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Ukraine could lose $6 billion in grain exports due to port blockade

Ukraine could lose $6 billion in grain exports due to port blockade

Ukraine faces a possible $6 billion loss in grain sales revenue as the Russian military’s blockade of its ports prevents it from exporting millions of tonnes of wheat and corn by June, an industry official said.

Ukraine, one of the main producers of grains and oilseeds in the world, exports 98% of its grains through its ports and only part by rail, where costs are higher.

The country was the fourth largest grain exporter in the world in the 2020/21 season, with Russia in third place, according to data from the International Grains Council. The two countries combined accounted for 22% of global exports.

However, with Russian warships off Ukraine’s southern coast preventing cargo ships from leaving ports, including the main Black Sea hub of Odessa, grain exports have come to a virtual standstill since the start of the war on February 24.

Ukrainian maritime representatives said the fighting had left some 100 foreign-flagged ships stranded in the country’s ports.

We are facing a potential loss of US $ 6,000 million”, Mykola Gorbachev, president of the Ukrainian Grain Association, told Reuters.

He added that the country had around 20 million tons of wheat and corn still to be exported from the 2021/22 season, which ends in June, at an average price of around $300 per ton.

The official argued that there is no way that Ukraine can transport that volume by train. The railway has a capacity of about 600,000 tons a month, a tenth of what the ports handled before the war.

Ukraine exported some $27 billion worth of agricultural products in 2021, accounting for about half of its total foreign sales revenue.

The Ukrainian crisis will add further fuel to already runaway food inflation following global supply chain problems attributed to the COVID-19 pandemic.

The UN food agency reported this month that global food prices hit a record high in February, posting a year-on-year rise of 20.7%.

Although Ukrainians not trapped in besieged cities like Mariupol or Kharkiv in the east are not at immediate risk of food shortages, the war could disrupt agriculture for a long time.

Gorbachev said Ukrainian farmers may also think twice about planting for fear of their safety, and because their grain might not sell if the war continues. New crops of corn and barley must be planted over the next month or it will be too late, he added.

Source: Gestion

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