legal entities. And in second place is a company whose founder is probably a psychologist from Uzbekistan, for whom 20 legal entities have been registered in Ukraine over the past two years,” the investigation said.
“Suspicious” companies for the last quarter of 2023 exported through the ports of the Odessa region about 800 thousand tons of agricultural products worth about $ 150 million, or 6 billion UAH, says the publication and recalls that the head of the Odessa Regional State Administration explained the establishment of manual control by the need to fight against one-day companies and so-called “black exports”.
Such one-day companies export grain and do not return foreign currency proceeds to the country, do not pay taxes, have a fake director and do not have an office. After several transactions with a budget of several million dollars, the company disappears.
The chairman of the All-Ukrainian Agrarian Union “Agrarnaya Rada” Dmytro Kohan drew attention to the fact that any manual control has increased risks of corruption.
The Odessa regional military administration refused to comment on the facts revealed by journalists.
In January-April this year, Ukrainian companies increased exports of ferrous scrap by 54.9% year-on-year to 87,414 thousand tons from 56,449 thousand tons.
According to statistics released by the State Customs Service on Friday, 26.153 thousand tons were exported in April, 20.907 thousand tons in March, 23.194 thousand tons in February and 17.160 thousand tons in January.
In monetary terms, scrap metal exports increased by 68.8% to $28.155 million from $16.684 million.
In January-April, Ukraine exported scrap metal to Poland (83.81%), Greece (12.39%) and Germany (3.65%).
In the first four months of the year, the country imported 339 tons of scrap metal for $187 thousand. Imports were carried out from Slovakia (43.01% in monetary terms), Turkey (38.17%) and Poland (8.06%), while in January-April 2023, 176 tons of scrap metal were imported for $64 thousand (49.23% from Slovakia, 21.54% from Moldova and 15.38% from the Netherlands).
As reported, in 2023, the scrap collecting enterprise of Ukraine increased the export of scrap metal from the country by 3.4 times compared to the previous year – up to 182.485 thousand tons from 53.557 thousand tons. In monetary terms, exports increased 2.74 times to $52.723 million from $19.271 million.
Earlier, Ukrmetallurgprom President Oleksandr Kalenkov stated in a column on the Interfax-Ukraine website that scrap metal is exported through the European Union, which has a preferential export duty of EUR3 per ton, and from there the raw materials are redirected to real customers. He noted that exporting raw materials directly to customers would cost EUR180 in export duties, and the Ukrainian budget has already lost UAH 350 million.
The head of Ukrmetallurgprom called for a temporary ban on the export of ferrous scrap to provide steelmakers with strategically important raw materials in the face of the ongoing war. He also clarified that a ton of scrap metal processed into steel brings in 10 times more to the budget than the EU export duty, which is about $300 per ton.
In 2022, Ukraine reduced exports of ferrous scrap by 11.5 times compared to the previous year, to 53,557 thousand tons, and in monetary terms, it decreased by 12.4 times, to $19.271 million.
The flow of grain ships through the ports of Odessa Region is bringing long-awaited support to Ukraine’s economy. However, analysts warn that this may be a temporary phenomenon.
“In early March in Odessa, a 700-foot Liberian-flagged vessel slowly sailed out of the port, passing rows of yellow cranes and plunging into the calm waters of the Black Sea. Its hull was almost completely submerged as the ship was loaded with corn bound for Bangladesh. Meanwhile, other ships laden with grain have already left port, bypassing those that were just arriving,” the New York Times reported.
What seemed impossible last summer, when the Russian naval blockade paralyzed all commercial activity, is now a reality. The port was back on track thanks to a military campaign that drove Russian warships out of Ukrainian waters and provided a trade route for supplies to foreign markets.
Ukrainian grain and oilseed exports across the sea, which are vital to the Ukrainian economy, have almost returned to prewar levels, according to data provided to the New York Times. Over the past six months, Ukraine exported 27.6 million tons of grain and oilseeds across the Black Sea, only 0.2 million tons less than the average volume for the same period from 2018 to 2021 before Russia’s invasion in February 2022.
