Ukrainian Large Farm & Ag Supply Company Managers Speak Out on Planting, Harvesting, Input Supply Availability During Zoom Conference
Betsy Jibben, AgMarket Consulting
3-21-22
*Only first names are quoted in this article in an effort to protect the safety of interviewees on the call. An English translation was provided on the conference call to help with the language barrier.
It’s been nearly one month since Russia invaded Ukraine, launching missile strikes, displacing families, seizing the country’s port system and putting the growing season in question for Ukrainian farmers.
The Trend and Hedge Club, a Kyiv-based International Traders Discussing Club, hosted a video conference last week with large farm managers, ag supply company managers and traders to figure out the state of the agricultural industry caught in the middle of a war zone. Some of the speakers are located in Donetsk, Karkhiv and Sumy regions which are ground-zero for daily battles.
Club members and participants of growers, traders and input suppliers answered survey questions during the conference. The answers for the biggest problems were: fuel, logistics, cash and then employees. The lesser problems were seed, chemicals and fertilizer.
On this call, majority of attendees said fuel was a large issue throughout the country as it is used for military purposes. Seed suppliers made it sound as if seed isn’t a large issue for the 2022 growing season. However, planting the seed may be a problem depending on the crop and area. They stressed the challenge ahead of applying inputs to receive the best yield potential and quality. They even stated seed production for the 2023 year may be even more critical.
Ukraine’s Production Depends on Area
(Courtesy: USDA’s Foreign Agricultural Service)
According to the U.S. Department of Agriculture’s Foreign Agricultural Service, corn, wheat and sunflowerseed are the country’s top crops for production. (Sorted by Year 2021/2022)
Ukraine’s corn production last year was an ‘absolute record’, according to club members. However, there are roughly 15 MMT not shipped yet.
“These volumes cannot be consumed within the country within the whole year, says Elena, an Ukrainian commodity analyst. “The domestic consumption of corn and wheat is about 7 MMT for each of those crops.”
(Courtesy: USDA Foreign Agricultural Service)
Planting will begin in about six weeks for corn, sunflowers and soybeans. However, whether farmers are able to plant this year depends on location. For corn farmers, it’s hard to know right now.
“The corn belt of Ukraine, almost half of it is occupied by Russia or the hostilities taking place,” says Elena.
(Courtesy: Institute for the Study of War, Map of hostilities in Ukraine)
Members of the club say, in some instances, Russian military
has targeted farm equipment storage areas to compromise planting in Ukraine.
Ninety percent of Ukraine’s wheat traditionally is winter wheat, according to the club. Most of the wheat, 6.5 million hectares [nearly 2.5 acres equals a hectare], is already planted and harvest will begin in 3 to 3.5 months.
If farmers do not have an opportunity to apply fertilizer to the wheat, the club expects at least a 15% drop in yield. There’s also a big question mark which regions may be controlled by Russia come harvest.
Ukrainian Government: Fuel Is One of the Largest Problems
According to UkrAgroConsult, Fuel supply is a critical factor for the grain crop. There is a shortage of diesel, supplied across the western border, which is a top priority for sowing.
Denis, the adviser to the Minister of Agriculture, attended the call and highlighted the critical fuel problem.
“The biggest problem is now fuel, says Denis. “It’s not a secret for anyone, the shortage is up to 80 percent.”
He says the 80 percent deficit was a survey of those who manage 3 million hectares of ground.
Denis says how there is not an intention for the government to purchase grain stocks from Ukrainian farmers at this moment.
When asked about exporting grain through rail, Denis said, “Technically, there is no more capacity. There [are] some small volumes which you can export by truck. Regarding the cost of transport and lack of trucks, this is a very limited possibility.”
The club says rail exports are occurring at smaller capacities.
Seed Supply Is Available for 2022, According to Suppliers
Victor, director of a seed company, which supplies 18 percent to 20 percent of Ukraine’s sunflower hybrid seeds and 6 percent to 7 percent of its corn hybrid seed spoke on the call.
Victor says “the level of 100 percent” of 2022 corn seed is available for Ukrainian farmers. Sunflower seed is imported and nearly 75 percent to 80 percent of seed has been delivered. The question is if farmers are able to plant.
“Some more [seed] we are anticipating to get but [take] into consideration the fact that not all areas will get planted this year if the hostilities are still ongoing,” says Victor.
If war continues, Victor believes there will be low production of hybrid corn and sunflower seeds for farmers during the 2023 growing season.
“Not all parental lines were delivered to the country. The difficulty is you put one parental line first and another later. Plus, it’s a difficult situation with irrigation,” says Victor.
It means farmers may need to diversify.
