Ukrainian grain: IMF, exports, forecasts and future for the Russian Federation

The issue of the Ukrainian agro-industrial complex and, in particular, grain remains on the front pages of the mass media, and every day there is a new topic to further immerse oneself in the situation provoked by Russia's military aggression. And almost always these topics concern problematic issues.

Here, as an example, we can cite the International Monetary Fund, which expects a decrease in grain exports from Ukraine due to low harvests and mined fields. According to his estimates, possible interruptions with the "grain initiative", as well as EU import restrictions on Ukrainian products, threaten the country with a loss of up to 800 million dollars. monthly.

"Further trade disruptions will affect GDP growth and exports, depending on their scale and duration. It is already expected that the volume of grain exports will decrease due to the reduction of stocks and harvests, but according to the NBU's estimates, the termination of the grain corridor will lead to additional uncollected export revenues in the amount of $290 million per month," the IMF report states.

At the same time, the total export of agricultural products amounted to about $2 billion per month since the beginning of this year and $2.3 billion per month in 2021. Therefore, in case of further import restrictions introduced by individual EU countries, the reorientation of trade will be complicated even if the possibility of transit is preserved. Thus, the negative impact on exports of grain and non-grain products will amount to about $170 million per month until mid-September and will further increase to $270 million per month - if the restrictions continue to apply when the new harvest begins to arrive.

In addition, there are risks associated with the need for additional storage or transport capacities that are beyond Ukraine's control. If import bans are extended and the grain corridor is disrupted, the combined effect with associated logistical problems could lead to losses exceeding $800 million per month. Therefore, the priority in the near term is to strengthen and diversify trade channels, while long-term recovery will require solving the problem of demining agricultural lands.

It should be noted that analysts of the NASA Harvest food security and agriculture program estimate the total production of wheat in Ukraine from 25 to 26.5 million tons. Moreover, according to the forecast, from 21 to 22 million tons will be collected in the territory controlled by Ukraine and from 4.1 to 4.4 million - in the territory occupied by Russia. At the same time, the productivity is estimated to be higher than last season, at the level of 4.27 tons per hectare. On the other hand, the sown area decreased compared to last year: from 5.8 to 6.2 million hectares were sown throughout Ukraine.

"This information is vital to inform markets where any sudden reduction in wheat supplies from Ukraine could cause food prices to rise, as well as for global food security, given that Ukraine supplies wheat to many food insecure regions of the world." - says the analysts' report.

On the other hand, there is some confidence in the situation on the part of the authorities. For example, the Deputy Minister of Agrarian Policy and Food of Ukraine, Taras Vysotsky, emphasized that the export of Ukrainian agricultural products for a year can reach volumes estimated at $20 billion. According to him, forecasts show that this year Ukraine can collect from 47 to 50 million tons of grain. Taras Vysotskyi added that this indicator is higher than the forecast for spring. At the same time, Ukraine will be able to export about 30 million tons of grain, since domestic consumption is about 16-17 million tons.

It should be noted that agricultural exports currently depend on the grain agreement, which was signed in July 2022 with the assistance of the UN and Turkey. And here is another expense item for Ukraine. After all, at the state level, UAH 20 billion has been allocated to ensure the safety of ships transporting Ukrainian agricultural products within the framework of the grain agreement. Currently, various countries are continuing negotiations on options for preserving the grain agreement.

As for Russia's actions, according to Oleksiy Danilov, secretary of the National Security and Defense Council of Ukraine, Putin continues to threaten to disrupt the grain agreement, but since this is a global issue, he will not be allowed to do so. According to the representative of the Council, recent events in the Russian Federation have shown that we are talking about an uncontrolled territory in which there is no king.