Ukraine’s grain storage crisis hits home as farmers harvest new crops

Ukrainian farmer Mykola Tereshchenko hopes to start harvesting his wheat fields this week, but the smallholder in northern Ukraine has no place to store the grain.

His silos are still stuffed with 1,100 tons of grain from last year’s harvest, which he is unable to export due to the closure of Ukraine’s seaports following the Russian invasion in February.

While some crops have left by rail or road via neighbors like Romania and Poland, millions of tonnes have piled up on farms and missing shipments from one of the world’s largest grain exporters are driving global food prices higher.

The US Department of Agriculture estimated this month that Ukraine ended the 2021-22 season in June with 6.8 million tonnes of corn, an eightfold year-on-year increase, while wheat stocks nearly quadrupled to 5.8 million.

UN agencies have warned that the shortage of Ukrainian grain, which normally goes to the Middle East and Africa, threatens hunger and mass migration on an “unprecedented scale”.

Farmers like Tereshchenko in regions where transporting grain to Eastern Europe by rail or road is problematic will have to sell their crops at great losses if they cannot store them, and have less money left over for seeds, fertilizers and chemicals for crops the next time buying season and aggravated expected production declines in Ukraine.

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Farmer Mykola Tereshchenko opens the gate of a wheat grain warehouse as Russia’s assault on Ukraine continues in the village of Khreshchate in Chernihiv region, Ukraine, July 5, 2022. REUTERS/Valentyn Ogirenko

Tereshchenko farms as part of a collective of 30 people near Khreshchate, a village of 700 people some 120 km (75 miles) from the Russian border, which was shelled and bombed in the first month of the war.

Villagers mostly hid in basements during strikes that destroyed the farm’s roofs, Tereshchenko said. Thirty cows and pigs were killed.

“That’s a catastrophe”

After Russia withdrew to concentrate on conquering part of eastern Ukraine after failing to take the capital Kyiv, sappers combed fields littered with war debris and disarmed mines and guns. Farmers then used tractors to roam the fields to pull rockets out of the ground.

The collective received almost no money, which only managed to sell some sunflower seeds at very poor prices.

“We have our own camp. But it’s full of grain that we couldn’t sell,” Tereshchenko told Reuters.

The future of his farm and many others in the war-torn country may now depend on talks, expected to continue this week, to open a sea corridor to allow exports through Ukraine’s Black Sea ports to resume.

He hopes the sea route will reopen but fears what will happen if it doesn’t.

“For me personally, that would mean the death of all my dreams and life plans. I’m 60, what’s left?” he said.

“It’s a disaster for the collective. They will be without work, without bread. I’m retired, I can hold out. But for the people it will be a disaster, just a disaster.”

Grain prices have plummeted in Ukraine in recent weeks as farmers try to make room in their silos for the new crop.

According to consultancy APK-Inform, the bid price for third-rate milling wheat in Ukraine fell on July 8 from 7,650 hryvnia (about 259 US dollars) per ton in mid-April to 3,100-3,400 hryvnia (about 110 US dollars) per ton.

“The price of all grain has fallen and logistics costs have increased so much that everything is being destroyed – the farmer has no income,” said a foreign grain trader working in Ukraine.

“SILOS WILL OVERFLOW”

At the Baryshivska Grain Company, a medium-sized company in Nizhyn in the northern Chernihiv region, Yevhen Prymushko, director of the company’s silo and storage operations, said the plight of smallholders was particularly dire.

He said the company used to be able to offer them services, but under the pressure of the export blockade, it has no spare storage capacity to offer.

Before the war, their silos could hold 72,000 tons of grain, but a missile impact destroyed the roof of one. The bombardment reduced total capacity by 15,000 tons and destroyed a smaller 1,200 ton warehouse.

“We will not be able to offer any services to small farmers. They will have no place to store their grain. We chat with them, they ask us to camp just a little,” Prymushko said.

Kees Huizinga, a Dutchman who runs a 15,000-hectare dairy and arable farm about 200km south of Kyiv, said farmers plan to convert workshops and cowsheds to store grain harvested this season.

He also bought about 60 plastic pouches for storage known as “ag bags” for $1,000 each. A sack can store 250 tons of grain, giving it the ability to store an additional 15,000 tons.

Oleksandr Haidu, head of the Agriculture Committee of Ukraine’s parliament, said Ukraine needs about 80,000 such casings and lawmakers plan to create preferential conditions for the casings by waiving import duties

“Unfortunately, some farmers are already selling their crops below the net price. Some don’t even know whether to harvest at all,” he said.

“If we don’t get up now and export routes aren’t expanded, by October our silos will be overflowing, farmers will sell their crops for next to nothing, won’t be able to pay rent and eventually refuse to sow next year.”

Ukraine was once the world’s third largest grain exporter, but it’s gradually slipping down the rankings. That trend is likely to intensify next year when farmers lack the money to buy seeds and fertilizers, or no incentive to grow crops if they can’t be shipped.

“Farmers can’t cover their costs with the price, and if nothing changes in the near future, then we have to expect a drop in autumn sowing,” said Maria Kolesnyk, an analyst at ProAgro Consulting. ($1 = 29.5420 hryvnia) (Additional reporting by Maytaal Angel and Nigel Hunt in London; Editing by Veronica Brown and David Clarke)

https://www.independent.ie/business/farming/tillage/ukraine-grain-storage-crisis-hits-home-as-farmers-harvest-new-crops-41854098.html Ukraine’s grain storage crisis hits home as farmers harvest new crops

Fry Electronics Team

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