This year’s profitability of crop and livestock production in Ukraine has been forecasted

The profitability of grains and oilseeds is expected to increase in 2024, provided the security situation and exports stabilize. In January 2024, the seaports of Odesa region became more profitable for export than the port of Constanta and the ports of Gdansk, providing farmers with higher profitability due to more efficient exports by sea. This was reported by the Ministry of Agrarian Policy of Ukraine.

However, the ministry predicts a 4-5% decline in yields and an increase in the cost of elevator services due to higher electricity prices, as well as a slight increase in land rent.

In contrast to crop production, livestock production was profitable throughout 2023, with milk yields increasing in January 2024.

However, in 2024, the profitability of all livestock products is expected to decline due to rising costs, in particular for feed and electricity.

What influenced the loss-making nature of crop production

Despite lower production costs and improved logistics conditions, in 2023, grain cultivation in Ukraine was mostly unprofitable. The situation with oilseeds was better: sunflower production showed minimal losses, while soybeans and rapeseed brought a small profit.

The overall profitability of grains and oilseeds improved in 2023 compared to the previous year, but low global prices prevented the sector from achieving significant profitability.

Fertilizer costs reportedly accounted for the largest share of all costs in 2023, ranging from 17% to 28%. Due to financial constraints, Ukrainian farmers continued to save on fertilizers for the second year in a row, reducing application rates by 49% despite lower prices. Prices for other key inputs, such as seeds, crop protection products, and fuels and lubricants, also declined.

Logistics costs for exports decreased in 2023: to Odesa ports by 33%, to Constanta port via Danube river ports by 40%, and to Gdansk/Gdynia ports by 42%. The average percentage of logistics costs as a share of the final selling price of grain was about 21% in 2023, compared to 25% in 2022.

Tags: grain, oilseeds, Ukraine