Continuation of Ukrainian agricultural export by sea important for preserving crop areas - Ukrainian Grain Association

MOSCOW. July 21 (Interfax) - Ukraine is capable of finding routes to export grain and agricultural goods alternative to the Black Sea Initiative, but the profitability of such export would be much worse, and farmers would have to reduce crop areas as a result, Ukrainian Grain Association President Nikolai Gorbachev said.

"We will technically be able to export the necessary amount of grain even without the grain corridor with the forecast of export of 45 million tonnes in the 2023-2024 marketing year. But the cost of export, the cost of logistics will be much higher than the cost of logistics via the Black Sea ports. It means that production of grain will be less profitable for our agricultural producers," Ukrainian media outlets quoted Gorbachev as saying on the Freedom television channel on Thursday.

If Ukraine does not find a solution involving cheaper logistics in the next month or two, farmers could reduce crop areas, and Ukraine would sell less grain on the international market as a result, he said.

Speaking about alternative routes, the expert mentioned that over two million tonnes of grains and oilseeds per month are already exported via the Danube ports, and over one million tonnes per month could be exported by railway and 500,000-600,000 tonnes by motor transport.

"We have been working very closely with the European Commission. The second conference call with participation of the European countries up to the Adriatic Sea will happen this week. We're discussing technical and financial issues to accelerate the passage on the Danube and reform the European railways in order to ship Ukrainian grain in large amounts," he said.

Ukraine will be able to export 4.5 million tonnes a month even without the grain corridor within a month, Gorbachev said.

Speaking about Turkey's role in the resumption of the grain initiative, he expressed an opinion that it would focus on talks with Russia and "would hardly risk escorting grain" with its military ships. Turkey's more rational decision would be providing its own bulkers and dry cargo ships to load Ukrainian grain on them to be transported via Turkey, Gorbachev said.

Ukraine has formed a guarantee fund of 20 billion hryvni to compensate potential losses to the ship owners who would dare transporting agricultural cargoes via the Black Sea, he said. The Ukrainian Ministry for Communities, Territories and Infrastructure Development is negotiating technical details, in particular, compensations and routes ships could use, with certain ship owners, he said.

China was before the crisis and remains now the largest buyer of grains from Ukraine, it received about eight million tonnes of grains in the 2022-2023 marketing year, he said.

Ukraine traditionally sells 30% of its grains to African countries, 40% to Asia and 30% to Europe, he said. Logistics reach to these sales markets would be longer and more complicated, resulting in the growth of food inflation.

Gorbachev estimated the total amount of the world's grain trade at 500 million tonnes a year, including Ukraine's share of 12%. "We're supplying over 50 million tonnes [to the global market] every year. If we do no supply this grain, it will have to be grown additionally somewhere and certainly at great expense," the expert said.