ROCK BOTTOM farmgate prices caused by soaring transport costs, massive internal depopulation causing a workforce shortage and a lack of inputs are all likely to conspire to keep a lid on Ukrainian crop production for the 2022-23 season.
Mykola Gorbachov, president of the Ukraine Grain Association, highlighted the massive human toll from the current conflict with Russia.
"Over six million people have headed abroad since the conflict began, mainly women and children who have headed to the west into Europe," Mr Gorbachov told the Australian Grains Industry Conference last week.
"On top of that there are a further 10 million people who have moved within the country to find a safer space," he said.
He said the lack of incentive to grow crops in the export-orientated nation would likely see further cuts to production until a workable transport supply chain emerged.
"Ukraine produces four times as much grain as we can consume it, so looking forward if we can't export the grain we won't grow it."
"People are just not going to sell their grain for $US50-60 a tonne."
He said the lack of people to help move the crop was yet another hurdle in the already complex export supply chain.
"There is a lot of corn that was produced this year but we can't export it.
"The transport costs to get the grain into Europe and then onto the broader market are huge and it means the price for Ukrainian farmers is below the cost of production.
"Farmers are not willing to sell at these values so there is a lot of grain in storage."
Mr Gorbachov said transport costs were ranging at anywhere from $US100 a tonne up to a staggering $US400/t.
"It is a high price but the grain has to move long distances and in some cases through dangerous areas."
He said rail capacity had ramped up, sending the grain primarily into Romania.
"We were loading a train a month, now it is 12 trains a day, but it just not make up for the lack of access to our Black Sea ports, our supply chain has become geared to sending grain out this way."
"This is the reason we see Ukraine having a big reserve of grain that does not end up making it to the world market in time to help those crying out for supplies."
Looking ahead, he said average yields would also likely be down as farmers battled with insufficient access to key crop inputs such as fertiliser and herbicides.
Mr Gorbachev said the ripple effect of the war spilt far beyond Ukrainian borders.
"The lack of access to Ukrainian grain is a big deal for Africa which needs cheap grain, they will either face starvation or have to move somewhere else, and that somewhere else could well be Europe.
"We could see 40-50 million people coming to Europe which will cause chaos, which is why it is important to all to open Ukraine."
Gregor Heard
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
