Newsletter: Ukrainian agri sector

Black Sea Export

The situation with the Black Sea ports reminds us of the beginning of the fullscale invasion. At that time in 2022, there was a physical blockade of the ports by Russia. This year, due to continuous attacks on the infrastructure of the ports as well as directly on vessels, there is effectively no export taking place from the Black Sea ports. This comes at a time, as you are aware of, that it is the midst of the harvest season. Alternative export routes can, when fully maximized only compensate for approx. 50% of the export capacity. At the moment these alternative export routes cannot be maximized due to attacks and logistical constraints. This is not only affecting global food security but also the agricultural sector in Ukraine. The price of grains dropped significantly in Ukraine and without income, farmers cannot buy the inputs for the next season.

Temporary grain storage facilities

There is an urgent need for working capital as well as temporary storage facilities to be in place before the sunflower harvest will start. Distributors of silo bags (grain sleeves) who have them in stock can contact me so I can specify what is exactly needed and get you in touch with the right organizations.

Destruction of warehouses, logistical and distribution centers

In recent weeks and days we see systematic destruction of warehouses, logistical and distribution centers including of the retail, not only in frontline regions but also in Kyiv region. According to the Ministry 90% of modern cool storage facilities in these areas are destroyed due to russian attacks. With the disruption of the supply chains we see the first partly empty shelves in supermarkets. Especially dairy products and fruit & vegetables, those products that need cool storage, are affected. It is not that there is not enough food in the country – no need to send food aid – the question is how to organize the logistics especially for a city of 3 mln people. For certain it will lead to increased food prices, the first estimations are approx. 10-15% but the burden is not only with consumers but also with retail, processors and primary producers. There are discussions ongoing on how to organize logistics, including supplying directly to stores “from wheels” (skipping distribution centers) and who is paying the price for products that are destroyed together with a warehouse. For those already doing business in Ukraine – please note that your business partners might request to keep your machinery or products longer in the warehouses in the Netherlands and supply only last minute directly to the clients. This will prevent as much as possible that the products will be destroyed during an attack on a warehouse or logistical center. It will help your partner to get through this time and by that benefit you as well in the longer term.

The emergency response

The emergency response to both crises – export blockade and destruction of warehouses and distribution centers – is on the side of the Ukrainian government in the hands of the Ministry of Agriculture led by Minister Taras Vysotksyi. Since this summer there is once again an independent Ministry of Agriculture, following a year when it was (temporary) merged with the Ministry of Economy & Environment. The Minister is well known, an expert and being supported by the whole agricultural sector. Since 2019 he has served as (first) deputy Minister and before that as Director General of the largest agricultural association UCAB. 

Greetings from Kyiv, Carolien