Despite severe damage to its agricultural infrastructure and Russian missile attacks on its export ports and grain warehouses, Ukraine is managing to keep up ag exports and has shifted cargoes to ports on the Danube River.
Antonina Broyaka, Extension associate of agricultural economics at Kansas State University—who formerly taught and did research at the Vinnytsia National Agrarian University in Ukraine—gave a detailed update to attendees of recent webinar hosted by Kansas State University. Broyaka spoke and gave figures on the situation in Ukraine after Russia’s pulling out of the Black Sea Grain Initiative and targeting Ukrainian grain infrastructure in the ports of Odesa, Pivdennyi and Chornomorsk, causing ripples in world grain markets, especially for wheat.
The Black Sea Grain Initiative was negotiated among Russia, Turkiye, the United Nations and Ukraine and took effect in August 2021. Its purpose was to keep both Ukrainian and Russian grain flowing to food-challenged parts of the world. Some of the grain was bought by aid organizations and destined for Yemen, Afghanistan, Sudan and other countries reliant on food aid, although most went to the European Union.
In recent months Russia has been complaining that its provisions in the deal—such as being able to sell its fertilizer freely—have not been honored, and has raised a list of demands, including renewed access to the SWIFT financial payment system by its agricultural bank and access for an ammonia pipeline.
Agreement without Russia?
Broyaka said there has been some international discussion of the possibility of resuming the agreement without Russia’s participation. The advantages would include no slow-walked Russian grain inspections; a reduction in logistics costs; and an increase in world food security. There have been calls for NATO or the United Nations to offer protection for vessels carrying grain out of the Black Sea.
However, she admitted that possibility is remote, since insurance premiums would be unaffordable. Russia has newly mined the area around Ukraine’s Black Sea ports and said it would regard all foreign vessels as potentially military, a clear threat.
Damages to ag infrastructure
Broyaka said Russia’s missile attacks on grain warehouses destroyed about 600,000 tons of grain. The damage would take at least a year to restore, she said. During the past year, Ukraine has been building up its ports along the Danube River to compensate. The port of Izmail has handled about twice the amount cargo as its prewar volume. The port of Ust-Dunaysk, at the Danube’s mouth, has also seen increased traffic.
“Solidarity” rail lines carry Ukrainian grain to the EU, although countries directly bordering Ukraine were allowed to forbid its sale within them, after their own farmers complained that cheaper Ukraine grain was undercutting their livelihoods.
Broyaka said war damage to the residential areas of Ukraine totals about $147.7 billion so far, with $40 billion direct damage to agriculture and $9 billion indirect damage. About 20% of all Ukrainian agricultural land is occupied and will have to be de-mined after the war.
These figures don’t include damage to the Kakhovka Dam and the resultant flooding in June, which also took out some agricultural land. Broyaka estimated those damages at $2.079 billion. Up to 30,000 residences were affected by the flooding, including some in Kherson. About $25 million in direct agricultural damage resulted from the floods, part of a total of $1.5 billion damage. Before the dam’s destruction, the Kakhovka Reservoir irrigated 584,000 hectares of agricultural land.
Total crop losses from the dam’s destruction totaled about $182 million. Restoring a new hydro-electric plant would require about $1 billion. The reservoir was completely drained, and the area lost 334.8 megawatts of electric capacity.
African charm offensive
After fierce international criticism that Russia’s actions were a direct attack on the world’s poor and hungry, Russian president Vladimir Putin recently invited leaders of African countries to St. Petersburg, where he promised them free grain and they promised to help him work for a “multi-polar” world. But the grain Russian missiles have destroyed in Ukraine is much greater than the 25 million tons Putin is promising to send to Africa.
Exports hanging on
Ukraine managed to export 33 million tons of corn and 17 million tons of wheat. Seaports totaled exports of 53,846,580 tons of agricultural goods, while rail handled 13,800,814 tons and vehicles handled 264,424 tons. In the past agricultural year, a total of 32,856,036 million tons of grain and foodstuffs have left Ukrainian ports, including 725 million tons food aid. China’s imports of Ukrainian grain are about half of prewar imports.
Average yields of corn, wheat and soybeans have been lower, she said, due in part to difficulties getting fertilizer.
Although the Russian actions caused wheat and corn prices to jump, Broyaka presented graphs showing that the prices of both commodities have been steadily falling. Even after the spikes, wheat prices, for example, remained below the highs of August 2021.
In the question period, Broyaka said Russia had stolen grain from the occupied parts of Ukraine and offered it to poor countries. “Normal countries don’t accept stolen grain, but some do,” she said. Russia has taken over some Ukrainian wheat exports to China and Egypt.
The video and supporting graphs and slides are available at bit.ly/3OBUDph.
David Murray can be reached at [email protected].
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