The Ministry of Agrarian Policy and Food of Ukraine has released report on the impact of the war on agricultural profitability
Source: The DairyNews
The Ministry of Agrarian Policy and Food of Ukraine has released its second report on the impact of the war on agricultural profitability, shedding light on the challenges faced by the industry.
Despite an improved yield forecast for the 2023-2024 marketing year, crop production in Ukraine remains unprofitable. The study, conducted in collaboration with the Ukrainian Agribusiness Club (UCAB) and with support from the Global Facility for Disaster Risk Reduction and Recovery (GFDRR), highlights the increased logistics costs during the July-October 2023 harvest season and the subsequent decrease in purchase prices, causing significant losses for small and frontline farms.
The report indicates a global and domestic decline in prices for various grain and oil crops, coupled with expensive export logistics, negatively impacting the profitability of crop production in Ukraine. Although there is a gradual recovery in exports by sea, the logistics cost to ports such as Odesa, Constanta, and Gdansk is rising. Labor costs in crop production have also increased due to personnel shortages caused by mobilization and forced migration.
Small and frontline medium-sized farms experience the lowest profitability in grain and oil crop production. Small farms, in particular, face 5%-10% higher production costs and sell products at lower prices due to smaller production volumes. The study reveals that average farms near conflict zones save on rents but incur higher costs for seeds, plant protection products, fertilizers, fuel, and services. Export logistics for these farms are also more expensive than in other regions of Ukraine.
The profitability of grain and oil crop production in Ukraine worsened from July to October 2023. Sunflower, once profitable, turned unprofitable due to a price drop. Wheat and corn production saw increased losses, while barley became the least profitable crop among the main grains. Winter rapeseed transitioned from unprofitable to minimally profitable, and soybeans were the only crop showing tangible gains, despite declining profitability.
In contrast, most livestock products, except beef, remained profitable and even increased profitability from July to October 2023. Pork production, though still profitable, experienced a slight decrease in profitability. Small farms in central Ukraine and those near the front line faced lower profitability in livestock production due to higher feed and veterinary drug costs, lower purchase prices for products, and increased logistics costs.
The report indicates a global and domestic decline in prices for various grain and oil crops, coupled with expensive export logistics, negatively impacting the profitability of crop production in Ukraine. Although there is a gradual recovery in exports by sea, the logistics cost to ports such as Odesa, Constanta, and Gdansk is rising. Labor costs in crop production have also increased due to personnel shortages caused by mobilization and forced migration.
Small and frontline medium-sized farms experience the lowest profitability in grain and oil crop production. Small farms, in particular, face 5%-10% higher production costs and sell products at lower prices due to smaller production volumes. The study reveals that average farms near conflict zones save on rents but incur higher costs for seeds, plant protection products, fertilizers, fuel, and services. Export logistics for these farms are also more expensive than in other regions of Ukraine.
The profitability of grain and oil crop production in Ukraine worsened from July to October 2023. Sunflower, once profitable, turned unprofitable due to a price drop. Wheat and corn production saw increased losses, while barley became the least profitable crop among the main grains. Winter rapeseed transitioned from unprofitable to minimally profitable, and soybeans were the only crop showing tangible gains, despite declining profitability.
In contrast, most livestock products, except beef, remained profitable and even increased profitability from July to October 2023. Pork production, though still profitable, experienced a slight decrease in profitability. Small farms in central Ukraine and those near the front line faced lower profitability in livestock production due to higher feed and veterinary drug costs, lower purchase prices for products, and increased logistics costs.
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