7 Dec 2023 20:53

Reducing freight rates should help Ukrainian farmers sell crops at profit - grain association head

MOSCOW. Dec 7 (Interfax) - Ukraine can potentially cut logistical costs in shipping grain and legumes by 20% through reducing freight rates of ships loaded at the Greater Odessa ports, which would enable farmers to sell their harvest without losses, Ukrainian Grain Association President Nikolai Gorbachev said, as quoted by Ukrainian media

"I think we have potential for farmers to make more money through making the logistics cheaper. For instance, logistics to the Constanta port was at the level of $100 per tonne a month ago, and it's already $70 per tonne in December. And if you ship from the ports of Greater Odessa, it's already $60 per tonne," Gorbachev said at Forbes Ukraine's Business Breakfast.

He said he was confident that this figure could be reduced by another $20 per tonne through lowering freight rates.

At present, freight rates for ships loaded in Ukraine are twice as high as for ships loaded at Constanta's ports due to high risks, while this difference before the crisis was merely $1 per tonne, Gorbachev said.

"If you save this $20, they'll immediately be spent on payments to farmers through increasing the prices for their produce," he said.

The growth in global corn and wheat prices, Ukraine's key export crops, has helped corn growing in the 2023 season to near the break-even point, while previously it was unprofitable by about $30-$40 per tonne, Gorbachev said.

Solving logistical problems is realistic enough, and Ukraine can potentially help its farmers make at least some profit in the 2023 season, Gorbachev said.