The Ukrainian Agricultural Council (UAC) has stated that it is currently in a "critical financial situation," and direct losses by the end of this year will amount to over 3 billion dollars (2.85 billion euros).

The current situation, which was triggered by the Black Sea blockade – Russia unilaterally withdrew from the Black Sea Grain Initiative in July – means that many farmers are at risk of bankruptcy, the UAC added.

Furthermore, the situation has been exacerbated by logistics costs, including fuel costs, agrochemicals, and spare parts, leading to higher production costs amid lower purchase prices.

Financial Performance

"We tried to estimate the financial performance of the agricultural sector this year, focusing on the crop production subsector," commented Andriy Dykun, the head of the Ukrainian Agricultural Council. "We used the production of the main crops – wheat, corn, sunflower, barley, soybeans, and rapeseed – in the central regions of Ukraine.

"Due to low purchase prices and high production costs, all crops, except soybeans, are unprofitable this year. According to forecasts, crop production losses will exceed 3 billion dollars. In a scenario that foresees improved working conditions in maritime ports, the figure could drop to 1.2 billion dollars, but the industry will still suffer significant losses, even in the optimistic scenario."

In addition to withdrawing from the Black Sea Initiative, Russia has carried out a series of attacks on grain storage facilities across Ukraine, destroying over 300,000 tons of Ukrainian grain and partially damaging 105 Ukrainian port infrastructures.

As a result of the attacks on ports in the Danube cluster and the blockade of maritime ports, cereal exports to Asia, Africa, and Europe have decreased by nearly three million tons per month, and Ukraine has lost 40% of its port export potential.

A Year of Losses

This year will be the first in 20 years when the agricultural sector in Ukraine will have a deficit. In the past, profits from wheat production were almost zero, but sunflower production was never unprofitable, UAC members said.

"This is happening despite favorable weather conditions this year that have supported agricultural production," members said in a statement. "Last autumn, winter crops were reduced, but due to the weather, we had a normal gross yield. Next year, the area will continue to decrease.

"Farmers are cutting costs on fertilizers and equipment, which will have a negative impact on the accumulation system, and the gross yield will decrease significantly. The average Ukrainian will have enough food. But the issue of exports will become even more acute, and there will be no foreign currency income in Ukraine."