In the first quarter of this year, Black Sea exports even exceeded pre-war figures, according to Ukrainian data.
Grain and oilseed export estimates from Dragon Capital, a Kiev-based investment firm, and data from Lloyd’s List Intelligence, a shipping analytics firm, confirm this trend.
Sal Gilberti, head of Teucrium Trading, a U.S. company that trades agricultural commodities on the New York Stock Exchange, said claims by Ukrainian officials that grain exports across the sea are close to prewar levels are “accurate.”
Ukraine still faces challenges that could prevent grain exports from stabilizing at previous levels, including continued Russian attacks on port infrastructure and a reduced harvest this year. The U.S. Department of Agriculture predicts a decline in grain exports in the near future.
However, analysts say the overall environment is improving and freight companies are willing to transport Ukrainian grain despite the war. “The data shows there is no shortage of shipowners willing to take the risk and go for it,” said Greg Miller, senior maritime journalist at Lloyd’s List.
Maintaining high levels of grain exports is a strategic necessity for Ukraine. Grain and oilseeds accounted for a third of Ukrainian exports last year, said Natalia Spygotska, senior analyst at Dragon Capital. It has become critical to sustaining Ukraine’s economy and ultimately its war effort.
Tariel Khajishvili, head of Novik LLC, a Ukrainian ship agent operating in Odessa, said: “It is obvious that without grain exports, the country’s economy will collapse.”
After the invasion, Russia seized control of the Black Sea, blocking trade for months, jeopardizing global food security. In July 2022, a deal brokered by the UN and Turkey allowed Ukraine to resume exports through an agreed corridor in the Black Sea.
But a year later, Russia pulled out of the agreement and threatened all commercial ships traveling to or from Ukraine, leading to a complete halt to maritime grain exports last August.
To resume exports, the Ukrainian army launched a campaign to drive the Russian navy out of part of the Black Sea, destroying many warships and attacking their headquarters in Russia-occupied Crimea. The successful operation allowed Ukraine to create a new trade corridor along the coast that allows ships to enter the territorial waters of NATO countries.
Dmytro Barinov, deputy head of the Ukrainian Sea Ports Administration, recalls how nervous they were when the first grain ship passed through the corridor in mid-September: “We prayed that everything would go well.
Eventually, the ship successfully sailed into the open sea, and soon the “familiar pleasant sounds” of the ship’s sirens were again heard in Odessa.
The number of grain ships arriving at the three ports of the Odessa region – Odessa, Pivdennyi and Chernomorsk – increased to 231 in March from just 5 in September, according to Lloyd’s List.
Ukraine’s ship insurance arrangements with global insurers also contributed to the increase. Mr. Gilberti of Teucrium Trading added that Moscow is also interested in keeping the fighting out of the Black Sea, as it is also used to export Russian goods.
Today, Ukraine can only use ports in the Odessa region for grain exports, as other seaports are either too close to Russian positions or occupied by Russian troops. Despite this, with 4.1 million tons of grain and oilseeds shipped monthly, these three ports are close to pre-war export volumes.
The opening of the Odessa ports brought welcome financial relief to Ukraine. Having lost key economic assets during the war, such as steel mills in the east seized or destroyed by Russia, Ukraine is now more dependent on grain exports to support the economy. Dragon Capital predicted in the fall that a return to full operation of Odessa ports could add several percentage points to Ukraine’s GDP growth this year, which was forecast at 4 percent.
However, analysts warn that the initial success of Ukraine’s new trade route may be short-lived.
Russia continues to strike port infrastructure in Odessa, and with Ukraine’s air defenses in short supply, more missiles are reaching their target. In mid-April, Russia successfully struck two terminals in Pivdenne, destroying several containers.
Dragon Capital’s Ms. Spygotska also noted that high volumes of recent grain exports partly reflect shipments delayed by the Russian blockade, which could make it difficult to achieve those volumes in the future, especially with grain production projected to decline.
