July 20, 2022

 

Ukrainian farmers harvesting new crops affected by grain storage crisis

 

Farmers in Ukraine harvesting new wheat and corn are affected by a grain storage crisis, with millions of tonnes stockpiled at farms and a lack of shipments from the one of the biggest grain exporters in the world resulting in soaring global food prices, Reuters reported.

 

The US Department of Agriculture said Ukraine finished the 2021/22 season in June with 6.8 million tonnes of corn, an eight-fold increase from the previous year, while wheat stocks nearly quadrupled to 5.8 million.

 

According to UN agencies, a lack of Ukrainian grain, which usually travels to the Middle East and Africa, poses a "unprecedented scale" of risk for starvation and mass migration.

 

Farmers in areas where transporting grain by rail or road to eastern Europe is difficult will have to sell their crop at a significant loss if they can't store it, leaving them with less money to invest in seeds, fertiliser, and other agricultural supplies for the following season. This will exacerbate predicted declines in Ukraine's output.

 

In recent weeks, grain prices in Ukraine have plummeted as farmers attempt to make room in their silos for the upcoming harvest.

 

The bid price for third-class milling wheat in Ukraine fell to about US$110 per tonne on July 8 from about US$259) in mid-April, according to the APK-Inform consultancy.

 

A foreign grain trader who operates in Ukraine said the price of all grain has decreased, and the cost of logistics has increased to the point where it just destroys everything, until the farmer has no more income.

 

Yevhen Prymushko, the director of Baryshivska Grain Company's silo and storage operations, a medium-sized business in Nizhyn in the northern Chernihiv region, said the situation of smallholder farmers was particularly dire.

 

He said that the business used to be able to assist them but was unable to do so due to the export ban's pressure on its storage facilities.

 

Their silos could have stored 72,000 tonnes of grain before the war, but one of them had its roof destroyed by a rocket. The bombardment reduced the total capacity by 15,000 tonnes and destroyed a smaller storage facility with a capacity of 1,200 tonnes.

 

Oleksandr Haidu, the chair of the agrarian committee of the Ukrainian parliament, saod that Ukraine required about 80,000 plastic storage sleeves, known as "ag bags", to store crops, and that the legislature intended to give them preferential treatment by eliminating import taxes.

 

Haidu said some farmers are already selling their harvest for less than net cost, adding that silos will overflow in October and farmers may not be able to pay rent and refuse to sow next year if export routes don't expand.

 

Ukraine once ranked third in the world for grain exports, but it is now steadily falling down the rankings. If farmers lack the funds to purchase seeds and fertilisers, or any incentive to plant crops if they cannot be shipped, this trend is likely to worsen the following year.

 

Maria Kolesnyk, an analyst with ProAgro consultancy, said that farmers cannot cover their costs with the price, and if nothing changes in the near future, then they can expect a decrease in the area of autumn sowing.

 

-      Reuters