By Amitabha Sen
The war ravaged Ukraine is expected to close the current marketing year (July-June) with shortfall both in agricultural production and in exports as well, going by the reports both of the Ukraine Agriculture Ministry report and the USDA’s Kyiv staff report. According to the latest statistical picture given by the country’s Agriculture Ministry on April 24, country’s grain exports for the 2022-23 season till now stand 5 million tonne lower at 40.7 million tonne against 45.7 million tone during the comparable period in 2021-22.
It is to be noted that Ukraine is the global leader in sunflower meal, oil, and seed production and also leading exporter of sunflower meal and oil. .One-third of the world’s sunflower oil is produced in Ukraine and accounts for nearly half of the global sunflower exports. But according to the latest available data the sunflower seed production in 2022-23 is likely to be 32 percent lower than the previous season. Production is estimated at 10.4mntonne compared with 17.5 million tonne in 2021-22.
One of the major global sources of wheat supply, Ukraine is likely to suffer a major setback in wheat production. Total production is likely to be 20 percent lower than previous season’s (2021-22) output of 33 million tonne. The current (2022-23) year’s wheat production is estimated to be 21 million tonne. Against last five-year average of 33.64 million tonne, corn production is estimated to be down by 20 percent – from 42.12 million tonne in 2021-22 to 27 million tonne in the current season.
Two other major agri products of Ukraine are Barley and Soyabean. Barley production in the current season is apprehended to nosedive at 6.10 million tonne from 9.92 million tonne in 2021-22 recording 30 percent shortfall. Against five-year average of little over 4 million tonne, soyabean production during the current season is estimated at 3.2 million tonne from 3.8 million tonne in 2021-22. Rice production is likely to be meagre 3,000 tonne from 32,000 tonne in 2021-22.
According to a report posted by the USDA staff from Kyiv , the “seismic shocks “ of the Russian invasions launched February last year that shattered the Ukrainian economy, had a direct bearing on the country’s agriculture. Besides a near-total break-down in agricultural operations the “fighting and shelling” also crippled “ agricultural logistics out of the country, leaving farmers unable to sell their crops at reasonable prices . Production volumes for all major grains dropped in MY (marketing year) 2022-23 due to military activities. A “further drop in production” for MY 2023-24 is forecasted in the USDA Kyiv report pointing out that “…Ukrainian farmers are employing mitigation strategies to stay afloat during the crisis”.
Amidst this disastrous situation the only ray of hope, though a temporary make-good arrangement, is the Black Sea Grain Initiative (BSGI) agreed on by the United Nations, Turkiye, Ukraine and Russia that enabled Ukraine to exports grain, foodstuffs and fertilizers, including ammonia, from ports of Odesa, Chornomorsk, and Pivdennyo (Souther). These ports being back in business Ukrainian exporters returned to their markets in Africa, the Middle East and Asia. The BSGI arrangement also allowed “the cost-efficient alternative for truck and rail shipments to EU. However, with a note of caution, the Kyiv report points out that “ … BSGI is the subject of periodic extension every 120 days, creating uncertainty, thus opening up the ability for Russia, a prominent grain exporter and Ukraine’s competitor in the global; markets, to exploit it to gain a competitive advantage”.
According to the statistical data as mentioned in the Kyiv report, in the first three months (January-March) of 2023 calendar year average exports through these ports stood at little over 3 million tonne per month against monthly average of 6 million tonne used to be exported through its ports during pre-war period.. Since August, 2022, after signing the BSGI agreement in July that year, agricultural exports from Ukraine during the last 8 months ending March, 2023 stood at 22.52 million tonne. A total of 831 vessels ferried this volume of exports.
Exports, as stated by the Agriculture Ministry of Ukraine on April 24, 2023, in the current marketing season included about 13.9 million tonnes of wheat, 24 million tonnes of corn and 2.4 million tonnes of barley.. Of this, grain exports during the current month stood at approximately 2.8 million tonnes as of April 24.
The USDA Kyiv report forecasts grain exports “ to decrease alongside production for MY 2023-24, MY 2022-23 exports were below pre-war levels and remained at the level of the previous MY as the result of ability for exporting large ending stocks amassed back in MY 2021-22 due to a port blockage”. (IPA Service)