The cost of agricultural production in Ukraine could increase by 20% by the end of 2026, which is double previous expectations, said Oleg Khomenko, CEO of the Ukrainian Agribusiness Club (UABC), during the Center for Economic Strategy’s (CES) economic review on Friday.
“The forecast of a 5–10% increase in costs is too optimistic a scenario. In fact, we are preparing for a 20% increase. The main factors are the surge in diesel and gas prices. The latter is critical not only for grain drying but also for fertilizer costs,” he emphasized.
Khomenko explained that farmers began the planting season using reserves from last year, having purchased fuel and fertilizers at old prices. However, to complete field work, they will have to purchase additional resources at high market prices, which will “eat into” the farms’ financial reserves.
The head of the UAC identified the shortage of mineral fertilizers as a separate problem. Due to the war, domestic production has halved—to 1 million tons per year—which has already caused a shortage of ammonium nitrate before the start of the season.
“Less fertilizer is a direct path to lower yields. Right now, the situation is somewhat mitigated by good soil moisture reserves, but if the summer is dry, especially in the south, weather risks will only amplify the impact of cutting corners on technology,” added the association’s CEO.
Touching on the topic of global prices, Khomenko noted that Ukraine, despite its large export volumes, is not a “game-changer.” The domestic costs of Ukrainian farmers do not influence global prices, so it will be difficult for farmers to pass on increased production costs to buyers. In his opinion, countries where governments provide compensation or eliminate excise taxes for farmers, as is practiced in the EU, will have a competitive advantage.
As previously reported, CES analysts predicted that rising logistics and fuel costs could add up to 10% to the final price of food.
