‘Ukrainian farmers are going bankrupt, solutions are needed now’

Image: Ukrainian Agri Council

Ukraine farmers are under extreme pressure during the first months following the Black Sea Grain Initiative blockade. The Ukrainian Agri Council (UAC), one of the largest agricultural associations in Ukraine, claims that many farmers in the country are on the verge of bankruptcy. The situation is attributed to the collapse of the Grain Initiative, the expensive alternative logistics solutions and the destruction of critical infrastructure and large parts of the grain produce.

“Grain exports to Asia, Africa, and Europe have decreased by almost 3 million tons per month, and Ukraine has lost 40 per cent of its port export potential,” said UAC, which also stressed that most farming enterprises will go bankrupt this year–a year in which the “Ukrainian agricultural industry will be unprofitable for the first time in 20 years.”

Multidimensional problem

That the collapse of the Black Sea Grain Initiative would cause significant problems in Ukraine has been apparent since day one. The same applied to the export alternatives, mainly concerning rail, which were often deemed very expensive and unfeasible. This is why barging solutions via the Danube River port infrastructure were preferred and promoted during the summer.

What no one could predict, though, was that this port infrastructure would be subject to military attacks. “17 massive attacks on grain storage facilities throughout Ukraine destroyed more than 300,000 tons of Ukrainian grain and damaged and partially destroyed 105 Ukrainian port infrastructure facilities,” explained UAC.

The situation is causing even more economic and logistical pressure on Ukraine. With security concerns making port infrastructure unreliable, Ukraine has to turn to other solutions. Rail is again among the primary alternatives, but it is still costly compared to other solutions.

Transport and storage facilities burning. Image: © Ukrainian Agri Council.

A matter of survival

For Andrii Dykun, the head of UAC, focusing on the present and not the future is critical. In his opinion, discussing the post-war recovery and reconstruction of Ukraine and its infrastructure is not the number one priority. “It will take at least a year and millions of dollars to rebuild the infrastructure in some regions. Currently, the survival of agricultural enterprises is the number one issue for Ukraine,” he said.

However, his concerns go beyond the Ukrainian agricultural sector and reach other countries. “The issue of exports will become even more acute, the price of grain will rise, and not all countries will be able to afford to buy agricultural products, which means that the cost of food will increase significantly,” underlined Dykun.

Author: Nikos Papatolios

Nikos Papatolios is the Editorial Coordinator of RailFreight.com, the online magazine for rail freight professionals.

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