GENEVA, SWITZERLAND — The problem of how to keep the world supplied with grain when two of the biggest exporters are at war following Russia's invasion of Ukraine was on the minds of traders and millers at the recent Global Grains Conference in Geneva, Switzerland. Diversifying supply was the answer for many of the processors and end users who spoke.

Markiyan Dmytrasevich, Ukraine’s Deputy Minister of Agrarian Policy and Food, spoke to the conference by means of a videolink. Asked about the grain corridor, he described it as “extremely important, not only for Ukraine, but also for food security.”

He put the tonnage of grain that has been shipped under the arrangement at 10.7 million tonnes and told delegates that Ukrainian President Volodymyr Zelenskyy said to the G20 meeting that Ukraine would “strive to achieve indefinite status of the grain corridor. It will give more certainty to our partners.”

Next, Dmytrasevich was asked about whether Ukrainian farmers had been sufficiently well supplied with inputs, particularly fertilizer, for this year’s plantings. He explained that nitrogen fertilizer consumption had declined and forecast a decrease in area in the coming season, with a decrease in fertilizer consumption, as a result of high prices and the financial position of Ukraine’s farmers.

Responding to a question about whether the government was planning any special campaign or subsidies to support farmers, he highlighted a program to provide working capital but not distributed under state guarantees to the smallest farmers over those with an area of up to 100 hectares or up to 120 cows in the livestock sector. 

“We had support from the European Union, providing farmers with grants by hectare and per cow,” he explained. “Also, about three or four months ago, due to the damage caused by Russian attacks to storage infrastructure, we negotiated with our partners and the FAO and found a solution to provide farmers with temporary grain storage.”

The next question was about the demining of agricultural lands. 

“Demining is a really complicated issue,” he said. “As of June, the land needing to be demined, or inspected, amounted to 2 million hectares. We have no figures for the areas that need to be demined today.” 

He pointed out that Ukraine continues to have problems with World War II munitions. 

“It will take years, decades,” he said.

On the question of improvements to ports and rail infrastructure, he pointed out that exports had just stopped after the Feb. 24 invasion, with March shipments limited to about 300,000 tonnes. 

“It was a disaster,” he said. “We started to find new alternatives.” 

That included using the Romanian Port of Constanța and exports through, for example, Slovenia, Poland and Hungary. 

“The Russian Federation will remain our neighbor,” he said. “We need to have alternative routes. These routes should be permanent. We have to increase capacity and decrease prices (for transport). The EU had, a few days previously, committed €950 million ($981 million). The first thing is improving border crossings.”

He finished by stressing the point that “the best option to solve the problem of exports of grain in the Black Sea is to defeat Russia.” 

He called on Ukraine’s partners “to keep giving us weapons.”

Exporter profile changing

Speaking to a panel on Black Sea exports, Nikolay Gorbachov, president of the Ukrainian Grain Association, said that “we definitely see a change in the profile of exports.” 

Instead of large-scale exporters, there were now thousands of farms sending a few truckloads at a time abroad. He described “an absolute mess for customs, infrastructure.” 

“European infrastructure cannot absorb the tonnage of grain Ukraine would like to export,” he said, putting the target at 50 million tonnes, including oilseeds.

“It’s just technically impossible to export through European countries,” he said, citing problems with rail and port infrastructure. He warned that without export outlets, Ukrainian farmers are likely to cut production.

Volodymyr Korchun, head of trading for LNZ Trading, reported that with big buyers out of the market, “farmers from small to big started to build export chains. We started to push as much as we can in all directions.”

“Ukraine is investing everything for alternatives, buying barges, buying trucks,” he said. “We still have big queues on the border, trucks and trains, even the barges.”

Turning to the grain corridor through the Black Sea, he stressed that “we need to cancel outbound inspections,” complaining that Russian inspectors often fail to appear, or insist on irrelevant paperwork, causing delays of up to 20 days for vessels. 

He noted that Ukraine has not signed a deal with Russia on the corridor. Its cosignatories are the UN and Turkey. 

“If Turkey guarantees the safety of the corridor, it will go on,” he said. “Otherwise, the insurers won’t cover it.”

Gorbachov added, “For us the guarantor is Turkey and the UN. We’ve signed nothing with Russia.” 

He put Ukrainian farmers losses on a tonne of wheat exported in current conditions at $58 per tonne.

Impact on food security

In a panel looking at the effect of the energy crisis on food and feed security, Iliana Axiotiades, secretary general of the European grain trade organization COCERAL, explained that the war in Ukraine had “forced trade and traders to adapt very quickly.” 

“Here we have a country that fed 400 million people,” she said. “This is not a country where you can think we will source somewhere else. Everybody relied on the Black Sea and large vessels.”

She noted that much trade had gone down to 25-tonne truck loads. It showed the “really desperate situation” of Europe’s rail infrastructure. 

“The Ukrainians are being amazing,” she said. “The price of logistics has increased tremendously,” and there was “a realization that something has to be done to increase access by road,” as well as to invest more in rail transport.

Ayman Rostom, general manager, Skretting Egypt — Nutreco Group, said Egypt and North Africa generally had been dependent on Ukraine for wheat and maize. 

“Consumption went down,” he said. “The price went up, mainly affecting aquaculture and poultry.”

Bernhard Dahmen, head of procurement feedstock and sales co-products at CropEnergies AG, also reported high prices, although he said they had come down. European support for Ukraine meant that many railway vehicles had been diverted to moving grain out of that country while truck drivers also had gone there. However, the movement of Ukrainian grain into Europe meant improved supplies. 

“Europe is facing like a 50 million-tonne-plus corn crop,” he said. “Ethanol here in Europe is suffering. Corn is not available, not at the right quality, and at very high prices.” 

There was also a problem of drying costs, which meant that much of the grain available was too wet.

Alex Döring, secretary general of the European feed industry group FEFAC, told delegates that the EU’s emergency food supply mechanism had met that week. 

“The problem we see in Europe with the energy crisis comment the problem is it’s a Member State decision,” he said. “The leverage of the EU is very limited.” 

The problem varied from region to region. 

“The advantage of the Iberian peninsula is they are not hooked to the Russian grid,” he said. 

Germany and central and Eastern Europe in contrast were using a lot of Russian gas. 

“You must be careful not to exchange one dependency for another,” he said. “We are not going to see energy prices come down to where they were.”

Dahmen said that “it is not likely that there will be an extension of the industry in Europe.” 

He explained that many European governments originally aimed to decarbonize their energy production by moving from fuels like lignite and coal to gas. Now alternative fuels like biomass coming under greater consideration. 

“We have to do things differently, and be much more nimble,” Axiotiades said. 

She called for large-scale investments in logistics infrastructure. 

“We need to make sure that Ukrainian farmers are motivated enough to produce next year,” she said. 

She was asked about new breeding techniques. There was “definitely a change of mentality from the standard opposition, which is DG SANTE,” she said, referring to the European Commission’s Directorate General dealing with health and food safety. 

Döring explained that a tolerance level for GM material in feed had “helped us tremendously this year for imports of corn.”

“The crisis changed a lot of peoples outlook on this,” Axiotiades said. “If you cannot feed your animals, policymakers are much more pragmatic.”