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Ukraine farmers grapple with storage, finance, exports

Getty/iStockphoto Ukraine Farmer Morda Vasyl drives a tractor pulling a planter to plant sugar beet seeds
“People are willing to work and they’re trying to survive,” says one agribusiness official.

The Trend and Hedge Club, a Kyiv-based International Traders Discussing Club, hosted a video conference this week with farm managers, cooperatives, and finance specialists to share Ukrainian sowing and financing updates. Only first names are used in this article to protect the safety of interviewees on the call. An English translation was provided on the conference call to help with the language barrier.

Storage, finance, and exports – These words sum up the main issues Ukrainian farmers are wrestling with as the war against Russia drags well into its third month.

It seems as if those on the zoom call believe planting, producing, and harvesting a crop will be attainable in most places. Sufficient labor depends on location.

Trend and Hedge Club member Elena expects 70% of farmland in Ukraine to get planted. 

She also recited how British Intelligence predicted about 80% of fields will be planted in Ukraine. 

The concerns among speakers include finding storage for new crop if the war continues, financing for future fuel and logistics, and exporting a crop if Russia continues to control ports.

Here’s what some of the speakers shared:

Roman

Roman farms 5,400 acres with his family, growing corn, soybeans, sunflower, winter wheat, spring barley and peas. The land is located in the Poltava region which is a major area with rich soils for corn and sunflower production -- roughly 200 miles from Kyiv. 

His area of Poltava has major poultry and hog operations within 200 miles. Roman sells to a hog operation in the area which has stable demand for barley, corn, and feed wheat. There’s also a crushing plant nearby. In the past, he sold barley and corn to China through the Odessa port, which is currently blocked.

“I believe the biggest problem, the biggest issue will be selling of the product,” says Roman.   

When asked what could happen if Russia continues to take over ports, Roman says, “I hope we’ll solve this problem before the new yield comes. Otherwise, hundreds of millions of people are going to starve.”

He prepaid and received majority of inputs (80%) last year before the war started. 

“We [now] have received everything remaining and are now provided at 100%,” says Roman. “Also, we purchased fuel and lubricants. We don’t have problems with that.”

Yet, Roman is trying to plan ahead to have more fuel on-hand before harvest. He says some suppliers are providing imported fuel from Lithuania.

“Yes, it is available but you have to wait,” says Roman. “You pay for the fuel tank and you have it labored in maybe two or three weeks.” 

When asked if it would be hard to purchase inputs if a farmer doesn’t currently have them, Roman said seed dealers call and say how they have corn and sunflower seed available. Most ‘protection chemicals’ are available in his region. He says similar products and technologies are available for the chemicals not at one’s fingertips.

Roman also says it can be difficult to sell grain in warehouses and storage to receive a profit. He says farmers are struggling to have capital on hand. One of the state-owned banks has a program where farmers may apply for a $5 million loan.

“It will be some security [if I receive it],” says Roman.

As for planting, field conditions for April were wet and temperatures were cool for his area. However, he expects 2022 to be better than last year’s “catastrophic” crop year and the year before as well.

“I believe we will finish planting,” says Roman. “If the weather is right, over the next 10 days.” 

Oleksandr

Oleksandr is the head of a cooperative with 1,000 farmers and ag managers who have 300 to 10,000 hectares (up to 24,000 acres). His territory covers Poltava and Donetsk (which are locations of war) and near the major ports of Odessa and Kherson. These ports export grains and oilseeds but are in areas that mostly grow wheat, barley and sunflowers.

“For those [regions of Ukraine], I think 40% to 50%, we will plant the field,” says Oleksandr. “The South is more occupied [Crimea and Mykolaiv regions]. Sumy and Kharkiv, we know a lot of fields are mined. In Kharkiv region, 60% to 70% will be planted [of spring crop].” 

He helps with selling grain, purchasing fertilizer, and providing fuel.

Oleksandr says fuel is an open question and hopes to receive product from Bulgaria, Romania and Moldova by rail.

“The situation is difficult in terms of fuel,” says Oleksandr. “This issue is not solved and it’s critical for us.”

Oleksandr says another issue is selling and transporting grain. The cooperative now has contracted to Poland but they can only ship so much on rail and it can’t replace the ports.

“A lot of product, we still have in our warehouses,” says Oleksandr. “That’s why we are feeling a huge need in selling the grain.”

According to John Stewart and Associates research, Ukraine is exporting 1 to 1.2 million metric tons of grain by rail to the EU. Roughly 600,000-700,000 million metric tons consist of corn. The rest is wheat. The country is shipping grain to Poland by rail but it’s a slower process. JSA believes 3 million tons of corn and 2 million tons of wheat will be exported that way, which was not anticipated.

JSA research shows there are roughly 25 million metric tons of corn and wheat located near ports in storage and silos. Those on the call expressed difficulty in moving until ports open.

To add to the difficulty, machinery operators and drivers in his area are engaged in territorial defense and there is a big demand for technicians who cannot access fields. 

Oleksandr says rotation has stayed similar as years past with some increasing sunflower production due to logistics and planting time.

Financing varies by company.

“Those 30 companies which were problematic [and] approached us directly, 21 of them received financing,” says Oleksandr. “We are practically provided with financing.”

Svitlana

Svitlana operates large agribusinesses with a coverage area of 42,000 hectares and grain elevators in Kharkiv and Lugansk regions (locations of war). She says the biggest problem is logistics and selling grain. 

“Without selling [grain] we won’t succeed. But, if we don’t grow it first, we won’t have anything to sell,” Svitlana.

That’s why she’s hopeful 5,000 hectares of winter wheat in occupied territories will get harvested, depending on the success of army.

As for planting, Svitlana says seeds have been fully provided and they have a lot of corn seed if needed. Chemical shortages are a non-issue. 

Svitlana says there are some shortages of specific chemicals, but there are products available to replace them.

However, out of all inputs, probably the most problematic is fuel. “Our government did some timely actions,” says Svitlana. “They lifted duties and reduced taxes. We are trying to buy fuel in advance.”

As far as a rotation, some corn acres have been replaced with sunflower and soybeans. An agronomist is helping the business experiment, replacing 3,000 acres with mustard. They are also replacing corn acres with field peas.

“Germany is expecting a deficit shortage of mustard,” says Svitlana. 

Svitlana says labor isn’t too big of an issue and offered help by paying employees “one month ahead of salaries” and in occupied territories. 

“People are willing to work and they’re trying to survive,” says Svitlana. “So, we don’t have problems with personnel.”  

She said she knew of planting taking place on the day of the call on 15,000 hectares but there are locations in her coverage area where planting will not occur because of hostilities.

With all the uncertainties, one thing is clear: the Ukrainians will do what they can for as long as they need.

Betsy Jibben is the media director for AgMarket Consulting (associated with AgMarket.Net). Contact her at 605-929-9376, on Twitter: @BetsyJibben, or at [email protected].

The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 

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