Page 56 - UKRRptJan22

international companies, their number will decrease by 78% by the end of the year. Rates will continue to decline in the future, predicts UTG.
9.1.6 Agriculture sector news
Ukraine estimates its grain harvest fell by around 40% year on year due to the Russian invasion, a representative for the country's industry told AFP Friday. "We expect a grain harvest of 65-66mn tonnes" by the end of the year, the head of the Ukrainian Grain Association Sergiy Ivashchenko said, following a record harvest of 106mn tonnes last year. "The main reason is the war," which immediately led to fuel shortages and hindered sowing, Ivashchenko said.
In 2022, the Ukrainian agricultural sector may lose $9.3-$9.8bn due to logistics problems, said Doctor of Economics Oleksandr Zakharchuk. It is noted that this year the domestic agricultural sector may lose $7.5B-$8bn due to the seaport blockade and changes in export transportation logistics. The value of last year's unsold grain is $0.5bn, and the cost of elevator warehouses destroyed or seized by the occupiers is valued at $1.3bn. According to Zakharchuk, since the beginning of the port blockade, the cost of logistics in the export structure has increased five to seven times and reached $180 per ton of grain. Given this logistics cost, grain producers are forced to sell goods below their cost. According to average calculations, the selling price of a ton of wheat in the field decreased to $100-$120, with a production cost of at least $120-$150.
A third of Ukraine’s corn crop still stands in fields as winter sets in. The war, constant blackouts, and the record autumn rainfall that has muddied fields have hit Ukrainian farmers’ harvest efforts. Additionally, the war has decreased how much farmers can fetch for their goods. As well, strikes on the country’s infrastructure have limited the availability of electricity needed to dry soggy grain, reported Bloomberg. While Russia’s invasion has curbed exports, Ukraine remains the world’s fourth-largest corn shipper and significantly impacts global supply. The grain can still be collected into spring, although the prospects for its quality and quantity are ebbing. The US Department of Agriculture cut its Ukraine corn crop outlook to 27mn tonnes on December 9, down 4.5mn tonnes, citing relentless autumn rains in three key regions. That would be a five-year low. The United Nations predicts an even lower forecast of 24mn tonnes.
Ukraine’s food processing sector has been affected by power outages due to Russian bombing in December. Without power, food producers have had to pause or even cease their work, which has led to shortages in grocery stores. However, transition to alternative energy sources is costly and will inevitably be reflected in food prices, FPRI BMB Ukraine reports.
According to the Institute of Agrarian Economics, the production of processed foods, vegetables, fruit, bread, meat and dairy products, and fish will all be negatively impacted by the blackouts. There will also be difficulties with the production of livestock fodder and storage of produce within retail networks. The blackouts will eventually also affect food prices. Experts estimate that prices of bread, canned goods, meat and dairy products, and vegetables will increase by the end of the year. Meat prices may increase by 7-10%; milk and dairy by 10-15%; and vegetables by 15-20% before 2023.
56 UKRAINE Country Report January 2023 www.intellinews.com