Farmers in Ukraine could face new challenges in the winter planting campaign due to high stocks, a shortage of storage and tight and costly logistics leading to current domestic prices being close to the cost of production, AgriCensus reported.
The current situation means that funding the next crop is increasingly a major concern, as farmers – who normally use revenues from the previous production to fund the next year’s output – are already close to the point of working at a loss, according to the 24 June report.
With the main Black Sea ports blocked and under attack by Russian missile strikes, exports had mainly been carried out by land, trains and trucks, as well as through the river ports of Reni, Kiliya and Izmail, AgriCensus wrote.
However, the alternative forms of transport are not traditional for Ukraine and the situation has led to major bottlenecks forming on the country’s borders with its European neighbours, according to the report.
The situation also led to a significant increase in logistics costs, which made it difficult to maintain Ukrainian grain and oilseed prices at the same level as global prices as the increased logistic costs needed to be factored in if Ukrainian grains were to remain competitive enough to attract demand, the report said.
Taken together, the factors put extreme pressure on domestic prices and raised questions over the viability, desire and capacity of farmers to manage the winter planting campaign, AgriCensus wrote.
“Production costs and logistics prices are rising, while prices for grains are falling on the local market. In such conditions, …I will be forced to use the cheapest possible agri solutions for the next sowing campaign... that will not improve the yield,” a farmer from the Vinnytsia region told AgriCensus.
The current situation means that farmers are likely to have to economise on the use of crop protection products, seeds, fertilisers and machinery ahead of the new season, according to the report.
With estimated production costs for wheat of around US$150-180/tonne level, around US$130-180/tonne for corn and around US$155-175/tonne for barley, any sales below that threshold were unsustainable for the farmer, according to trading sources.