Small players in Ukraine were combining resources and exporting sunflower oil to nearby countries from little-known river ports, using mainly cash transactions, as the conflict with Russia continues, a vegetable oil trader at DeltaWilmar told S&P Global Commodity Insights.

“Entrepreneurs, who sometimes are also owners of minor crushing plants, are forming networks and hiring barges with 2,000 tonnes-6,000 tonnes capacities. They take the oil to Turkey and sell at whatever price they can get and use that money to buy seeds from farmers again,” Dinesh Kumar, who lives in the Ukrainian city of Odessa, was quoted as saying in the 30 August report.

As these operators were not international companies, they did not have to worry about insurance or spend money on quality checks, Kumar said.

“You buy seeds from the farmer in cash, you take it to the crusher and pay partly in cash. And this cash economy saves about 20% in value added taxes.”

Exports of sunflower oil from Ukraine -- the world’s largest producer and exporter of the commodity – have dropped following Russia’s invasion of the country on 24 February and subsequent blockade of major ports in the Black Sea region.

Following the signing of a safe transportation deal on 22 July between Russia and Ukraine – brokered by the United Nations (UN) and Turkey – passage had resumed through three of Ukraine’s major ports -- Chernomorsk, Yuzhne, and Odesa, S&P Global wrote.

Although the safe passage treaty was hardly a “game changer” for sunflower oil exports, trade had slowly restarted at the Odessa port in the last week of August, Kumar was quoted as saying.

Vessels with capacity of up to 40,000 tonnes were now docking and loading at the Odessa port with shipments heading to India and China – the two largest vegetable oil buyers in the world – the report said.

“Some of the authorities I have spoken to are more pessimistic than optimistic [that the safe passage agreement will ease transit issues]. All the leading [vegetable oil] players are focusing on handling the stock in the Odessa region,” Kumar added.

Since the start of the conflict, Ukraine’s sunflower oil exports had dropped to around 935,700 tonnes – 48% less than the same period last year – the country’s Ministry of Agrarian Policy and Food said on 23 August.