Ukrainian agribusiness leader holds cautious hope for grain export deal brokered by UN and Turkey
A leading Ukrainian agribusiness organisation remains optimistic that a recent deal between Ukraine and Russia to restart Black Sea exports will succeed.
The Ukrainian Grain Association represents some of the world’s largest grain trading organisations, which handle about 90 per cent of Ukrainian grain and oilseed exports.
This week, its president, Nikolay Gorbachov, delivered a presentation to the Australian Grains Industry Conference in Melbourne and received two standing ovations for his emotional recounting of the invasion’s impact on the lives of Ukrainians.
Russia’s invasion, which began in February, has impounded around 20 million tonnes of Ukrainian grain, much of it held in port storages in Ukraine.
Prior to the war, Ukraine exported an average of six million tonnes of wheat, corn and barley to about 50 different countries.
Agricultural products were worth $27.8 billion – or 41 per cent – of Ukraine’s total export value in 2021, according to the United States Department of Agriculture (USDA).
On July 22, Ukraine and Russia signed mirror agreements with the United Nations and Turkey to get grain moving out of Black Sea ports.
But Russia’s attack on the Port of Odesa days later, as well as difficulties insuring export vessels travelling through the Black Sea, have cast doubt on how effective the agreement will be.
“I cannot trust Russia,” Mr Gorbachov said.
“But at the same time, I need to trust that the United Nations and the international community will find some way to export grain from Ukraine.”
Ukraine supplies grain to some of the most food-insecure nations in the Middle East and northern Africa.
About 65 per cent of Ukraine’s harvest moves to ports on rail, with trucks accounting for another 25 per cent.
Mr Gorbachov said approximately 20 per cent of Ukraine’s rail lines had been destroyed during the war.
“We have to find a way to export our grain, because we produce over 100 million tonnes each year and we only consume 20 per cent of that domestically,” he said.
“There has been so much damage to fields and so much damage to the supply chain.”
Since the invasion, Ukraine has managed to send some grain through safe rail corridors into Europe, and through Romanian ports.
But the volumes have been tiny and without major Ukrainian ports like Mykolaiv, Odesa and Chornomorsk operational, the country will be unable to restore anything that resembles normal trade.
Ukraine has the capability to load about 715,000 tonnes a day onto rail, trucks and barges destined for its Black Sea ports, but the European Union’s infrastructure can only handle a total of 70,000 tonnes per day.
“Over the last five months we’ve tried exporting on rail through the 12 border crossing points to Romania, Hungary, Poland and Slovakia, as well as using the shallow Danube ports to get grain to Romania,” Mr Gorbachov said.
“But the European infrastructure can’t absorb such a large volume of grain — total European exports are less than Ukraine’s.
“The best we achieved was two million tonnes a month in June, but since July Europe’s had their own crop, which has taken up all the capacity in the supply chain.”
The price of exporting through Europe is also inhibitive — Ukrainian grain can be exported through the Port of Odesa for US$20-25 a tonne, but that rises tenfold on European rail.
Ukrainian farmers planted this year’s crop as missiles fell around them.
Now they are harvesting those fields and being killed by unexploded ordnance.
“Can you imagine how farmers are feeling as they enter a field that’s only been bombed one or two days ago, and 20 or 30 per cent of the missiles haven’t detonated yet,” Mr Gorbachov said.
“Every time a farmer enters those fields, they are risking having those bombs explode.”
Mr Gorbachov described Ukrainian farmers as heroes with an unbeatable optimism.
“They truly believe the next day will be better,” he said.
“They continue to invest in their farms, they can’t think of living a different way.
“It’s only this optimism that allows them to enter these fields.”
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