In 2023, Ukraine exported 67.5 million tons of agricultural products, which is 15% more than last year, while export earnings decreased by 8% to $21.9 billion compared to 2022, according to the Ukrainian Agribusiness Club (UCAB).
The business association noted that 2023 was one of the most difficult years in the history of Ukraine’s independence, including in terms of exports.
Among the main obstacles to agricultural exports, the UCAB called the Russian side’s inhibition of the grain corridor, which had been operating since July 2022, and then its termination and blocking of any sea exports. The destruction of the infrastructure of seaports and river ports on the Danube by Russian troops had a significant impact on the export of agricultural products. The agricultural sector was also affected by the ban on exports and transit by neighboring European countries, as well as the blocking of checkpoints on the western border.
The UCAB noted that despite these restrictions, exports of agricultural products increased in physical terms in 2023. Export revenue decreased due to falling prices for almost all types of agricultural products compared to 2022, which was the year of the highest food prices in the world.
The business association warned that the current level of exports is not enough to export the 2023 harvest. If the export volume remains as of the end of 2023, there are risks that Ukraine will have significant carry-over stocks (primarily of grain crops) by the beginning of the next harvest, the UCAB explained.
“Such a situation in the context of low prices on the Ukrainian market for grains and oilseeds, expensive export logistics will further complicate the activities of Ukrainian farmers due to lack of working capital. That is why it is necessary to increase export volumes through all possible channels in order to export the entire harvest before the start of the new season,” summarized UCAB analyst Svitlana Lytvyn.
Since the beginning of the Russian aggression, Ukraine has been forced to change the geography of agricultural exports, as a result of which the share of Europe reached 59% in January-October 2023 compared to 32% in 2021, the Ukrainian Agribusiness Club (UCAB) reported on Facebook.
According to the report, such an increase in exports of agricultural products to Europe is forced and is explained by a decrease in supplies to other regions: the share of Africa decreased to 7% from 14%, Asia – to 12% from 19%, and Southeast Asia – to 4% from 13%.
“The main reason for these changes is the blockade of Ukrainian seaports by Russian troops. The development of alternative routes, which were possible only through the territory of the EU countries, led to changes. Ukrainian farmers were forced to look for buyers of their products in Europe,” the analysts explained.
The UCAB reminded that deliveries to Africa and Asia during the war became possible only thanks to the work of the grain corridor in cooperation with the UN and Turkey, as well as the temporary grain corridor, which is currently shipping.
In 2023, the structure of exports of Ukrainian agricultural products in terms of the main export items is similar to last year’s figures: 39% were grains, 26% were vegetable oils, 4% were meat, and 2% were dairy products, eggs, and honey. At the same time, exports of oilseeds decreased to 12% compared to 16% in 2022, while exports of oilcake increased to 6% from 5% during the year. The permission to supply sugar to foreign markets allowed producers to increase its share in agricultural exports to 3% over the year.
In pre-war 2021, the structure of Ukraine’s agricultural exports was as follows: cereals – 45%, vegetable oils – 26%, oilseeds – 9%, meals – 6%, meat – 3%, and tobacco products – 2%.
“The only way to resume exports to Ukraine’s traditional markets is to ensure the safety of sea export routes and increase the volume of shipments through this channel,” the UCAB summarized.
In August 2023, Ukraine increased exports of agricultural products by 16% compared to the previous month – up to 4.3 million tons, and this is without taking into account the growing queues of vehicles at the borders, according to the Ukrainian Agribusiness Club (UCAB).
“Such export volumes in August 2023 are an incredible result. Despite all the obstacles (Russia’s shelling of the Danube river infrastructure, falling water levels in the Danube, a ban on the export of a number of key Ukrainian exports to neighboring countries, etc.), as well as the lack of sea exports, Ukrainian farmers and traders continue to provide the world with the necessary food,” analysts said.
They specified that the Danube river ports remain the most efficient channel, thanks to which 4% of agricultural exports were delivered to foreign markets in August.
