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Where is the Ukrainian grain? Exports are falling

2022.09.07. 17:21 2022.09.07. 18:39
Where is the Ukrainian grain? Exports are falling

Though Ukrainian grain exports managed to get started again, the latest data shows that Ukraine has only sold half the amount that it did last year to foreign customers. Moreover, contrary to international expectations, most of Ukraine's grain did not end up in starving African countries but rather Turkey and Europe.

Since the end of February when Russian forces entered Ukraine’s territory, domestic and international media platforms have been reporting on every combat-related event. However, the impact of the war on the Ukrainian economy has barely been covered despite the dire situation that is emerging.

Give us nine billion a month!

Actually, Ukraine declared national bankruptcy in late August as it could not fully repay its debts. Some of their creditors gave reprieve thereby allowing Ukraine to reschedule their debt repayments.

This was necessary because Ukraine is essentially incapable of generating its own maintenance costs due to the war.

According to the Ukrainian government, they are in need of nine billion dollars of international support a month to cover the budget deficit. This translates to HUF 3600 billion – per month.

A sensitive spot

The intense blow to the Ukrainian economy – aside from the horrifying material and human sacrifices – was caused in large part by losing important industrial areas and economic opportunities to the Russian attacks. For example, exports: before the war, Ukrainian exports reached 40 percent of the country’s GDP. The two leading products were grain and iron and steel materials. But the Russian war turned everything upside down.

The two most important iron and steel plants were in Mariupol which were leveled during the conflict and grains did not fare much better.

Before the war, grain was mainly exported via the Black Sea (along with other smaller land and waterways) in huge quantities. Up until now, Ukraine was the world’s fifth largest grain exporter as well as a major player in the global corn and barley markets. After the war, Russia blockaded the Black Sea ports. The stalemate was resolved by agreements signed on July 22 which guaranteed a local ceasefire allowing Ukrainian exports to leave from three major ports in Odessa, Chornomorsk and Pivdenny.

Major backlogs

Though Ukraine is exporting more and more grain, the total is still far less than what it was in past years. According to official statements, Ukraine exported 3.4 million tons of grain by the end of August this year. By this time last year, they had already gotten seven million tons out to foreign buyers with about four million tons of exports in August alone.

It is worth noting that despite to international expectations, the majority of Ukrainian grain exports did not end up in Africa.

Turkey was the biggest customer receiving 16 of the 36 shipments made via the sea. Among the other foreign buyers were Italy, Germany, Romania, Ireland, as well as Iran, South Korea, Egypt, Djibouti and Sudan. The latter was the only sub-Saharan customer. This list of countries also reveals the well-known fact that shipments are not necessarily used on the shores they land on.

With the opening of the Black Sea route, Ukraine can export four million tons of grain and seeds per month; however, it remains to be answered whether they will be able to take full advantage of their possibilities. After all, the Russian army was already firing cruise missiles at Odessa the day after they signed the contract. In addition to the hostilities, they also may not have enough sea carriers during these wartime conditions.

Photo: Illustration (Photo: MTI/EPA/Szergej Ilnyickij)

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