The good news is that Ukraine’s crucial grain is leaving its ports again. The bad news is that farmland lost to the war and weak local prices are threatening its next wheat harvest.
Ukraine is one of the top wheat growers, so the amount it produces will be key to determining if global supplies stay tight next year and also an important driver of world food prices.
Planting of 2023’s crop kicks off around this time of year and it’s still early days, but the Ukrainian Agribusiness Club said about a third of last year’s wheat area has been lost due to the invasion. It warned that farmers may cut plantings further if sales remain slow.
“Domestic prices are slowly improving, but not fast,” said Kateryna Rybachenko, vice chair of the club. “Logistics are still very difficult, and the ports need to clean out the bins from the previous harvest.”
Most of Ukraine’s wheat consists of winter varieties, which are sown from now and then lie dormant during the coldest months, before resuming growth in spring. Farmers near the western border that’s farthest from the front lines are operating more normally, but the situation is more difficult moving east.
For example, Rybachenko said the wheat area at agribusiness Agro-Region, where she is a board member, may shrink about 10% to 15%.
The early outlook is another reminder of the challenges Ukraine’s farm sector faces, even after the recent deal to restart exports from some key ports. That’s helping sales of grain that’s typically sent to to countries across Africa, Europe and Asia.
Still, Ukraine’s grain exports -- a vital part of farmers’ incomes -- stand at half of last year’s pace. Traders need to clear backlogged crops from the 2021 harvest while also selling this year’s crops, keeping local prices subdued.
That’s prompting some growers to switch to more lucrative crops like oilseeds. Oleksandr Peretiatko said the farm he helps manage in the Volyn region will cut winter-wheat plantings by 10% to 15% from last year, while boosting the rapeseed and sunflower area.
Plantings are also under threat in areas occupied by Russian forces. Ukraine’s wheat area has typically been centered in the south and east, where the fighting is concentrated.
Major grower HarvEast plans to sow 1,500 hectares (3,707 acres) of winter rye, wheat, and barley for next year’s harvest on the land it now controls, less than a third of the usual 5,000 hectares for the area, Chief Executive Officer Dmitry Skornyakov said.
The company -- part of Ukrainian tycoon Rinat Akhmetov’s SCM holding company -- has lost about two-thirds of its land to the Russian occupation, Skornyakov said.
Agribusiness Agricom Group has also lost about a third of the land it usually sows, said CEO Petro Melnyk. It will start planting winter-crops next month and wheat and rye is expected to be sown on about 15% of the available area, down from 25% to 35% normally.
While the newly opened grain-export corridor is helping sales, the pace isn’t yet fast enough to significantly bolster wheat prices that remain below growing costs, Melnyk said.
Since the first grain cargo moved on Aug. 1, more than 700,000 tons of crops have been exported under the deal signed in late July and which is valid for an initial 120 days. Ukraine can normally ship out more than 5 million tons of grains a month through its ports.
Traders are also still shipping grain via rail and road, but those routes take longer and are more expensive.
“It’s very important that this grain corridor remains actively open and protected,” Rybachenko said. “It’s a crucial thing for Ukrainian agriculture and global food safety.”
