President of Ukrainian Grain Association confident of increased grain export
"I believe that they will find a solution, and the grain corridor will be extended. I hope we will even add an additional port."
The Black Sea Grain Initiative (BSGI) agreement was predictably one of the main topics of debate at this year’s Fastmarkets Global Grain Geneva meeting (November 15–17), held at the Intercontinental Hotel. The gathering included hundreds of leaders from the global grain trading, shipping, freight, and logistics community, together with diplomats from missions and multilateral agencies based in Geneva. On the sidelines of the event, the influential President of the Ukrainian Grain Association, Mykola Gorbachov, granted The G|O an exclusive interview on a range of topics just a few hours before the UN announced the agreement would be extended. Below are edited extracts.
Renewal of the agreement on the same terms was secured following technical-level talks among the UN, Russia, Ukraine, and Türkiye, co-chaired by the UN and Türkiye and held in Istanbul on November 16 and this morning (November 17). The terms of the agreement can be modified through negotiations at any time during the 120-day period.
The G|O: The deadline for the renewal or rollover of the Black Sea Grain Initiative brokered in Istanbul on July 22 expires on Saturday (November 19). How optimistic are you about its extension?
Mykola Gorbachov: I believe that they will find a solution, and the grain corridor will be extended. I hope we will even add an additional port. At the moment, we are only able to export from the three Panamax ports—Odesa, Chernomorsk, and Yuzhny. I hope we will add Mykolaiv, which is quite a big port with 11 grain terminals; from there, we can export up to 2.5 million tonnes per month. 90 percent of Ukraine’s total grain exports are produced by our members. Last year, we produced more than 107 million tonnes of grain and oilseed. Our domestic consumption is a little over 20 million tonnes, which means our potential export could reach 70 million tonnes per year of wheat, corn, barley, soybeans, rapeseed, and other products.
How has the war impacted grain export flows? (According to the Initiative’s Joint Coordination Centre (JCC), as of mid-afternoon November 17, 11,186 million tonnes had been exported via the corridor in 941 voyages, of which 51 percent went to high-income countries, 28 percent to upper middle-income,17 percent to lower-middle income, and 4 percent to low-income countries.)
The biggest impact of the war has been on farmers, who have not been able to produce enough grain. Production fell from 107 million tonnes of grain and oilseed before the war to 68 million tonnes this year. That decrease in production of 40 million tonnes is because part of the territory is occupied, and much of the land which is not occupied contains unexploded mines and bombs and, therefore, cannot currently be used for agriculture. The biggest problem at the moment is that farmers do not believe that they will be able to sell the grain at a normal price, with some profit, in the near future. Therefore, they will decrease grain production, and this is another reason why, next season, we will see less production of grain. For the winter crop, the planting area for wheat has already decreased from 6.5 million hectares on average to 3.7 million hectares. For corn, last season, we had 5 million hectares; now, we’re discussing an optimistic scenario of about 3 million hectares and a pessimistic scenario of 1.7 million hectares.
Do Ukrainian grain farmers need some form of financial assistance to continue, break even, and make some profit?
Ukrainian farmers are, I think, the only farmers around the world who have no subsidies at all. That is why, for them to produce the grain, they have to sell it at a profit. It’s a business. If they produce grain at $200 per tonne and only sell it for $100, you can’t expect them to produce it for long! For the moment, they continue to sell the grain only because they have it in stock, and they have no choice. They have to sell it, and they have to go to the field and continue to harvest everything. How much damage has the war done to transportation infrastructure and logistics for the grain business? Have facilities, railways, and storage silos been destroyed, and how much has that taken off the grain export capacity of Ukraine? Currently, about 20 percent of our territory is under occupation. Before the war, we had 1,200 inland grain silos, with a total storage capacity of about 67 million tonnes. If we say roughly 20 percent is under occupation, then 13 million tonnes of grain storage are under occupation. If we can export grain from Mykolaiv, Odesa, Chernomorsk, and Yuzhny, I am sure we can easily increase our monthly exports to close to 6 million tonnes through this corridor. Additionally, we can export through alternative ways, about 600–700,000 tonnes by railway, about 400–500,000 tonnes by truck, and about 1–1.5 million tonnes by barges through the Danube River. We can load the barges and sell to Constanta in Romania, and at the same time, we can load and sell directly to Türkiye or other destinations.
How important has international diplomacy and the United Nations been in securing the Black Sea Grain Initiative agreement?
I would like to thank Mr. Guterres and the Western countries for this agreement which benefits the whole world.
Beyond the war, how concerned are you about the impact of climate change on future grain output?
I am sure people will find solutions to this. Ukraine will continue to grow grain. We are located in a good area, and I’m sure new technology will provide new opportunities and will increase yields around the world. We will produce more grain, and we will find a solution on how to feed the world. Ukraine is very eager to join the European Union. Since Ukraine is a big agricultural country and agricultural policy is a politically sensitive issue in the EU, could this be a sticking point in fast-tracking Ukraine’s accession bid? I’m not sure that we will be in the EU in the next ten years. I would like us to be, but I’m not sure. However, there is good potential for Ukraine to find a special agreement with the EU before we join it as a full member.