Low grain prices and high logistics costs may cut Ukraine’s planted area by 1 mln ha

Ukraine’s planted area could decline by around 1 mln ha due to export problems, high logistics costs and low domestic grain prices, according to Denys Marchuk, Deputy Chairman of the Ukrainian Agrarian Council.

Marchuk said the current agricultural logistics situation is among the most difficult Ukraine has faced since independence. Strikes on logistics routes, export restrictions and low water levels on the Danube have pushed transport costs above $100/t in some cases.

Against this backdrop, farmers are selling grain at UAH 5–6 thsd/t in the domestic market, while in some northeastern regions prices fall to around UAH 3 thsd/t. At the same time, wheat is trading at close to $300/t on international markets. According to Marchuk, this gap could force some farms to suspend operations or leave the business.

Export problems are also reducing foreign currency earnings. According to the Ukrainian Agrarian Council, Ukraine is losing around $1.5–2 bn in export revenues each month, while only 928 thsd tons of grain had been exported by September 21 against a required monthly pace of around 4–5 mln tons.

At the same time, Marchuk said a reduction in planted area of around 1 mln ha would not pose a critical risk to domestic food security. Ukraine is expected to remain self-sufficient in key food products, although current market conditions may become a serious financial challenge for some farmers.

Tags: Ukraine, grain, prices, margin, logistics