On a sweltering summer morning, two tractors rumbled through a green field, spraying squat stalks of sunflowers ahead of a crop that has taken on greater significance than ever beyond this farm outside the central Ukrainian city of Dnipro.
Russia’s invasion of Ukraine has turned the operations of the world’s pre-war fourth largest grain exporter upside down. Nearly six months after Moscow’s blockade of the Black Sea, the main outlet for Ukraine’s wheat and oilseed exports, more than 22 million tons of grain and other crops remain stranded in the country, with nowhere to go and increasingly scarce storage space.
An internationally brokered deal last week allowed some cargo ships to set sail from Ukraine. But their cargo represents only a tiny fraction of the total awaiting liberation. Worse, the blockade will only grow, said Ukrainian President Volodymyr Zelenskyy, with the 2022 wheat crop already being harvested while last year’s wheat crop is trapped.
Countries that depend on Ukrainian wheat are already suffering. In addition to pandemic supply chain disruptions and Western sanctions on Russian oil and gas, severely reduced wheat stocks have already resulted in a 25 percent rise in bread prices in war-torn and poverty-stricken Yemen. In Nigeria, another major importer of Ukrainian wheat, the price increase is twice as high.
As a result of this added stress, the number of “people marching to starvation” around the world has risen to 345 million, World Food Program chief David Beasley told the House Foreign Affairs Committee on July 20. About 50 million people in 45 countries are “knocking on the door of famine,” he added.
Not only grain is in short supply. Before the war, Ukraine exported an average of 430,000 tons of sunflower oil per month, accounting for about 42% of world supply; Its disruption caused the price per tonne (£2,205) to rise by 50%.
“It’s a complicated issue,” said Nader Wansa, head of Wansa Group Commodities, a UK-based firm. “I have been in the markets for over a decade. I’ve never seen anything quite like this vanishing spiral.”
In Ukraine, it’s the opposite problem, said Dmitri Yemelchenko, production manager at KSG Agro, a Dnipro-based agricultural holding that grows wheat, sunflowers and rapeseed, among other crops. It also operates a pork processing plant.
Yemelchenko, a burly man whose muscular build, unlined skin and broad chin give him the look of a Ukrainian Buzz Lightyear, sat in the conference room at KSG headquarters in downtown Dnipro, his face seeming to be permanently scowled as he considered what he called “a great mind-expanding exercise” for his business.
“We don’t know what to plant. For grain, it’s a catastrophic market collapse. There is so much wheat here that we can’t export it,” he said, adding that before the war he could expect more than $272 a ton.
“I would be happy with any solution, but the question is how can we change so that we can remain profitable on such a cost basis.”
At the start of the invasion of Russia on February 24, the price plummeted to $85 a ton before recovering to around $100 after the deal was announced. But wheat costs $200 a ton to grow — or at least it did before the war, Yemelchenko said.
“Diesel? It’s two and a half times that now,” he said. Fertilizers, whose production relies on natural gas supplies, and pesticides, many of which were shipped from Russia, have also skyrocketed in price.
With Ukraine’s southern seaports closed – in peacetime they handled about 98% of Ukraine’s grain and oilseed exports – KSG was forced to truck its cargoes to the border. The distance and long delays added $200 to $300 per truckload to transportation costs.
The Black Sea deal was supposed to help, but Yemelchenko said KSG still had to deal with getting its products from Dnipro to the nearest loading point on the Danube, which would mean an additional $100 in costs, at least until then the shipping agreement holds and more Ukrainian ports are included.
One way KSG has tried to stay afloat is by focusing on the more expensive crops in its portfolio and ramping up production of oilseeds, including sunflowers, which remain profitable despite falling prices. Another cash crop is rapeseed, which KSG can export across the land borders of Ukraine to customers in France.
But it’s still a risk, said Vasili Gurin, the 42-year-old director of KSG farms in Novopokrovka, a village on the banks of the Komyshuvata Sura River about 32 miles southwest of Dnipro.
“Well, last year it was profitable. How will it be this year? Who knows,” he said, explaining that other canola exporters using the sea route would likely cause a market glut.
Another problem is that crop rotation requirements mean many plots of land have to be used for money-losing seed crops or simply remain fallow, Gurin added, while gazing at tractors heading into a different field.
“Two years ago we planted wheat in this part. Last year it was corn and now sunflower,” he said.
“If we plant sunflowers here again, the harvest will end up being half the size and the plants will be less healthy. It just wouldn’t work, even with pesticides.”
Furthermore, with Russia shifting its military campaign to the vast steppes of Ukraine’s eastern and southern regions, the KSG and others have even less of a solution to the very real danger faced by farmers trying to do their jobs on a battlefield.
This campaign, with its relentless artillery barrage, has already turned much of the farmland into cratered, Swiss cheese-like landscapes. Farming villages have become an arena for run-‘n’-gun tank battles, with grain elevators, farm equipment depots and vegetable stores destroyed in combat — part of a deliberate policy by Russian troops to attack Ukraine’s agribusiness, Ukrainian authorities claim.
“Of the 22,000 hectares [about 85 square miles] We operate, almost a third is in areas close to the front line,” Yemelchenko said.
He scrolled through the photos on his phone before landing on a picture of a cluster bomb hidden among green stalks of wheat. It originated from a cluster of fields covering 2,500 hectares, or about 9½ square miles, between Kryvyi Rih District and Kherson Province. The port city of Kherson fell to Russian forces early in the war.
“We had prepared this area, but in the end we didn’t plant anything on any of those 2,500 hectares. The military said we couldn’t even go there,” Yemelchenko said.
Some KSG employees have already experienced these dangers first-hand. Ivan, a 35-year-old, who gave only his first name to protect privacy, said he was forced to abandon his farm near Lyman, a town in eastern Ukraine’s Donetsk region.
In April he was working in the fields near his home when a Russian shell fell nearby. He rolled up his sleeve and pointed to a laceration on the upper part of his bicep.
“Shrapnel. From a cluster bomb,” he said, shrugging.
For three days he debated whether to go with his wife and two children, aged 13 and 6. Eventually he accepted that it was too dangerous to stay and went to Dnipro where his aunt lived. Six weeks later, Lyman was overrun by Russian-aligned Ukrainian separatists.
“There’s no point in going back now. I’ve seen it with my own eyes: part of my house is damaged and 80% of my field is just gone,” he said. “There is work here. So I’m staying here.”
On Monday, two more ships carrying more than 66,000 tons of agricultural products left Ukrainian ports, and the first grain ship to reach its final destination arrived in Turkey, prompting cautious optimism that the Russian-Ukrainian deal is working.
“This sends a message of hope to every family in the Middle East, Africa and Asia: Ukraine will not let you down. If Russia honors its commitments, the ‘grain corridor’ will maintain global food security,” Ukrainian Foreign Minister Dmytro Kuleba tweeted.
Still, Wansa, the commodities company’s CEO, doesn’t expect immediate relief.
“That gives us hope, but markets are taking a while to take that into account. And the damage is so great that it will take a long time to recover,” he said.
Meanwhile, as fertilizer production is expected to be lower this year, along with the drop in purchasing power of grain-importing countries in the Middle East and Africa, he expects the overall picture to continue to deteriorate.
“It’s a long road. But the worst pain is yet to come.”
https://www.latimes.com/world-nation/story/2022-08-08/war-ukraine-desperation-farmers-worldwide-effects War brings pain to Ukraine’s farmers, with global effects