Ukraine: news bulletin mid summer

• On 22 July  Ukraine, Turkey and Russia with the assistance of the UN agreed on the facilitation of safe shipping for export of grain, food and fertilizers (including ammonia) from the Odesa, Chornomorsk and Pivdenny sea ports. This agreement will last 120 days with the possibility of extension. 

- a Joint Coordination Center was set up in Istanbul under the auspices of the UN and including representatives of all Parties and the UN;

- inspection teams consisting of all Parties and the UN will check for the absence of unauthorized cargoes and personnel on board vessels inbound to or outbound from the Ukrainian ports.

-All activities in Ukrainian territorial waters will be under the authority and responsibility of Ukraine.

-Despite the fact that Odesa port was bombed by the Russian rockets the next day after the agreement was signed, the preparations continued and on August 1, the first ship with 26 thous. of Ukrainian corn left from the port of Odesa to Tripoli, and on August 2 reached the Bosphorus and passed the inspection. 16 other ships were loaded and  are ready to leave the ports as part of an agreed caravan.

-99% of the grain exported from Ukraine will belong to private companies, and the ships are ready.  Expected capacity of these three ports is 3 mln. tons of grains/month. Ukraine expects to earn 1 bn. USD per month from this export.

International assistance.

• FAO estimates the losses of the agricultural sector of Ukraine as 4-6 bn. USD, including damage to infrastructure: irrigation, storage facilities, buildings, crops, and animals.

• FAO has launched a new USD 40 million (Canadian Dollar 52 million) Canada-funded project to further address grain storage shortages in Ukraine. The initiative will allow storage of an additional 2.4 million tonnes of grain between 2022-2023 along with related technical support and equipment. This complements the support of USD 17 million recently provided by the Government of Japan to cover 1 million tonnes of grain storage. 

• The European Investment Bank (EIB) will provide EUR 1.59 billion supported by guarantees from the EU budget, to help Ukraine repair the most essential damaged infrastructure and resume critically important projects addressing the urgent needs of Ukrainian people. This is the second package of support for Ukraine under the EIB Ukraine solidarity urgent response developed in close cooperation with the European Commission. It follows an emergency support package of EUR 668 million. Like the first one, this new financing is offered at favorable terms including long tenors. EUR 1.05 billion of the new package will help the Ukrainian government cover priority short-term financing needs, provide support to strategic state-owned companies, ensure urgent repairs of damaged infrastructure, resume the provision of disrupted municipal services, and support urgent energy and energy efficiency measures in preparation for the cold season.

Another EUR 540 million will be used to resume implementation of EIB-financed projects in Ukraine. The selected projects will cover energy, energy efficiency, roads, transport, education and infrastructure, as well as reconstruction and recovery programs.

• The United States Announced $100 Million Ukraine Agriculture Resilience Initiative (AGRI) - Ukraine (U.S. Agency for International Development (usaid.gov)

AGRI-Ukraine will target Ukraine’s immediate agricultural export challenges, while also simultaneously supporting the wider needs of Ukraine’s agriculture sector and bolstering Ukraine’s continued production of agricultural commodities through 2023. The Initiative will increase Ukrainian farmers’ access to critical agricultural inputs including seeds, fertilizer, equipment, and pesticides, enhance Ukrainian infrastructure capacity and capability to efficiently export agricultural goods, increase farmers’ access to financing, and expand the capacity of Ukrainian businesses to dry and temporarily store, and process agricultural commodities.

• Project of technical assistance “Victory Gardens” financed by the Canadian government celebrates positive results. In spring they stimulated territorial communities to plant vegetables at all unused plots to compensate for the lack of vegetables that could not be delivered from the occupied territories in Kherson oblast and to provide for the needs of increased population because of the refugees that arrived. The project supports the communities with advice on food supply planning and growing techniques.

News from the companies.

• PrJSC Teplychny (Greenhouse), one of the largest enterprises in Ukraine growing vegetables in greenhouses, plans to transfer part of their greenhouse farm from Kalynivka (Kyiv region) to Varash (Rivne region), according to the information from Rivne Regional Military Administration

• Danone Ukraine had to stop production at its largest production facility near Kherson, which stands on territory that is temporarily occupied now. It was stopped from considerations of safety in the beginning of the war, produce stocks were delivered to the local community for free, employees were evacuated, and the production facility was conserved. Later the plant was hit by a rocket and there was damage.  Occupation authorities make attempts to gain control over the plant and restart it. Danone also lost part of its warehouse near Kyiv during bombing. Danone had to reschedule their logistic links and continue operating its production facility near Poltava.

