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- The estimated cost of the stolen Ukrainian grain and oil by Russia is more than $600 million – KSE Agrоcenter
The estimated total value of stolen Ukrainian grains and oilseeds by Russia is over $613 million. It was stated by Roman Neyter, an expert at the KSE Institute’s Center for Food and Land Use Research during the discussion “100 days past the RF’s invasion: current state and outlook on food security and agricultural markets around the globe”.
The total amount of war damages and losses in agriculture of Ukraine is $27.6 billion, which was estimated by KSE Agrocenter. Among damages that totaled $4.3 billion – the largest category is damages caused by the inability to harvest winter crops ($1.4 billion) and destroyed equipment ($926 million).
The expert emphasized that, as of now, approximately 4 million tons of grain storage capacity is gone because elevators are either damaged or completely destroyed. On top of the facilities that are not damaged, not destroyed, there are facilities located in the currently occupied regions, with no access to them. So one of the problems Ukrainian farmers face or will face in a matter of the upcoming weeks-months is how to store the harvest.
“We are also seeing more and more evidence of Russia stealing our grain from occupied regions in Ukraine: from Kherson oblast, from Zaporizhzhya oblast. And the estimated cost of this stolen grain and oil is exceeding $600 million”, – Roman Neyter stated.
Before the Russian invasion, domestic prices on the Ukrainian market were perfectly correlated with world prices. Right now, because of the naval blockade imposed by the Russians, we have a substantial disruption in our supply chains. While after the Russian invasion the world prices for grain skyrocketed – domestic prices here in Ukraine went down. As of early June, the weighted average decrease in domestic prices for wheat, barley, maize, and oil fell by 33,7% compared to the pre-invasion level, leading to $11.6 billion in losses.
During the discussion the KSE Institute’s Head of the Center for Food and Land Use Research Mariia Bogonos presented potential scenarios for the grain production and export for 2022-2023.
Under the scenario of unlimited exports, the Ukrainian agricultural sector will continue to function according to a more or less usual trend, despite the decrease in arable land and higher prices for fertilizers and diesel. The opposite situation is observed in the scenario with exports limited to 1,5 million tons per month. In 2022, we expect a certain decline in production and a significant decrease in the amount of grain exports. This will lead to the need to store 45% of the wheat crop, 50% of the barley crop and 30% of the maize crop in the long term.
According to the expert’s evaluation, if producers of these export-oriented crops are unable to export their harvest, they will have very little funds to continue production in 2023. At best, manufacturers will be able to satisfy the needs of only the domestic market, which is quite small. Thus, Ukraine risks losing up to 10% of its GDP if grain exports are not restored to the level of 2021. At the moment, it is unknown whether Ukrainian grain will be exported in the required volume, meaning both scenarios remain probable.
“If grain is not exported we will see serious changes in the structure of our agricultural production and the agricultural sector in general. Producers will reorient themselves to other crops. The production of sunflower, wheat, maize and barley will fall to satisfy only domestic demand, which is many times smaller than the demand on the world market, which the Ukrainian agricultural sector has satisfied until now,” – the expert summarized.
You can view the discussion in the original language (English) or in Ukrainian.
Organizers: the Kyiv School of Economics (KSE, Ukraine), Leibniz Institute of Agricultural Development in Transition Economies (IAMO, Germany), Wageningen University & Research (WUR, Netherlands), German-Ukrainian Agricultural Policy Dialogue (APD, Ukraine).