Ukraine agriculture exports – what is at stake in the light of invasion?

Ukraine agriculture exports – what is at stake in the light of invasion?

https://www.windtaskforce.org/profiles/blogs/ukraine-agriculture-ex...

Agnieszka Maciejewska

Katarzyna Skrzypek

Introduction

Ukraine is one of the main world exporters of grains as well as vegetable oils.

The main agriculture export products are Corn and Wheat.

In 2021 Ukraine was the second largest supplier of grains for the European Union (EU) and a large food supplier for low and middle-income countries in Asia and Africa.

The longer the Russia-Ukraine conflict lasts, the more insecurity about food supplies it may bring not only to Ukraine and the EU region, but also to the whole world.

Key agriculture commodities exported from Ukraine

For 2021, GTAS Forecasting from S&P Global Market Intelligence estimates the exports of Ukrainian corn for 27.2 million metric tons and the export of wheat is estimated for 21.2 million metric tons.

These two are 12.8% and 10.5% of the total world exports, respectively.

Apart from corn and wheat, among the top ten exported goods, are the following edible goods: 'Animal and vegetable oils, excluding soybean oil', 'Sunflower seeds, rapeseed and colza seeds', and 'Other grains and cereals, including rye, barley oats'.

Ukraine grains exports by destination

Ukraine grain exports to the EU increased from 682 thousand metric ton in 2010 to 15.9 million mt in 2019, mostly supported by corn exports from 533 thousand mt to 14.3 million mt.

Ukrainian grain exports to the EU were $3 billion in 2019, and $ 2.6 billion in 2021.

The EU imports almost no wheat, rye and barley from Ukraine, only corn, to protect EU farmers.

In 2021, according to GTAS Forecasting estimates, Ukraine was the second largest supplier of grains (including 'Corn', 'Wheat' and 'Other grains, including rye, barley and oats') for European Union, accounting for 14% of total EU grain imports in terms of volume.

Ukraine is a large food supplier for low- and middle-income countries.

According to S&P Global Market Intelligence GTAS Forecasting estimates, in 2021, 55.1% of Ukrainian wheat was exported to Asia and 40.7% to African countries, and almost nothing to Europe (to protect EU farmers), and to the rest of the world. See image.

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In 2021, the largest importers of Ukrainian wheat were Egypt, Indonesia, Bangladesh, Turkey and Yemen.

Some countries mainly rely on Ukrainian wheat supplies, such as Libya and Lebanon

Ukraine is the second largest supplier of wheat for Indonesia and Bangladesh

The longer the Russia-Ukraine conflict lasts, the more insecurity about food supplies it may bring, not only to Ukraine and the EU region, and to the whole world.

The prices of wheat and corn increased before the war

Ukraine is the world's leading exporter of sunflower oil and seed

Ukraine is the largest world exporter of sunflower products with a share of 40% of world exports, in 2021.

Top importers of sunflower oil from Ukraine are India, China (mainland), Netherlands, Spain and Italy.

With imports of sunflower oil stopped, because of the conflict, India has to look for replacements from other countries.

The biggest markets for edible oil are India and China (mainland).

Over 80% of India's demand for sunflower oil was supplied by Ukraine in 2021.

Implications

Most of the Ukrainian exports go through ports on the Black Sea and Azov Seas, such as Odessa, Pivdeny, Chornomorsk, Kherson, Mariupol and Berdyansk.

On February 24, 2022, when the conflict started, most of the sea ports were closed

The Head of Ukraine's Maritime Administration confirmed on February 28, multiple shipping companies have suspended sailings to endangered Black Sea ports, because: 1) Ukraine mined the ports and 2) insurance companies would not insure the cargos and ships.

At least three commercial ships have been hit by bombs since February 24, 2022

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

APPENDIX

Russia and Ukraine are commercial competitors, and major exporters, regarding agricultural products.

The EU imports almost no wheat, rye and barley from Ukraine, only corn, to protect EU farmers. See above graph.

Turkey is a major importer of Ukraine wheat, rye and barley for its own use, and for processing, such as milling/bagging into flour for export, to many countries in the world, using Turkey ships, which compete with mostly Greek ships.

Russian agricultural exports are not under sanctions, but farm equipment imports and replacement parts imports are. 

Ship, insurance and harbor owners are coerced, behind closed doors, by the US/EU/UK, to not provide services to Russian cargos in Russian ships, or even in Turkish, etc., ships. 

Not all ship, insurance and harbor owners comply with the coercion, the so-called “dark fleet infrastructure”

With increasing BRISC-plus membership and economic power, the coercion will be diminished/counteracted in future years

Russian wants these coercion practices stopped, as agreed under the original UN-signed “humanitarian-grain deal", of which the agreed Russian part was never implemented.

The West (US/UK/EU/NATO) wants to control/weaken/breakup/regime-change Russia, in addition to controlling Ukraine, because then it can say to China, India, etc., you will be hungry and without sufficient fossil fuels, unless you continue to accept our rules-based regime, with the West making the rules.