© Reuters. FILE PHOTO: Farmers operate tractors as they sow sunflower seeds and fertilize a field amid the Russia-Ukraine conflict near Starobesheve in Donetsk region, Russian-controlled Ukraine, May 19, 2023. REUTERS/Alexander Ermochenko/File photo

By Pavel Polityuk

KYIV (Reuters) – Losses in Ukraine’s grain and oilseeds sector could exceed $3.2 billion in 2023 due to high logistics costs as well as rising fuel and fertilizer prices, threatening to reduce planted areas in the next and coming years, they said Farmers unions on Thursday.

Ukraine is one of the world’s leading producers and exporters of food and its agricultural sector is traditionally profitable. Ukrainian authorities and farmers did not report financial results in 2022.

Before the Russian invasion, Ukraine shipped the majority of its exports through deep-sea ports in the Black Sea, which have been fully or partially blocked since February 2022.

Limited export opportunities, now concentrated on the small ports on the Danube and the railway to Eastern Europe, have multiplied the logistics component and consequently reduced the prices that traders can offer farmers.

The port closures have also led to a sharp rise in prices for imported fuel, seeds, fertilizers and spare parts for agricultural machinery.

The Agrarian Council, Ukraine’s largest agricultural group, said the cost of wheat production in 2023 would be about $146 per ton, with an average selling price of $102. Farmers spend $149 to grow corn and can sell it for $94.

The council said that in 2023 even sunflower and rapeseed production would be unprofitable and only soybeans would bring some profit to farmers.

Growers said the large losses had already led to a reduction in plantings for the 2024 crop.

“We planned to sow 2,000 hectares of winter wheat, but only sowed 1,000 hectares,” said Ruslan Holub, director of the “Tak” farm, which has more than 10,000 hectares in central and southern Ukraine.

“Farmers will determine the area they can sow primarily based on their financial capacity,” said Oleh Khomenko, the chairman of the Ukrainian Agribusiness Club, a business association.

Farmers’ unions refused to give a forecast for the sowing area for the 2024 wheat crop, while the Ukrainian Ministry of Agriculture continues to maintain its forecast for winter wheat sowing at around 4.4 million hectares.

Not only financial difficulties, but also the unfavorable weather could significantly reduce the sown area this autumn. Ukraine is a traditional producer of winter wheat, barley and rapeseed.

State weather forecasters said this week that prolonged lack of rain in most Ukrainian regions had created unfavorable conditions for both the ongoing sowing of winter crops and those already sown.

They said that the situation in terms of soil moisture was worst in the Odessa, Kherson, Mykolaiv, Kirovohrad, Vinnytsia, Cherkassy and Kharkiv regions, where up to 20 cm of the upper soil layers were completely dry.

Farmers have sown 3.02 million hectares of winter wheat as of October 16, 2023, compared to 2.5 million hectares on the same date a year ago, Agriculture Ministry data showed.

Source : www.investing.com

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