Export of Ukrainian wheat has become unprofitable due to port blockade

Export of Ukrainian wheat has become unprofitable due to the blockade of seaports and a sharp increase in the cost of alternative logistics. Even the rise in world grain prices does not compensate farmers for the costs of transportation through the Danube and the western border.

This was stated by Minister of Agrarian Policy and Food Taras Vysotskyi in an interview with RBC-Ukraine.

According to him, the cost of growing a ton of wheat under a favorable scenario is about $150. In early July, an agricultural producer could sell a ton of wheat with shipment through the deep-water ports of Greater Odesa for about $205 excluding freight.

Currently, the price of wheat has risen to about $275 per ton. However, additional logistics through the Danube ports to the Black Sea alone costs over $100 per ton.

"If we take into account other producer costs, we have a situation where wheat export is unprofitable today", noted Vysotskyi.

Therefore, farmers are already reconsidering the feasibility of future grain sowings. According to the minister, producers are beginning to assess whether it is worth sowing the same areas with crops next season that have to be sold at a loss in current conditions.

The problem concerns not only wheat. According to the Ministry of Agrarian Policy, under current conditions, the economics of exporting about 26 million tons of grain do not work out — approximately 16 million tons of corn and 10 million tons of wheat.

At the same time, alternative logistics is gradually increasing volumes. According to the Ministry of Agrarian Policy, since the beginning of September, Ukraine has exported 630,000 tons of agricultural products through these routes — about 40% of the volumes that could be exported if logistics were fully operational. In August, this figure was only 33%.

Grain was exported the most through alternative routes — 380,000 tons, but this is only about 35% of the required volume. Oilseeds were exported in the amount of 94,000 tons, or about 60% of potential exports, vegetable oil — 97,000 tons, or 66%, and meal — 60,000 tons, about a third of the required level.

The Ministry of Agrarian Policy notes that under favorable conditions, it is possible to increase the throughput capacity of alternative routes to about 50% of the former sea volumes, but in fact this is their limit. Therefore, the restoration of full operation of seaports remains critical for grain exports, for which expensive land and Danube logistics already make supplies unprofitable.

Based on materials from: RBC-Ukraine (Dmytro Sydorov), Ministry of Agrarian Policy