Profitability of the main types of agricultural crops has been steadily improving since 2023, but the production of cereals has not yet reached break-even, and the profitability of oilseeds remains minimal, in 2024 the profitability of oilseeds will be higher than previously predicted, and the production of cereals will remain unprofitable. The corresponding forecast is contained in the study of the Ministry of Agrarian Policy and Food and the Ukrainian Club of Agrarian Business (UCAB).
“The improvement in the level of profitability compared to the previous period is due to the restoration of export sea routes. This reduced the cost of logistics and allowed to increase purchase prices in the domestic market, even despite the decline in world prices for all types of grains and oilseeds,” the analysts said.
According to their information, over the past six months, prices at elevators have increased by 38% for grain crops and 14% for oilseeds compared to the same period last year. Prices in Ukrainian ports have also increased, but not so significantly, as the cost of logistics remains quite high. At the same time, purchase prices in the Ukrainian market are still far behind the world market.
Since the beginning of 2024, the structure of export routes has changed. Logistics of agro-products through the Danube river ports played an important role for Ukraine when the deep-water ports of Odessa did not work. But today the potential of the Danube export route is not fully utilized due to the higher cost of logistics in this direction compared to the deep-water ports of Odessa, the experts reminded.
The trend towards lower average fertilizer application rates in the industry continues. Although an increase in fertilizer application rates for winter crops was recorded in the autumn of 2023, in the spring of 2024 application rates decreased again – on average by 5% compared to the same period last year. The main reasons for the decrease in fertilizer application rates are the lack of working capital and rising cost of fertilizers due to changes in the Customs Code and the general situation of uncertainty in the industry due to the war.
Analysts noted that large producers practically did not reduce fertilizer application rates, while small farmers were forced to reduce them by an average of 10-15%. Application rates of plant protection products remained at the same level, because a reduction in the use of crop protection products can lead to deterioration in yields and quality of grain and oilseed crops.
According to the results of 2024, the Ministry of Agrarian Policy and UCAB forecast a higher level of profitability of crop production compared to the previous forecast. Sunflower profitability is expected at $45/t (-$4/t in 2023), soybeans at $83/t ($69), and rapeseed at $78/t ($5/t). Grain production, on the other hand, will remain unprofitable.
“The results of crop production this year will be most influenced by such factors as reduction of fertilizer application rates and, as a consequence, a slight decrease in yields, as well as reducing the cost of export logistics, reducing the price gap between prices at elevators and Ukrainian ports due to the establishment of export shipments, which will contribute to a more active recovery of domestic purchase prices”, – stated analysts.
