Focus on Ukraine

Ukraine, the second largest country in Europe after Russia, is a major producer and exporter of agricultural crops, with a large area of fertile land devoted to producing grains and oilseeds.

The International Grains Council (IGC) forecasts Ukraine’s total 2021-22 grains production at 74.2 million tonnes, up from 64.9 million the year before. The wheat crop is put at 27.2 million tonnes, up from 25.5 million, while production of maize is predicted to rise to 37.3 million tonnes from 30 million in 2020-21. Ukraine’s production of barley is forecast at 8.1 million tonnes in 2021-22, up from 8 million the year before. The country also is expected to produce an unchanged 400,000 tonnes of oats.

The IGC’s forecast for total Ukrainian grains exports in 2021-22 is 53.1 million tonnes, compared to 45.3 million the year before. Ukraine’s imports of grain are too small to figure separately in the IGC’s estimates for 2021-22, but the IGC gave a figure of 100,000 tonnes in 2020-21. Wheat exports in 2021-22 are put at 19 million tonnes, up from 17 million. Maize exports are forecast at 29.6 million tonnes, revised down from a previous figure of 30.1 million and up from 23.7 million the year before. Ukraine’s barley exports are put at 4.3 million tonnes, unchanged from the previous year.

Ukraine also is expected to export 60,000 tonnes of oats, down from 80,000, and 4,000 tonnes of rye, unchanged from the previous year.

Soybean production in Ukraine is put at 3.6 million tonnes in 2021-22, up from a previous estimate of 3.2 million, and also up from 2.8 million tonnes in 2020-21. The forecast for Ukraine’s rapeseed output is 2.5 million tonnes in 2021-22, compared with 2.7 million the previous year. Exports of soybeans are put at 2.3 million tonnes, trimmed from a previous estimate of 2.4 million and up from 1.8 million the year before. Its exports of rapeseed are forecast at 2 million tonnes, down from 2.1 million in 2020-21.

In an April 20 report, the USDA attaché said “unfavorable climatic conditions in 2020 resulted in lower production volumes for Ukrainian farmers in MY 2020-21.”

“As a result, some Ukrainian farmers went bankrupt,” the USDA said, but also noted that higher prices allowed most farmers to make up for the loss in volume. “Corn farmers witnessed a unique situation as corn prices equalized with prices for milling wheat. Thus farmers’ appetite for grain production should remain intact and Post does not expect to see an expansion of oilseed area for MY 2021-22.

“These ever-growing domestic grain prices tempt farmers to maintain their stocks, waiting for even higher prices after selling off only a limited volume of grain to pay debts and fund the spring 2021 campaign. At the same time, grain exporters desperately scout the market in an attempt to execute their contracts, driving grain prices even higher.”

Wheat and rye are both mainly utilized for food consumption, the attaché said, while corn and barley are predominantly consumed as animal feed.

“Over one-third of corn is processed into starch and molasses by larger plants in Dnipropetrovsk and smaller processing facilities in Chernigov and Kyiv,” the report said. “Additionally, a small amount ends up crushed into corn oil. Small volumes of wheat are designated for high-quality alcohol production and around 9% of barley is used for malting.”

Flour milling

Domestic consumption of wheat is predominantly used for food purposes, milled into flour, the USDA said.

“Flour production demonstrates a clear downward dynamic in line with the decrease in Ukraine’s population and changing food preferences inviting imports,” the agency said.

“Consumption in MY 2020-21 reflects a sharp downward trend in flour production as domestic millers were not able to compete with grain exporters in times of rising export wheat prices,” the USDA said.

The report also pointed out that “over recent years, Ukrainian large-scale bread production has gradually decreased,” explaining that “this decline is consistent with the decline in population and the loss of Ukrainian territory.”

According to the Union Millers of Ukraine, more than 330 flour mills, including 50 with a capacity of 1,000 tonnes a month, produce some 2.5 million tonnes of flour a year.

“Middle-income consumers are switching away from purchasing ‘social’ types of bread in favor of premium bakery products and homemade bread,” the attaché said. “While large, mostly state-owned, bread-making enterprises have reduced production quantities, various private, specialty bread producers have opened small stores and are supplying grocery stores in larger cities.

“According to local media (in Ukraine), 40% of the total production cost of bread can be attributed to the cost of flour. Rising wheat prices inevitably translated into a hike in bread prices in MY 2020-21. Thus, bread production volumes went down as it became more expensive for low-income consumers.”

Ukraine is a significant exporter of flours, with exports reaching 356,000 tonnes in 2019-20, according to the attaché, with the Middle East, mainly Saudi Arabia, taking 138,000 tonnes, East and Southeast Asia (Singapore and China) 101,000 tonnes and Africa 57,000 tonnes.

“From July 2020 to January 2021, wheat flour exports dropped to 99,000 tonnes, a 58% decrease compared to the same period in the previous year,” the attaché said. “As for wheat exports, high export prices for flour resulted in an exodus of consumers from the traditional markets for Ukrainian millers: the Middle East, East and Southeast Asia, and Africa.”

Oilseeds popular with producers

In an April 5 report, the attaché said, “Ukraine has an excess crush capacity, fostering competition between domestic processors and exporters. Ukraine is a net exporter of oilseeds, oil and meal, with one exception — imported palm oil is widely used in Ukraine’s domestic food processing industry.”

Oilseeds retain the status of the most popular crop for Ukrainian farmers because they typically offer good profitability, the agency noted. Sunflower is the most profitable, but the attaché said steady growth reached a plateau in 2016.

“The main limiting factor capping the expansion area for sunflower seed production is the significant increase in production costs when crop rotation requirements are not met,” the report said. “Sunflower seed is also used as a sort of ‘insurance policy’ in the event of high winterkill rates or sharp changes in domestic policy, which helps farmers salvage their income.

“Rapeseed presents another viable option for Ukrainian farmers. Winter rapeseed is better at capturing soil moisture and producing a better yield. The only disadvantage is that in Ukraine rapeseed often experiences high winterkill rates. However, climatic changes have been decreasing this risk factor, making this crop more attractive to farmers, who have therefore allocated an increasing area to this crop.”

Soybeans are also popular among farmers, but the market depends on policies and demand in importing countries, mainly the EU.

No GM crop approval

A Nov. 23, 2020, attaché report described opinion on biotechnology as divided, with the view of the public, “generally negative,” and “very influenced by propaganda from the European Union,” while “many farmers understand that GE crops are more cost-effective and provide a better financial outcome.”

“The country has committed to shape its policy in line with European Union’s regulations,” the report said.

There are no genetically modified crops approved for agricultural or food production and no imports of GM crops.

IC UAC according to world-grain