“We have to diversify seed growing. My recommendation for all supply companies is to diversify that among the biggest number of regions,” says Victor.
He says there’s a lack of seed in Europe for this year which creates a challenge for next year too.
“Because the export is suspended, it will be difficult to ship the grain and seed grain,” says Victor. “I don’t’ think we’ll be able to count on Europe because Europe [counted on receiving seed from Ukraine] before the war.”
Ability to Apply Inputs Could Slash Yield
Victor says if chemicals aren’t applied to wheat now, yield could drop 15 percent. Lack of inputs altogether could cut yields roughly 20 percent to 30 percent on average. Rapeseed needs attention soon as well.
He says insecticide availability is critical because bugs will diminish wheat grain quality from food grade to feed grade.
Chemical and Seed Companies Trying to Help Plant
Dmytro, a manager of a major seed and chemical company, was also on the videoconference.
He says 2022 seed purchases have been a problem for farmers because banks are not operational or not financing new loans. Farmers in “riskier areas” were given financial vouchers in the past by the government to be used for seed purchases. It has not been approved by the government for this year.
“It’s quite logical but it’s not fully implemented because it requires legislative framework,” says Dmytro.
The major seed and chemical company he works for is attempting financial certificates through Ukraine’s banks for 2022 for nearly 80 percent of the bag cost. The company would guarantee roughly 20 percent.
The company moved some of its chemicals, but there are still warehouses in occupied territories. Chemicals, such as fungicide, are 50 percent short of supply and delivery is tough.
“We anticipate 30 percent will be the decline [in yield] in the best scenario [without crop protection],” says Dmytro. “If people are still working in the fields, we can get that. If not, it will be minus 50 percent to 60 percent [on yield for corn and sunflowers in his territory].”
Seed Delivery Versus Supply
Dmitry, a director of a seed company and manager of a large farm operation of 83,000 hectares was on the call too. He has 100 farm managers throughout Ukraine. The warehouses have majority of product in Western Ukraine and 60 percent in Karkhiv.
“With the seed, it’s not a problem at all [this year]. We have seed available [with] 95 percent [availability],” says Dmytro. “None of the clients today said [how] no, we aren’t going to plant.”
The company has the same issue getting paid for seed deliveries. They are giving a partial credit to some clients and could shift deliveries.
Farm Managers Deal with Labor, Transportation
Sergiy, a manager of a French corporate farm of 60,000 hectares ( roughly 150,000 acres) participated in the videoconference. He is located in Karkhiv, area of unrest which produces 8% of wheat, 4% of corn and 10% of national crops. The operation primarily produces winter wheat and sunflower.
Sergiy says the safety of employees are priority. The operation also paid its employees ahead of time to retain them and help secure food.
“When we were attacked, we decided to pay salaries a bit earlier than usual. We paid out one salary as a financial aid in the beginning of March,” says Sergiy.
Bloomberg reporting how UkrLandFarming announced a number of its company managers had been killed in Sumy in northern Ukraine and in Kyiv.
This operation has roughly 30 percent of its sunflower seed offsite in warehouses. Farm managers are trying to negotiate with suppliers how to receive it. If this war ends by June 1, roughly 25 percent to 30 percent of wheat will be lost and nearly 50 percent of sunflowers will be lost in his area due to planting late. Some of those acres lost to sunflower could be planted with corn or soybeans.
Difficult to Plan Harvest, Planting in Certain Regions
Tetiana, a manager of corporate farms equaling 125,000 hectares (roughly 312,000 acres) was on the call as well. Majority of her territory is in the combat areas. She says it’s very difficult to plan wheat harvest and corn and sunflower planting.
She says some of the warehouses where they keep fertilizer and seed are lost.
“My opinion is we will lose about 40 percent of the [wheat] yield [in my territory] because we won’t be able to carry out certain operations,” says Tetiana.
Tetiana says she’s paid for salaries, inputs and machinery.
“[The machinery] which will most likely not be delivered to Ukraine before the planting season starts,” says Tetiana. “Also, [we wanted] to get pre-paid fuel. Most likely, those contracts will not get formed because our supplier have problems with preforming with getting that fuel.”
Seed production for 2023 is also in question for her area.
“500 hectares [of this operation] are dedicated to seed [production],” says Tetiana. “It’s in an area being shelled.”
Next Few Weeks
There are numerous unknowns during this important time of the growing season.
In a previous interview, Elena says, “[Everything] going on now in Ukraine will have impact on future. Everything, because it’s a new page of history, not just for Ukraine or Russia but all over the world.”
Yet, Ukrainians are resilient. They are trying to plant and harvest as their country and livelihood depends on it.
Betsy Jibben
Media Director
AgMarket Consulting
bjibben@agmarket.net
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