Over 90 ships have left the ports of Odesa and exported 3.3 million tons of Ukrainian agricultural and metal products since Aug. 8, according to the Infrastructure Ministry.
Six ships with 231,000 tons of agricultural products left last week and are moving along the sea corridor established by the Ukrainian Navy, while another five ships are waiting for permission to enter Ukrainian Black Sea ports.
The movement does not stop despite the threat from Russian forces. In particular, the Russians launched a missile strike on a Liberian-flagged cargo ship entering the port of Odesa on Nov. 8.
Mykola Horbachov, head of the Ukrainian Grain Association (UGA), explained in an interview with NV Business what is happening with grain exports, whether the harvest has increased this year, and whether farmers are returning foreign currency earnings to the country.
NV: Russia scuppered the Black Sea Grain Initiative (BSGI) this summer. The aggressors have partially destroyed the infrastructure of the Danube ports, while exports through the western borders by car and rail have become more difficult. How did all this affect our grain exports?
Horbachov: We send quite a lot by rail for export, namely about 1 million tons of grain and oilseeds per month. And this is a permanent indicator. Of course, everything is not so simple, and we’re trying to improve communication with our neighboring partners, but the shipments didn’t stop.
We export about 400,000 tons of grain and oilseeds by road every month. We even set records for several months, shipping 600,000 tons per month, but this doesn’t fundamentally change the situation. The work of the Danube ports also didn’t stop as 2.5 million tons were exported through them in September, and about 1.8 million tons in October. The decrease in deliveries is due to the reorientation of supplies through the ports of Odesa. This opportunity appeared two weeks ago thanks to our Armed Forces.
We’re currently working to ensure that foreign partners and insurance companies consider these export routes as permanent. By the way, in October, farmers have set a record for exports since July 1, 2023, namely over 3.5 million tons of grain and oilseeds. The situation was better last year since about 3 million tons of products were exported every month only through the grain corridor.
NV: Russian aggressors have repeatedly attacked the infrastructure of the Danube ports. Is it true that all products are now shipped from trucks?
Horbachov: No. The infrastructure of the Danube ports and those of greater Odesa is different. If the latter have elevators that can store 100,000 tons of products each, they’re smaller near the Danube River, for 2,000 or 5,000 tons. If the aggressors destroy such a warehouse, it’s not too much. Moreover, a dozen new terminals are currently under construction in this region.
Indeed, some traders want to ship products from trucks as it reduces risks. The grain is actually stored in these trucks, so the drivers bear the risks. And this is also not the best solution.
NV: You stated in late October that exporters were suffering millions of losses due to idle ships in the port of Odesa. What affects this and has the situation improved?
Horbachov: The situation has improved. The ships are idle due to several factors, such as weather conditions and military intelligence data, which doesn’t recommend taking ships to sea at a certain time. However, every such idle day costs a lot, because we’re a country with a high level of risks. Companies lose $1.5-2 per ton every day. Some ships were idle for three or five days during these two weeks of the grain corridor. Large ships from 3,000 to 90,000 tons enter the ports of Great Odesa.
NV: The Ukrainian Grain Association has updated its assessment of the potential harvest of 2023, increasing it by another 1.1 million tons to 81.6 million tons of grain and oilseeds. Let’s remind the harvest reached 73.8 million tons of grain and oilseeds in 2022, according to UGA. Will it affect prices in the domestic market?
Horbachov: The domestic market in Ukraine is relatively small as we consume 25-28 million tons of grain and oilseeds annually. Therefore, the increase in harvests will affect export opportunities, so we’re more dependent on open routes for the delivery of grain abroad. Prices may even drop in the domestic market.
NV: Are farmers really suffering losses for the second year in a row?
Horbachov: Yes. It’s easy to calculate them. For example, loaded grain in the Romanian port of Constanta currently costs $210. It’s necessary to pay $100 for delivery and $10 per ton for loading. Corn should cost $100 per ton at the elevator or in the producer’s warehouse, but the cost price, i.e., cultivation, harvesting and drying, is $140-150 per ton. That is, losses amount to $40−50 per ton. The situation is the same with wheat sales.
NV: Did farmers reduce the area of farmed land this year? Does the crop structure change?
Horbachov: Barley crops are decreasing as it’s the least profitable crop. A little more than 440,000 hectares of winter barley were sown as of early November this year compared to 600,000 tons in mid-November last year, according to the Agriculture Ministry. The structure is also changing since agricultural producers focus on sowing the most profitable oilseed crops, such as rapeseed, soybean, and sunflower.
NV: The National Bank of Ukraine announced in early October that the exporting companies hadn’t repatriated foreign currency earnings worth $8 billion. Why?
Horbachov: I’ve seen different data. Two months ago, word came out about the non-return of less than 1% of foreign exchange earnings and there was no problem. Later the figures of $7 billion and $8 billion appeared, followed by a new figure of $3 billion announced a week ago. I don’t know how to comment on this data and how they’re calculated. I’m sure the farmers return foreign exchange earnings to the country.
Read the original article on The New Voice of Ukraine