Business news from Ukraine

Losses of Ukrainian agricultural sector from war reached $40.2 bln

During the war, direct and indirect losses of the agricultural sector reached $40.2 billion, but these are not the final figures, as Ukrainian territories are still under temporary occupation, so it is difficult to calculate the full extent of losses, said Oleksandr Haidu, chairman of the Verkhovna Rada Committee on Agrarian and Land Policy.

“Confirmed direct losses of the agricultural sector exceeded $8.7 billion. We are talking about the destruction of infrastructure, business facilities, logistics chains, destruction and theft of grain and agricultural machinery by the enemy. There are also indirect losses of at least $30.5 billion. Unfortunately, this is not the final figure. When we accurately calculate the damage caused by the enemy’s explosion of the Kakhovka hydroelectric power station, the amount will be much higher,” the MP said on Wednesday at the conference “18 Months of War. Damage to the agricultural sector and prospects for the industry’s recovery”.

According to him, it is difficult to assess the consequences of contamination of agricultural land with explosives, destruction of the upper layers of soil due to “arrivals” and explosions during demining.

“We see that a large area is mined. Potentially, 174 thousand square kilometers of Ukrainian land are contaminated with explosives. And this is without taking into account the temporarily occupied regions,” the MP noted and informed about the preparation of the draft law “On the Quality of Soils”.

Gaidu also emphasized that the state cannot cover the needs of the affected farmers on its own and promised to engage international partners to support the agricultural sector.

“I emphasized the expediency of differentiating programs for farmers. After all, the needs of farmers are very different. For example, those farms that operate in the de-occupied territories cannot attract investment because financial institutions are mostly unwilling to cooperate with them. Although they are the first to return to their places after the liberation of the region to resume their activities and fill local budgets,” he wrote on Facebook.

The chairman of the relevant parliamentary committee believes that one of the mechanisms for compensation for the damage could be “grain reparations,” a mechanism that would help farmers receive compensation for destroyed businesses.

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Ukrainian and international grain traders suffer losses due to downtime of vessels of “grain” initiative

Sabotage by Russian inspectors in the Joint Coordination Center (JCC) of inspections of vessels bound for the Ukrainian Black Sea ports leads to low efficiency of their inspection – about 70 grain carriers piled up for a week to enter the “grain” corridor, and 30 – to leave.
According to the broker company Spike Brokers (Kiev) in Telegram-channel, grain traders are forced to lay more and more costs for demurrage of ships (up to 30 days) in the price of agricultural products, which “kills” the benefits for agricultural producers. Because of this, farmers are actively exporting their goods by land, strengthening trade relations with end consumers in Europe.
According to a brokerage company, for the past week, it has made deals for December-February delivery of feed wheat from Ukraine to Poland for $237/ton, rapeseed (non-GMO) to Germany – €595/ton, soybeans (GMO) to Ukrainian deep-sea ports – $415/ton. No data on sunflower sales have been made public this week.
She specified that domestic corn prices have stabilized at $205-230, depending on the place of delivery – in the port or to the land border crossings. Exchange quotations for wheat this week are in the nature of an “inversion” (a reverse market where spot is more expensive than contracts for future months). Recent buyer indications for the past week are DAP Poland (border) $210-220, DAP Turkey (port) $260-270, DAP Romania (port) $255-265.
“The proximity of the holiday month creates some constraints on the efficiency of cargo handling in Europe. Most buyers in Europe do not want to receive shipments by truck/rail between December 20 and January 5. In the direction of ports, buyer demand is expected to decline significantly until vessel throughput efficiency improves,” Spike Brokers stressed in a statement.
In turn, with low selling prices of wheat in Ukraine and the high cost of its logistics, domestic producers are suffering significant losses, which significantly constrains its supply. The latest indications of buyers: DAP Poland (border) – $230-245, DAP Hungary (border) – $230-242, DAP Ukraine (Danube ports) – $240-245.
According to the trader, the purchasing prices of oil extraction plants in Ukraine adjusted from $450 to $350 excluding VAT per ton of sunflower seed delivered to the plant: the saturation of demand in Ukraine occurs against the background of the fall in vegetable oil prices to $ 200 per ton. Thus, while oil prices on foreign markets will remain stable, there will be an increase in the supply of sunflower for export.
The latest indications of sunflower seed buyers: DAP Bulgaria (center) – $540-560, DAP Romania (center) – $500-530, DAP Hungary (center) – $540-555.
In addition, the saturation of the EU market with rapeseed from Ukraine and Eastern European countries does not give any chance for price strengthening at the moment. Latest buyer indications: DAP Germany (east) – €550-560, DAP Hungary (center) – €540-550.
“The soybean market remains at last week’s levels. Producers remain with good soybean balances for sale,” the brokerage clarified.
The latest soybean buyer indications for the week: non-GMO DAP Italy – €545-550, GMO DAP Italy (south) – €545-550.
A representative of the trading department of A.G.R. Agroholding. Group in a survey by Interfax-Ukraine agency noted that since the beginning of Russian military aggression, the logistical leverage for agricultural exports from Ukraine has increased, freight prices have risen, energy and fuel prices have risen. As a result, the group is forced to spend about $200 per ton of exports, a huge amount of money compared to the prewar $45-50 per ton.
“With the start of the war, we changed our crop rotation and switched to oilseed crops as much as possible – that’s more than 60% of our crops this year. Corn is a comfortable crop, but energy-intensive, and with the price of energy, gas, it’s just not profitable to work with. As a result, we have reduced the volume of its sowing and to a greater extent switched to oilseeds, thereby reducing the burden on the railway and road transport and combine maintenance costs, “- said the interlocutor of the agency.