• One of the largest producers of sweet cherries “Melitopol cherry” was nationalized by the occupation authorities as a result of a raider attack. The total area of plantations is 1.2 thous. ha. The new leadership of the company tries to set up exports to Crimea, and makes attempts to arrange exports to Russia.

• Gals Agro, agricultural holding will supply biomethane to gas distribution networks in Ukraine, the Bioenergy Association of Ukraine (UABIO) reports. Ukraine's first physical connection of the plant's facilities to the gas distribution network and biomethane production is expected in early 2023. "The design capacity of the biogas-to-biomethane processing equipment is about 3 million m³ per year. This is the consumption of about 1,500 private households,". Gals Agro is one of the largest players in the bioenergy market in Ukraine. It operates three biogas plants in Kyiv and Chernihiv regions. Two more plants will  be constructed.

• KSG Agro, one of the largest agri holdings  specialized in sales of oil crops, signed a memorandum of cooperation with Makarony Polskie (Poland) for joint production and trade in sunflower and rapeseed oil and grain processing.

• Makariv-Agrobud is a typical Ukrainian company that grows grains, sweet corn and cattle on the three locations in Kyiv, Cherkasy and Mykolaiv oblasts. One of its locations was destroyed, but the company runs business as usual as much as possible, growing some grains for export to feed the world. Village Nalyvaikivka near Kyiv was on the front line in March, and its citizens are restoring agricultural production, which is quite typical for many Ukrainian villages. The story was published by Novaya Gazeta. Europe. 

Markets and international trade.

• In July 2022, Ukraine exported 3 million tons of agricultural products through alternative routes to the blocked ports. This is 12% more than the previous month. Of this 2.8 mln tons was grains and oil.

• Structure of exports: grain crops — 1.7 million tons (corn - 69%, wheat - 22%, barley - 9%), growth compared to last month +21%;

            oil crops - 597.2 thousand tons (sunflower seeds 61%, rapeseed 19%, soy  9%), growth: -7%;

             vegetable oils - 297.1 thousand tons (sunflower oil - 94%, soybean oil - 5%), growth: 0%;

             cake after extraction of vegetable oils - 185.9 thousand tons (sunflower - 85%, soybean — 15%), increase: +34%.

•  It takes 30 days for the Milk Alliance group of companies to deliver cheese to Kazakhstan, the products across five countries, one sea, and 4,000 km. This increases the final cost of goods by 20%.

• According to the Ministry of Agrarian Policy and Food, the supply of sugar in Ukraine in the current marketing year (MY, September-August) will be 1.8 million tonnes, which is enough to supply the domestic market with an estimated volume of 1.210 million tonnes. In MY 2022/2023 some 23 refineries are planning to start the sugar-making season, while a year ago this figure was 33. In  May 2022 Ukraine introduced a sugar export licensing regime.

• Ukraine will need more than 7 million cubic meters of firewood for the coming heating season, which is several times more than the previous years, reports the State Forest Resources Agency of Ukraine after collecting applications  for the supply of firewood from almost all regions of the country. A quarter of the demand falls on three regions: Donetsk region, which has suffered the most destruction of infrastructure, Mykolaiv, and Odesa. State Forest Resources Agency say they are able to supply this amount by more active harvesting in the more hard-to-reach areas in the mountains and wetlands and increasing harvesting during forest care.

• In June Ukraine imported 9 thous. tons of pork, which is 4 times more than in June 2021, and 46%more than in May. Poland, Denmark and Netherlands became the main supplying countries. The domestic industrial supply decreased due to the fact that the producers in the eastern and southern regions were forced to temporarily leave the pork market. 

• 21 companies joined the Ukrainian Organic Pavilion at  the international exhibition of Organic Agriculture Biofach 2022 

Grain

• The Ministry of Agrarian policy of Ukraine updated its forecast of harvest to 65 mln. tons of grains and oil crops, which is 40% less than in 2021. By July 22, Ukrainian farmers harvested 6.5 million tonnes of early grain and leguminous crops (more by 2.9 million tonnes for the week of July 15-22) from a total area of 2.1 million hectares (more by 900,000 hectares), according to the website of the Ministry of Agrarian Policy and Food of Ukraine. 
   

• According to the Luhansk Regional Military Administration, the Russian occupation forces have collected around 70,000 tonnes of new grain harvest away from the farmers in Luhansk region and exported it. Two largest enterprises in the Luhansk region – Nibulon and Agroton – have almost completed the harvesting campaign, however, a Kuban-based enterprise nationalized the grain.