Ukraine scrambles to stockpile grain as Russian export blockade kicks in
Ukraine – the world’s fourth-largest grain exporter – has 30 million metric tons (33 million tonnes) of grain awaiting export and farmers are now scrambling to build temporary storage, but time is running out.
In July, Ukrainian farmers begin the summer harvest, but many fear there will be nowhere to store the new grain in September if the Russian export blockade is not lifted in time.
Consulting firm APK-Inform estimates an additional 40 million metric tonnes could be ready for export when the next harvest is expected by the end of summer.
“In addition to the 24 million tonnes (metric tonnes) of grain blocked from the 2021 harvest, from mid-July we will have the 2022 harvest and it is a huge problem where to store the new harvest if the old is still there,” said Gennadiy Ivanov, CEO of dry bulk operator BPG Shipping.
“In my opinion, to solve the problem of the global food crisis, the only solution is to end the war in Ukraine and unblock the ports,” he told Anadolu Agency.
To make matters worse, reports suggest that a fifth of Ukrainian grain silos were damaged or fell under the control of Russian forces. Ukrainian Agriculture Minister Mykola Solskyi said that could leave farmers short of 10 to 15 million tonnes of storage space.
Prior to the war, Ukraine’s Black Sea ports of Odessa, Pivdennyi, Mykolayiv and Chornomorsk served as terminals for around 5 million metric tons of grain per month, accounting for about 80% of its total grain exports.
The country typically accounts for 12% of world wheat exports. Now, with 84 foreign ships stuck in Ukrainian ports – many carrying grain on board – due to a Russian naval blockade, that figure is closer to 3%.
Wheat prices, which were already 49% above their 2017-21 average in mid-February, have risen another 30% since the start of the war in Ukraine.
Many fear that this sharp rise will cause famine, political unrest and migration in Africa and the Middle East.
Around 400 million people worldwide depend on Ukraine’s food supply, according to Anna Nagurney of the University of Massachusetts Amherst.
– cynical Russia
Russia says Western sanctions against its banking and shipping sectors prevent it from exporting food and is calling for the sanctions to be lifted.
Russian forces have reportedly targeted grain silos and agricultural infrastructure in Ukraine, and are accused by US and Ukrainian officials of stealing grain from the country and attempting to resell it to Syria after Lebanon and Egypt have refused similar offers.
The New York Times reported that the United States sent an alert to 14 countries, mostly in Africa, about Russian freighters loaded with what the State Department said was stolen Ukrainian grain.
Kyiv claims Russia stole around 400,000 metric tons of grain and seeds, with the Center for Defense Strategies, a Ukrainian security think tank, putting the figure at more than 600,000. A Defense Ministry report revealed that Russian soldiers had forced farmers to give 70% of their harvest to Crimean buyers at a price of about 10% at retail.
Ukraine’s agricultural sector generated around 22% of the country’s GDP in 2021, according to UN data.
Some observers fear that Moscow is seeking to take over Ukraine’s share of the global market in commodities like corn and wheat and trying to portray itself as a charitable supplier to poor countries.
– American and European plans
EU foreign policy chief Josep Borrell said Russia’s actions amounted to war crimes and the EU had even considered sending warships to protect grain shipments.
Germany plans to establish a “test corridor” to allow safe passage of Ukrainian grain by rail, German Ambassador to Ukraine Anka Feldhusen told state media on Monday.
Meanwhile, the United States has pledged to build temporary silos to store Ukrainian grain near the Ukrainian border in Poland and Romania to facilitate grain exports, President Joe Biden said last week.
Polish Agriculture and Rural Development Minister Henryk Kowalczyk said that for this initiative to take place, issues related to ownership, additional infrastructure, financing, location and size of silos would have to be settled.
“Implementing this type of investment takes about three to four months,” he said.
Current possibilities mean that the maximum amount of grain that can be shipped to Poland is around 1.5 million tonnes, while Ukraine’s needs amount to around 5 million tonnes per month.
“I don’t see much interest in silos in Poland,” said Pavlo Martyshev, an agricultural economist at the Kyiv School of Economics. “If anything, they could be built on the Ukrainian side of the border, for logistical reasons. At the moment we have bottlenecks at the borders and silos wouldn’t change that,” he said. he told Anadolu Agency.
Ivanov agrees. “In my opinion, even building temporary silos will not help much because there is still a global internal logistics bottleneck in terms of capacity.”
“The prices of a new crop in terms of transport costs are a big question mark, i.e. whether traders/farmers will be willing to accept a lower selling price in order to meet the huge costs freight/transport,” he said.
Martyshev added: “The extra cost of the train journey would be less than the cost of the price hike if the grain is wasted in storage on Ukrainian farms.”
– Alternative routes
Ukraine hopes to send 700,000 to 750,000 metric tons of grain per month from two small ports on the Danube to Romania.
The rest would be transported to Europe by road and rail.
But logistical problems prevent a rapid transition from sea to land transport.
Trains in Ukraine must stop at the country’s borders, as the track gauge is 9 cm wider than that of its European neighbours. The grain is then loaded onto wagons on other trains or lifted onto narrower wagons, which takes time.
It’s also a matter of capacity, with a single container ship capable of carrying roughly the same load of freight as 50 trains.
Kyiv also plans to send up to 4 million metric tons of grain per month via Belarus, which uses the same rail gauge as Ukraine. Plans are reportedly being discussed between Kyiv and EU ministers to build a new railway between Ukraine and the Lithuanian port of Klaipeda.
Martyshev also said Belarusian President Alexander Lukashenko’s regime could be open to any deal. “He is in negotiations and still likes to have some leverage between Russia and the EU,” Martyshev said.
Poland decided in June to temporarily reduce cargo inspections at its border with Ukraine, which will allow the war-affected country to export agricultural crops through the Rava Ruska-Werchrata border crossing.
But, another hurdle is the unavailability of storage at European ports, where tens of thousands of metric tons of grain have to be put into port silos before they can later be loaded onto cargo ships.
OT Logistics, a Polish operator of dry bulk terminals, said its port facilities in Swinoujscie and Gdynia on the Baltic coast are already operating at full capacity. The company estimates that the capacity of its Baltic terminals is around 1.6 million tonnes per month, 400,000 less than Kyiv’s desired amount.
Another route passes through Constanta, a port on the Romanian Black Sea coast. Much of Ukraine’s grain is destined for Constanta, with around 50% of current exports shipped from there, said Nikolay Gorbachov, the head of the Ukrainian Grain Association.
About 30% of Ukrainian grain exports pass through Poland near Gdansk on the Baltic Sea.
As British Foreign Secretary Liz Truss travels to Turkey for crisis talks on the global food shortage, amid growing fears that Russia’s blockade of Ukrainian grain exports could drive up food prices in developing countries to dangerous levels.
Turkey also plans to host Russian, Ukrainian and UN officials for talks in the coming weeks aimed at resuming currently stalled exports, according to media reports. Turkish Foreign Minister Mevlut Cavusoglu said leaders were working on a solution that would not require demining Ukrainian ports.
The Anadolu Agency website contains only part of the news offered to subscribers of the AA News Broadcast System (HAS), and in summary form. Please contact us for subscription options.