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“Ista-Center” will allocate UAH 155 mln in profits to cover past losses

Ista Center (Dnipro), a producer of starter batteries, intends to use its net profit for 2021 in the amount of 154.85 mln hryvnia to cover the losses of the previous periods.
According to the draft decision of the general meeting of the company shareholders, scheduled for December 26, published in the NKTSBM disclosure system, Ista-Center does not plan to accrue and pay dividends.
According to the company’s information, net profit per one common share in 2021 was UAH 60.4 mln, whereas a year earlier it amounted to almost UAH 2.9 mln. Net profit in 2020 was 7.37 million hryvnias.
As of January 1, 2022, the company had retained earnings of 12.81 million hryvnias against an uncovered loss of 143.25 million hryvnias on the same date in 2021.
The shareholders also plan to approve the reports of the management bodies at the meeting, approve the main directions of development for 2022 and re-elect the supervisory board.
“Ista-Center”, operating since 1995, is one of the plants producing starter batteries in Dnipro (the other is DOZ “Energoavtomatika”).
According to the latest financial statement of the company, which was made public by the NCSSM, its net income in 2020 was 206.6 million hryvnias. By the beginning of 2021, the plant employed 135 people.
According to the NCSSM, as of the fourth quarter of 2021, Oberon-Center LLC (Dnipro) owns 40% of the shares in which, according to Opendatabot, over 75% belongs to Scotwind Limited, whose beneficiary is named Oleg Zimin; 23.0476% is owned by Battery Investment Corp. registered in Panama and 6.23% belongs to the Ista International Corporation (Belize).
Another 21.55% is owned by the state. As reported, the Ista Center was included in the list of facilities transferred by the Cabinet of Ministers to the State Property Fund for privatization, which was made public in August 2022.