According to UCAB, in August 2023, the share of grain crops in the structure of agricultural exports increased by 2% and amounted to 2.3 mln tons (wheat – 52%, corn – 39%, barley – 9%).
Exports of oilseeds increased 2.3 times to 755.4 thousand tons (rapeseed – 94%, soybeans – 4%, and sunflower seeds – 1%).
The share of oilcake after extraction from vegetable oils in Ukraine’s agricultural exports in August 2023 increased by 15% to 367.3 thsd tonnes (sunflower – 98%, soybean – 2%).
The supply volumes of vegetable oils remained unchanged at 548.9 thsd tonnes (sunflower oil – 81%, rapeseed oil – 17%, soybean oil – 2%).
The analysts noted that the biggest changes in August 2023 were observed in the exports of oilseeds, the volume of which increased by 2.3 times. The main reason was the end of the rapeseed harvest in Ukraine and active exports.
“The next month is important for determining further trends in Ukrainian exports, as the ban on exports of four key items to neighboring countries is due to expire on September 15, 2023. The lifting of this restriction will significantly improve the situation with Ukrainian exports, which is what the entire Ukrainian agricultural sector hopes for,” UCAB summarized.
Ukrainian Agribusiness Club (UCAB) considers the continuation of the restrictive measures on import of wheat, corn, rapeseed and sunflower from Ukraine to Poland, Hungary, Slovakia, Romania and Bulgaria discriminatory and groundless and insists on the cancellation of this decision.
“Such prolongation will neither solve the problems of local markets nor improve the situation of local farmers,” said a statement published on the UCAB website on Monday.
The business association believes that the resolution prepared by the EU on the prohibition of the import of agricultural products from Ukraine to five neighboring EU countries, according to which the restrictions will be in force until September 15 this year, will have a negative impact on the economic recovery of Ukrainian farmers during the war.
Such decisions should be taken only after detailed studies and consultations with all EU member states because according to the latest data, some neighboring EU member states, such as Poland, were able to increase their export potential and domestic processing by importing cheaper Ukrainian agricultural products and improve their positions in livestock and finished products, the UCAB reminded.
The business association noted the negative influence of such a decision on the situation with sabotage of the “grain agreement” by Russia. “According to preliminary forecasts, the current steps to prohibit the import of Ukrainian agricultural products to the EU may deepen the blackmailing of the Russians regarding the operation of the grain corridor,” the UCAB said.
Experts of business-association emphasized that Ukraine will have less export potential in 2023 season: export of grains and oilseeds from Ukraine is forecasted to decrease by one third to 46 million tons per year.
Existing trade restrictions on Ukrainian agricultural products in five countries of the EU should be abolished. At the same time, it is worth conducting an open constructive dialogue between representatives of the Ukrainian and European agro-communities in order to find compromises, which will help both the EU and Ukraine to become stronger, summed up in UCAB.
As of 4 April, the cost of Ukrainian barley on the terms of FOB deepwater ports of Ukraine increased to $208-218 per MT that is 27% higher than the price level for the same period last year, the Ukrainian Agribusiness Club association (UCAB) has reported. The association said on its website that such a price for domestic grain crop is a record since the end of 2014.
“The key factor in the steady increase in barley prices over the past few months was the unstable demand from Saudi Arabia, which is the key importer of this grain in the world. In 2017, Ukraine shipped 2.07 million tonnes of barley to this country, which accounted for 57% of total exports,” analyst of agricultural markets of the UCAB Ilha Kharabara said.
This year, demand from Saudi Arabia is not sustainable – tenders for the purchase are infrequent, but volumes are quite significant. At the last tender, the Saudi Grains Organization (SAGO) announced the purchase of 1 million tonnes of barley, at the previous one was purchased 0.96 million tonnes.
The tense world balance at the beginning of the marketing year supported the price increase for barley – world production fell to 142.4 million tonnes in 2017/2018, which is 3.5 million tonnes less than last year.
