Ukrainian farmers lose up to $200 million a month due to logistics and border blockages

Ukrainian farmers' losses due to logistics and border blockades currently reach $200 million per month, and there are a number of complex challenges that farmers have to deal with in order to remain viable.

Expensive and complex logistics are the number 1 issue for farmers today. One of the factors affecting this is the increase in the cost of renting wagons from the UZ side, which has recently quadrupled. The fact is that Ukrzaliznytsia does not put the entire existing fleet of wagons up for auction, creating a high deficit and, accordingly, a high cost of renting wagons, while there is no demand for purchase at such a price.

It will be recalled that Ukraine's losses from blocking the western borders may reach $1.5 billion.

The decrease in the volume of foreign trade due to restrictions on the movement of freight transport through the western borders of Ukraine for November and December may reach 1.5 billion dollars. In November, the reduction amounted to 860 million dollars, and in December - 620 million dollars. Larger import losses are due to its higher dependence on road transport compared to exports.

According to the State Customs Service, in 2023, the share of road transport in the value of exports was about 35%, imports - 70%. Losses of imports in November were partially compensated due to the increase of supplies by other routes, in particular, by rail, and losses of exports - due to the increase of supplies through the new sea corridor, the volume of transportation of which, according to the results of November, came close to the highest values of transportation through the "grain corridor".

It will be recalled that exporters estimated losses per day of downtime at checkpoints due to strikes.

On average, due to the blocking of border checkpoints by Polish carriers, one day of downtime costs one company losses in the amount of about 1 million hryvnias. This is reported by the press service of the European Business Association, based on the results of an express survey among 55 member companies, whose activities were affected by the strike at Polish-Ukrainian checkpoints that began on November 6.

The cumulative estimated amount of losses since the start of the downtime, caused to the surveyed companies, amounts to at least UAH 305,880,000. At the same time, both importers and exporters suffer equally, because 49% of companies import products to Ukraine. At the same time, 25% of goods go to Poland, 15% to Germany, as well as to other Baltic countries, Western Europe, the USA, Canada, Asian and African countries.

In fact, the blocking of traffic on the border by Polish carriers has already led to numerous negative consequences for businesses in Ukraine and their counterparts abroad. Transportation costs are increasing significantly, which affects the cost of products and the price competitiveness of companies. There is a change in routes, and at the same time queues at the Slovak and Hungarian borders are increasing. The business is already reporting a shortage of transport, in particular due to the reluctance of carriers to take orders during the strike. Failure to fulfill obligations to Ukrainian and foreign customers will result in fines from buyers, cancellation of further orders and loss of customers. The impossibility of importing the necessary raw materials or components creates risks for Ukrainian industries. All this directly affects the access of the population in Ukraine to the necessary goods and the smooth operation of enterprises.

We would like to remind that since November 6, there has been a gradual blocking of freight transport in the direction of the checkpoints "Yagodin-Dorohusk", "Krakivets-Korchova", "Rava-Ruska-Hrebene".

Polish carriers demand the return of permits to Ukrainian carriers, the strengthening of the rules for Ukrainian carriers on ECMT transportation, and the prohibition of registration of Ukrainian companies if the company's finances are not located on the territory of the EU and they wish to gain access to the "Way" system. Also, in addition to strikes at the borders with Ukraine, strikes are planned for November 9 by employees of the ports of Gdynia and Gdansk (Poland) due to increased work volumes and low wages. Previously, Polish carriers repeatedly blocked checkpoints on the Ukrainian-Polish border.

It is now known that Polish transporters continue to block three checkpoints for Christmas and promise to let through even fewer trucks than before. They have already been joined by farmers demanding government subsidies for corn and a waiver of tax increases. It is already known that truckers will remain at the border for Christmas and will only let one commercial truck through every three hours, instead of three every hour. In turn, the Deputy Minister of Infrastructure of Poland said after the meeting in Kyiv that he hopes that the truckers' protests on the border with Ukraine will be resolved by the end of the year.