Ukraine has no plan to increase grain exports, famine is imminent
2022.11.17 13:49
Ukraine has no plan to increase grain exports, famine is imminent
Budrigannews.com – If Ukraine has problems with non-negotiated agreements with Moscow to export by sea, in the short term it will be possible to increase the export of grain by rail, road or river barges.
Ukraine is one of the world’s top exporters of grains and oilseeds, and Russia’s blockade of its ports has led to the destruction of basic foodstuffs after Moscow invaded its southern neighbor in May.
Non-negotiated agreements reached in May were able to resume grain shipments. However, Russia’s support for the deal has been shaken in recent weeks, with Moscow temporarily pulling out at the end of the tenth month. This raises doubts about the long-term future of the contract, even after it was extended for 120 days on Thursday.
Moscow said it hopes that all concerns about Russian food and fertilizer exports will be addressed in that period.
Kiev was looking for a 1-year extension.
Ukraine is shipping wheat by truck and train across the western border and through the port of the small Danube River in the southwest. But the capacity of these routes is much less than that of your Seaport: if the Seaport is slow, it means that there is no significant plan B.
The maximum export capacity through these routes is 2.7 million tons per month, compared to about 6 million tons per month exported through the Black Sea port of Ukraine before the invasion, according to data from the Kosellar Industrial Group, 6 million tons per month.
Nikolai Gorbachev, chairman of the Ukrainian Grain Association (UGA), said that the export of the Danube could probably increase to 2 million tons per month, but beyond that, he would not be able to make big profits, even by rail and trucks.
“The capacity of railways and trucks can be increased by 3-5% because the infrastructure of Europe cannot absorb the grain, but trucks, railways, river barges and storage are not ready to accept this grain in large quantities,” he said.
Some progress has been registered since the beginning of the conflict, with grain exports by rail, trucks and river barges reaching 7 million tons during the month and 3 million tons between 6 and 4.25 million tons.
The figures also show that exports to Romania via river barges have increased from 2.55 million tons to 4.7 million tons, far outpacing the growth due to railways and trucks.
However, these early increases were mainly based on the efficiency of existing logistics systems, rather than building new roads and facilities.
Gorbachev said that logistics through the Black Sea ports will be much cheaper, and if these ports are reopened, the Danube port will not attract large investments, as it may soon make the capacity of the New Danube obsolete. The same goes for truck and rail infrastructure, he added.
Ukraine doubled grain exports via the railway before the sea corridor was agreed and peaked at 940,000 tons in March, said Valeriy Tkachev, deputy head of the Commercial Department of the Ukrainian Railway Company Ukrzaliznytsia.
Analysts and industry experts say that the transportation of grain by rail from Ukraine to neighboring Poland is slow and expensive for several reasons: strong border control, the need to load trains due to the size of different meters of track, insufficient loading equipment, limited border storage and capacity of the railway fleet, and slow transportation of goods by rail.
“We are currently sending $00.5 million a month from Ukraine, and without the technical assistance of the European Union, we cannot do more,” Polish Deputy prime Minister and Agriculture Minister Henrik Kovalchik told Reuters.
Solidarity Lane
In May, the EU proposed a “Solidarity Lane” initiative to modernize and prioritize the passage of grain across the western border of Ukraine.
The plan included a set of railway vehicles and logistics equipment, the simplification of customs and inspection, the abolition of import duties and the conclusion of road transport contracts with Ukraine. But the problem is not solved, industry experts say.
“They don’t have wagons (enough to transport grain), they have limited capacity in the network itself,” Tkachev said.
He said that attention was fixed before the grain export agreement, focusing on the expansion of cargo terminals on the western border of Ukraine. However, Tkachev said that this will not be able to solve the central problem of the lack of port capacity in the country closest to Ukraine.
Referring to the lack of ability to move grain upon arrival to neighboring countries, he said: “We took the wrong path, we all focused on crossing the border, not understanding how this cargo is absorbed.”