“Producers and exporters are now well positioned to export all available crops,” she said. “But it all depends on the harvest.”
As of May 1, Ukraine exported 41.365 mln tonnes of grains and pulses since the beginning of 2023/24 marketing year, of which 6.314 mln tonnes were shipped in April, the press service of the Ministry of Agrarian Policy of Ukraine reported, citing the data of the State Customs Service.
According to the report, as of the same date last year, the total shipments amounted to 41.595 mln tons, including 3.619 mln tons in April.
In terms of crops, since the beginning of the current season, 15.778 million tons of wheat have been exported (in April, the figure was 1.936 million tons), 2.202 million tons of barley (231 thousand tons), 1.2 thousand tons of rye (0.2 thousand tons), 22.906 million tons of corn (4.136 million tons).
The total export of Ukrainian flour as of May 1 is significantly lower than last year’s figure (127.7 thousand tons) and is estimated at 86.6 thousand tons (7.4 thousand tons in April), including wheat – 81.9 thousand tons (6.8 thousand tons).
As reported, a number of sources in the Ukrainian market suggested that grain exports in April 2024 could be reduced to 5 million tons due to the constant shelling of port infrastructure by Russian troops, which made it difficult for a number of leading traders to supply agricultural products to foreign markets.
Ukraine’s exports in April this year increased by 11% compared to March and reached 13.1 million tons, the best result since the full-scale Russian invasion, First Deputy Prime Minister and Minister of Economy Yulia Svyrydenko said on Facebook on Wednesday.
“This is an absolute record for the entire period of the full-scale war. For example, in March, exports amounted to 11.8 million tons, in January – 12 million tons. Importantly, this figure is higher than the level of pre-war February 2022. Back then, we exported 12.8 million tons,” the Minister of Economy reminded.
According to her, in monetary terms, exports in April amounted to $3.3 billion compared to $3.2 billion in March.
Svyrydenko noted that the growth in exports was primarily due to the operation of an alternative sea corridor, which made it possible to partially compensate for losses in the economy due to the blockade of the Polish-Ukrainian border, as well as the introduction of a mechanism for insuring ships against military risks, which initially applied only to agricultural products, but was soon expanded to all non-military cargo.
“Of course, the growth and expansion of the capacity of the Solidarity Roads, primarily with Moldova and Romania, has also added to the growth. And the improvement of the conditions for the transportation of goods by rail to the Danube ports,” the Deputy Prime Minister said.
Customs inspectors have prevented an attempt to export 1.5 thousand tons of Ukrainian wheat worth UAH 9.2 million to Italy without a license using falsified documents, the press service of the State Customs Service (SCS) reported on Telegram.
“At the Mukachevo customs post, customs declarations for the export of domestic wheat (not for sowing) were submitted for customs clearance. The total weight of the goods was indicated as more than 1.5 thousand tons worth UAH 9.2 million. The seller of the goods was a Kharkiv-based company,” the statement said.
According to the State Customs Service, customs officers noticed that the goods were not licensed for export. During the inspection, it turned out that the director of the Kharkiv company resorted to tricks to circumvent the licensing of agricultural exports, and in the shipping documents he indicated an Italian company as the recipient of the goods. The export of wheat to Italy, unlike other EU countries, is not subject to licensing.
The foreign company responded to the State Customs Service’s request and denied the information about the purchase of Ukrainian wheat in a letter. For its part, the Italian customs also officially confirmed that there are no declarations in their database related to the Italian company that bought the goods.
“Two reports on violation of customs regulations under Part 1 of Article 483 of the Customs Code of Ukraine were drawn up against the head of the Kharkiv company for submitting documents containing false information about the recipient of the goods. The sanction of the article provides not only for the imposition of a fine in the amount of 50 to 100% of the value of the offense items, but also for their possible confiscation,” the State Customs Service emphasized.
