1 in 5 Ukrainian growers faces bankruptcy, grain boss warns

Spiralling haulage costs and a struggling grain price mean Ukraine’s farmers face an “adapt or die” situation that could force one in five into bankruptcy over the next year.

This is the stark outlook of Dmitry Skornyakov, chief executive of HarvEast, a Ukrainian arable and livestock farming company which has itself lost 95% of its farmland to the Russian occupation of eastern Ukraine.

Mr Skornyakov told the recent Alltech One Conference in Dublin that after a fourfold increase in haulage costs, the increased production cost was leaving no margin for growers.

See also: Ukraine War: The impact on agriculture one year on

He said haulage costs from the Kyiv region to the port at Odesa had risen from $30-$40/t (£24-£31/t) in 2021 to $110/t (£86/t) now.

Once this was taken off a breakeven cost of $180-$200/t (£141-£157/t), he said farms were making losses.

“I predict that 20% of farms will be bankrupted by this, unfortunately,” said Mr Skornyakov.

He was more optimistic for HarvEast, detailing investments the firm had made into irrigation and anaerobic digestion. He said the Ukrainian counter-offensive meant the Russian occupation of HarvEast’s farmland in the Donetsk region was “temporary”.

Impact of conflict

Mr Skornyakov said HarvEast’s two farming areas – around Kyiv and Mariupol – had suffered in the following ways:

Kyiv The company has about 35,000ha of farmland in the Kyiv region, of which 10,000ha had been covered in landmines and 9,000ha had been de-mined. One tractor and two trucks were stolen as part of a theft of $50,000 (£39,000) worth of equipment.

Mariupol The company has 150,000ha of farmland in the region, but 145,000ha is now under Russian occupation and is believed to be “owned” by a Russian oligarch. This includes several dairy units (totalling 6,000 cows) and two seed treatment plants. About 1,500ha of irrigated land had been occupied in the Donetsk region.

Despite the challenges, Mr Skornyakov said there had been a “boom” in anaerobic digestion plants in Ukraine, as a domestic source of energy and a market for farm products.

Based on grain price movements, HarvEast has planted less corn, with the area falling from 15,000ha to 5,000ha this year.

Instead, the business has drilled sunflower and soybeans, and niche crops such as winter peas to diversify income.

Irrigation infrastructure is also vital, and a new 165ha irrigation site, costing $365,000 (£287,000), was finished in the Kyiv region in May, taking the total irrigated area to 520ha.