Ukraine has stated that it may have to halve its planned agricultural exports as Black Sea ports in the Greater Odesa area are effectively non-operational due to Russian airstrikes, creating risks for global food supplies.
“Since the beginning of August, no ships have entered the ports of Odesa, forcing Ukraine to use alternative routes,” Ukrainian Minister of Agrarian Policy and Food Taras Vysotskyi told journalists on Friday. According to him, this month the volume of grain exports has decreased to 590,000 tons, which is only 30% of the planned amount. Even with the use of all alternative routes, the country will be able to export a maximum of 30 million tons of agricultural products this season, while another 30 million tons will not reach world markets.
Increased attacks and global risks
Russia and Ukraine have intensified attacks in the Black Sea region, particularly on ports and commercial shipping, increasing concerns about supply disruptions. These countries account for more than a quarter of the world’s wheat exports, and the attacks are occurring during this year’s harvest season.
According to the newspaper “Kommersant”, “Russian Railways” temporarily banned the transportation of grain and other cargo to its Black Sea port of Novorossiysk after Ukrainian attacks earlier this week. Kyiv sent Moscow a proposal for a mutual cessation of attacks on civilian targets in the Black Sea, Reuters reported on Thursday, citing an unnamed source familiar with the situation.
On Friday, the Russian Foreign Ministry stated on its website that Moscow sees no grounds for a partial cessation of hostilities in the Black Sea, which would give Ukraine a temporary respite. The ministry also noted that Moscow has not received any official request from Turkey regarding the conditions of the proposed moratorium in the Black Sea.
Search for alternatives and support for farmers
Ukraine expects to produce 80 million tons of grains, oilseeds, and processed products during the current marketing year and, provided the ports are operational, could potentially export 60 million tons, Vysotskyi noted. Ukrainian Black Sea ports are usually capable of loading about 90% of the country’s agricultural cargo intended for export.
The Infrastructure Ministry in Kyiv previously reported that Russia carried out more than 60 attacks on port facilities in July, with 35 ships hit in ports and another 22 attacked at sea. Authorities are considering ways to increase supplies using other modes of transport, including road transport, Danube ports, and a new railway route through Moldova, as well as negotiating with partners in other countries.
Officials are also developing a support program for farmers, which will include access to low-interest loans and discounts on logistics services. Earlier this week, Kyiv appealed to the European Commission for a grant of 220 million euros (254 million dollars) to compensate for interest expenses and partially cover the risks taken by lenders to finance exports and a new production cycle.
Given that the ports of Odesa may remain closed until November, farmers will face a shortage of storage capacity, which could potentially reach 11 million tons, Vysotskyi said. “We must think about this now and look for possible solutions,” he noted. “But the only effective solution is long-term security” in the Black Sea region.
Source: Bloomberg
