Millions that could stay in Ukraine: why we need to stimulate oilseed processing

We consistently emphasize that to endure a war of attrition, the Ukrainian economy must become more efficient. It needs to use resources rationally, increase added value, and generate more funds for defense and support of our people. Using the example of oilseed processing, I will demonstrate that we have everything necessary to achieve this. The only thing lacking is the state’s involvement.

Missed Opportunities

Ukraine can produce over 24 million tons of oilseeds, primarily sunflower, rapeseed, and soybeans. With its own capacities, Ukraine processes nearly the entire sunflower harvest and exports finished products—valuable oil and meal.

The situation with soybeans and rapeseed is the opposite. In the 2024/2025 marketing year, we processed 2.3 million tons of soybeans but exported 3.8 million tons. For rapeseed, the figures are even worse: 0.5 million tons processed versus 3.2 million tons exported. According to estimates by Ukroliyaprom, if these millions of tons of raw materials (7 million tons in total) were processed in Ukraine instead of being exported, we could have added at least $420 million to GDP. This does not account for the ripple effects on related industries—construction, transportation, energy, new jobs, and taxes.

For context, $420 million exceeds the amount raised for military needs by Ukraine’s largest charitable foundation, Come Back Alive, over three years of full-scale war.

Could we have produced oil and meal from our own harvest, earning these funds for Ukraine? Absolutely, especially with rapeseed. Our oil extraction plants can process nearly the entire harvest of sunflower and rapeseed simultaneously—20.2 million tons per year. Most plants are multi-crush, meaning they can easily switch between sunflower and rapeseed. Switching to soybeans is more complex due to technological and raw material specifics. Soybeans are processed by mono-crush plants with a total capacity of 2.4 million tons per year—roughly what we processed in the previous marketing year. Given the raw material base and export potential, building soybean processing plants is a highly attractive investment.

Returning to rapeseed, in the 2024/2025 marketing year, processing capacities were utilized at only 65%. A third of the plants either operated below capacity or stood idle. This translates to lost profitability, lack of funds for development and modernization, uncreated jobs, unpaid taxes, and stifled economic activity. Ukraine lost money.

Why Does Europe Succeed While We Don’t?

The rapeseed we grow but don’t process is handled by EU countries, which import nearly all of Ukraine’s harvest. The top five importers are Germany, Belgium, the Netherlands, France, and the United Kingdom. For the EU, rapeseed is a key crop for biofuel and food production. EU governments incentivize processing this crop domestically:

• Biodiesel Mandates. European legislation requires blending petroleum diesel with biofuel (7-10% share). This not only supports environmental goals but also creates significant, stable demand for rapeseed-based biodiesel.
• EU Common Agricultural Policy. Direct payments to farmers growing rapeseed and other oilseeds ensure stable incomes for farmers and a steady supply of raw materials for oil extraction plants. Everyone benefits.
• Trade Protection Mechanisms. Anti-dumping duties on imported biodiesel protect European producers from cheap foreign alternatives. Tariff policies make domestic rapeseed processing more profitable than importing finished products. Certification ensures imported biodiesel meets environmental standards before entering the European market.
• Trade Restrictions. A new regulation on forest conservation limits and gradually phases out palm oil in the EU market, creating a niche for rapeseed.

Finding Tools to Boost National Producers’ Competitiveness

Unfortunately, we lack the extensive capabilities to support our agricultural sector as our EU partners do. However, we could adopt some of their practices, such as introducing a balanced customs policy to support Ukraine’s processing industry. For instance, a first step could be expanding export duties on soybeans and rapeseed.

The National Revenue Strategy to 2030 identifies the development of the processing industry as a key pillar of Ukraine’s economic recovery. With state support, the oilseed processing sector could significantly boost the economy by stimulating employment, increasing household incomes, supporting farmers and agriculture, boosting tax revenues and foreign exchange earnings, improving the balance of payments, and stabilizing the hryvnia.

We have abundant raw materials, sufficient factories, and export opportunities to scale up oilseed processing. The arguments for why we need this are even more compelling. All that’s needed is the willingness of lawmakers and government officials to support national producers and find tools to enhance their competitiveness on global markets.

Stepan Kapshuk, General Director of the Ukroliyaprom Association