Ukrainian economy to gain approx. $5.5 bln from marine blockade lifting
MOSCOW. Aug 10 (Interfax) - The overall economic gain from the resumption of agricultural exports via Ukrainian seaports is estimated at $5.5 billion in the best-case scenario. About 2 million tonnes of agricultural products are due to be exported on a monthly basis until the end of this year, the Ukrainian media said with the reference to the website of the Kyiv School of Economics' Center for Food and Land Use Research (KSE Agrocenter) on Tuesday.
The additional export earnings from the transshipment of Ukrainian agricultural products at seaports are estimated at $14.7 billion or about 30% of all Ukrainian exports (estimated by the National Bank of Ukraine for 2022 in a pessimistic scenario).
"We are expecting the amounts of transshipment at the Odesa, Chornomorsk and Yuzhny ports not to exceed 2 million tonnes per month until the end of 2022 (the ports' transshipment potential stands at 3.7 million tonnes per month). After that, we may expect the exports to grow as China contracts large-sized Panamax bulkers to carry Ukrainian corn," the reports quoted KSE Vice-President for Economic Education Oleh Nivievsky as saying.
According to the KSE Agrocenter, the potential for exports of grain and leguminous crops harvested in 2021, stranded in Ukraine because of the port blocking, is estimated at 20 million tonnes, in addition to 35 million tonnes of the 2022 harvest. The full resumption of exports via Ukrainian seaports may increase an average price of agricultural products in Ukraine to $150 per tonne. Thus, Ukrainian agrarians will additionally earn about $5.5 billion after the ports are unblocked and domestic prices grow.
The KSE Agrocenter said, at the same time, it was expecting domestic prices on agricultural products to grow by approximately $100 per tonne, which roughly corresponds to the difference between the cost of marine transportation of agricultural products from Odesa and Constanta, Romania, and amounts to the difference of the cost of transportation to those ports by land.
The KSE Agrocenter believes that the entire amount of agricultural products stuck in Ukraine (55 million tonnes) will be exported in 2022-2023. The seaport unblocking will add 1.63% to the 2022 GDP and 2.24% to the 2023 GDP (according to the pessimistic GDP outlook of the National Bank of Ukraine).
The KSE Agrocenter noted that the agrarian export potential will be distributed in the following way in the marketing year 2022-2023 (July to June): 12 million tonnes of wheat, 3 million tonnes of barley, 28 million tonnes of corn, 2.5 million tonnes of rapeseed, 1.5 million tonnes of soybeans and products of their processing, and 4 million tonnes of sunflower oil.
Ukraine will earn $2.6 billion from exporting wheat, in addition to $600 million from barley, $5.8 billion from corn, $1.6 billion from rapeseed, $750 million from soybeans, and $3.2 billion from sunflower oil. The total earnings of agrarians may near $14.7 billion, or about 30% of the expected export earnings of Ukraine.
"The grain agreement and the departure of the first ships loaded with grain, leguminous crops and oil from the Odesa and Chornomorsk seaports give a hope to export the remains of last year's harvest and substantial amounts of this year's harvest, thus weakening the pressure on the domestic market and prices and improving the financial status of agricultural producers," KSE Agrocenter expert Pavlo Martyshev said.
It was noted that the blocking of Ukrainian ports had led to the excessive supply of grain to the domestic market, had significantly increased the cost of grain exports from the pre-crisis $30-40 per tonne to $180-200 per tonne, and had practically halved domestic prices on agricultural products compared to the pre-crisis period. As a result, the financial status and the liquidity of agricultural producers worsened, and the profit missed as a result of port blocking neared $11 billion (according to the preliminary estimates of the KSE), which actually endangered the sowing of winter crops.
What is more, the new grain harvest estimated at 60 million tonnes and about 30 million tonnes of estimated exports will put additional pressure on the export infrastructure, domestic prices and, therefore, the financial status of agrarian enterprises and the sector as a whole.