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Pokrovsky GZK received 37 million hryvnias in losses, revenue decreased by 45%

PrJSC Pokrovsky Mining and Processing Plant (PGOK, Dnipropetrovsk region) in January-June of this year saw a net loss of UAH 37.438 million compared to a net profit of UAH 55.980 million a year earlier.
According to the company’s interim report published in the information disclosure system of the National Securities and Stock Market Commission, over this period its net income decreased by 45.3%, to UAH 828.048 million.
Retained earnings by the end of June this year reached UAH 1.366 billion.
Pokrovsky Mining and Processing Plant is the largest producer of manganese ore in Ukraine, which is mining it in an open way.
Four Cypriot companies, namely Profetis Enterprises Limited, Exceed Investmens Limited, Clemente Enterprises Limited and Alexton Holdings Limited own 24.3024% of the shares of the company
The charter capital of the plant is UAH 736.134 million, the par value of the share is UAH 0.25.



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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Ovostar Union agro-industrial group of companies, one of the leading producers of eggs and egg products in Ukraine, in January-March 2022 received $ 16.44 million in net loss against the Russian military invasion against $ 4.72 million in net profit in the first quarter of 2021, according to the message of the agrarian group on the Warsaw Stock Exchange on Tuesday.
“The egg processing plant in Makarov (Bucha district, Kyiv region) was temporarily shut down until the city was deoccupied by Ukrainian troops in late March. A subsequent inspection of the plant revealed signs of uncritical damage to administrative and industrial buildings … Management expects to resume the operation of the plant after the completion of repair work in the premises, “the company said in a report on the consequences of the Russian invasion.
Ovostar’s revenue in the first quarter of 2022 decreased by 13.7% compared to January-March 2021 – to $ 27.71 million. The gross loss of the group of companies in the first quarter of this year amounted to $ 13.38 million against $ 6.91 million gross profit in January-March 2021, also for this period it received $ 15.67 million in operating loss against $ 4.37 in operating profit last year.
In the structure of Ovostar’s revenue, 75% was accounted for by egg sales ($ 20.8 million), of which 87% ($ 18.1 million) accounted for sales in Ukraine. The egg products segment generated 25% of the agroholding’s revenue ($ 6.8 million), with 58% of its sales ($ 3.93 million) in the domestic market.
“The main sales channel of the egg segment is large national retail chains. Geographically, sales are concentrated in the central part of the country, and the share of sales in the most affected regions does not exceed 10%. Market losses in the east and south where a large number of internally displaced persons temporarily reside, “the Ovostar report said.
The document states that the assets of the agricultural holding as of March 31, 2022 decreased compared to December 31, 2012 by 18.3% to $ 115.3 million, its long-term debt decreased by 1.8 times to $ 5.8 million, and current growth – by 1% to $ 14.5 million
“Since the beginning of the Russian military campaign, the group has faced significant obstacles to export activities due to serious logistics disruptions. In particular, the blockade of the port of Odessa blocked access to Middle Eastern markets, where goods were shipped by sea. after the company was issued a special license, “the egg producer said in a statement.
Ovostar also noted its dependence on imports of certain feed additives, vaccines and spare parts for equipment, which are included in the list of critical imports and are imported into Ukraine without restrictions. The management is also looking for adequate substitutes for imported supplies on the Ukrainian market.
According to the report, as of March 31, 2022, Ovostar Union shares were owned by: Prime One Capital Limited (67.93%), controlled by Ovostar CEO Boris Belikov and Chairman of the Board Vitaly Veresenko; Generali Open Funds Emergency Fund (10.39%), Fairfax Financial Holdings Limited (10.39%), Aviva Open Funds Emergency Fund (5.02%).
Ovostar Union Group is a vertically integrated public holding company, one of the leading producers of chicken eggs and egg products in Europe. The manufacturer is a certified exporter to EU countries since 2015.
The group’s holding company is Ovostar Union N.V. in mid-June 2011 held an IPO of 25% of the shares on the Warsaw Stock Exchange and raised $ 33.2 million. The majority stake in the company is owned by Prime One Capital Limited, which is controlled by its CEO Boris Belikov and Chairman of the Board Vitaly Veresenko.

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