Pavlo Koval: “Ukrainian agriculture is shifting from a volume-driven approach to margin-oriented production”

The Director General of the Ukrainian Agrarian Confederation, Pavlo Koval, provided a detailed analysis of this year’s spring sowing campaign during a broadcast on Ukrainian Radio. He explained why farmers are being forced to reconsider crop structures, how global geopolitics is affecting production costs, and what transformations of the European market Ukrainian businesses should prepare for.

– Mr. Koval, the spring sowing campaign is already well underway. What are the key challenges farmers are facing, and how does this “fifth wartime sowing campaign” differ from the previous ones?

Pavlo Koval: More than one million hectares of early grains and legumes have already been sown, and some farms are beginning to plant sugar beet. However, this campaign will certainly not be cheaper or easier. There are several fundamental challenges common to all regions.

First, there is a severe labor shortage. Second, there are serious constraints in terms of input supplies. Back in January, we recorded a deficit of nitrogen fertilizers at the level of 170–200 thousand tonnes, and many farmers simply lacked the financial capacity to build up stocks. Currently, the price of urea exceeds UAH 40,000 per tonne. Compared to wheat prices (around UAH 10,000 per tonne), this creates a 1:4 ratio. In practical terms, a farmer has to allocate the entire harvest from one hectare just to purchase urea for five hectares.

External shocks are also adding pressure. The situation around Iran and shipping through the Strait of Hormuz is causing significant volatility in energy markets. This directly affects the cost of fuel and natural gas, which is a key input for nitrogen fertilizers.

As for weather conditions, winter crops have generally come through the season without critical losses. There are isolated cases in Chernihiv region and in the south where rapeseed or barley were damaged and will require replanting, but there is no large-scale damage.

– Given such high input costs, should we expect significant changes in crop structure? What will farmers focus on?

Pavlo Koval: The crop mix in the 2026 sowing campaign is not just about business — it is about strategy. Ukrainian farmers, in line with their European counterparts, are moving away from the philosophy of “how much to produce and how to sell it” toward managing the economics of production. Today, the key target function is margin.

High input prices are forcing farmers to look for crops with a higher profitability buffer. Therefore, in the spring crop segment, preference will be given to oilseeds and legumes, with a possible increase in soybean acreage. At the same time, areas under spring barley, wheat, and oats are likely to decline.

Sugar beet acreage may also decrease slightly due to price volatility at the beginning of the year and logistical challenges in accessing European markets. At the same time, new niche opportunities are emerging. For instance, the opening of the pea market in China could positively influence crop structure, provided that supply chains through processors and elevators are properly established.

– In addition to domestic challenges, Ukraine is integrating into the European market. However, the EU’s Common Agricultural Policy (CAP) is itself undergoing changes. What should Ukrainian businesses understand in this context?

Pavlo Koval: Europe is currently engaged in a very intense debate regarding the relevance and effectiveness of financing the Common Agricultural Policy in its current form. Due to changing security priorities on the continent and the need to increase defense spending, financial resources may be reallocated. The European Court of Auditors is already questioning the efficiency of certain sectoral support programs.

There are also significant differences in positions among major EU players. For example, France and Germany have divergent views on how to address current challenges. French farmers are calling for mineral fertilizers to be excluded from the CBAM regulation (the so-called carbon border tax), arguing that environmental requirements are making production excessively expensive and threatening food security. Germany, on the other hand, emphasizes fiscal discipline.

For Ukraine, this means that we are integrating into a system that is currently undergoing transformation. The European Union is entering our space not only through political decisions, but increasingly through business-to-business requirements.

If a Ukrainian producer wants to access EU markets, they must already comply with strict standards on environmental sustainability, traceability, and animal welfare. We need to treat these processes as our own and actively engage in shaping the future of European agricultural policy, as Ukraine is already a significant player in global supply chains.

IC UAC according to Ukrainian Radio [broadcast from 04:06]